Money & the psychology of money
What’s competing for your money?
As time rolls on, the pressure over spending your money increases. All the hard work of saving and investing over the year could disappear in the twinkling of an eye.
I have observed a few things about the investment patterns of high earners as compared to low earners. The fact is everyone wished they earned more, regardless of how much they currently earn. High earners have certain latitudes that low earners do not have.
There are low earners who believe that they earn too little to invest. So they spend all they have, and then some. There are also high earners who are too distracted to invest. They are the target of lenders and big item sales people.
Let me talk about a real example of someone I know of. She is obviously categorised among the unemployed. She runs a very very small business of selling vegetables and airtime at a street corner. This year she managed to raise a very decent house in a good neighbourhood in Gaborone out of the ground. It has been roofed and ready for occupation. The only thing that remains is plastering outside and of course painting. When asked how she did she simply said, “ka madi a ditamati …” (With money from selling tomatoes).
I find her story very fascinating because there are young professionals who earn way more than she does but have no significant investments. Many of them spend more time complaining about banks and about their employers than focusing on their investments. This lady obviously does not qualify for a loan, but that did not stop her from pursuing this goal.
Now, let’s address the reasons why many people with lots of money cannot invest. They have a lot of competing issues. There are many things that make demands on their money. They have the pressure to dress a certain way. They face the pressure of travelling in a particular way. They have the pressure of living a certain lifestyle. They have the pressure of sending their children to certain schools. They have sales people calling on them to buy certain big items. They have lenders calling on them to give them more money to finance the pressing issues in their lives. All these things cost money, but more importantly, they steal time from them. They spend years in these cycles, and after ten to twenty years of working, they still have not paid off their loans because they kept topping them up along the way.
The best way to be an investor is to focus. Choose your money goal and go after it. Put aside or minimise distractions if you can but stay focussed. It is better to accomplish one thing in one to three years, than nothing in ten years.
It is never too late to change the direction of your savings to investments. Maybe over the year you have saved money for expenses like holiday or travel or just for the festive season. If you changed the direction of that money and put it towards investments, you could enjoy it over the next few years, instead of just this once.
Tired professionals have also been made to believe that to relax and to be rejuvenated, they need to spend money. Perhaps it is also time we examined our beliefs about money so that we can address our impediments to investments.