The Importance Of Having A Contingency Money Plan
In Nigeria, People tend to blame things like recession or inflation for the dent in their income and savings when they do not even pay attention to their marginal propensity to save or consume.
This means that when people have money things appear cheap to them and when they do not, it appears very expensive to them, not knowing or understanding that it's their financial situation that's changed for the better or worse.
You see when one's financial position changes it creates an illusion of lack of affordability when all they needed was discipline.
When people have money, they fail to check on their expenditures, they don't deem it necessary to check on their expenditures, forgetting that one must constantly earn above their expenditures to keep living the way they want.
However, how many people earn the same amount of money or more till they grow old? Nobody.
This is why people realize how wasteful they've been immediately they can no longer earn the way they do but their expenditures are still constant despite a negative change in their financial situation. A lot of people do not have a lifestyle
Stability Amidst Financial Chaos
They do not have financial goals, their financial situation determines their goals, this is why some others find it difficult to maintain a level of stability in their finances even when their income takes a dip.
This means that we must normalize the act of planning and a way of life despite our financial position because money in itself gives the quality of purchasing power, it's us who gives it value.
This isn't to say people shouldn't increase or reduce their quality of living when there's money or when there's no money, what I'm saying is that finding a middle ground will make it easier for people to maintain their quality of life when there's a constant check to their excesses.
There's a feeling of endlessness that comes with abundance, when we allow it to control us, it becomes normal for us to be broke with just a sudden shift in our income.
Reality: The Impact & Preparedness
"When spending money, we have to understand that the impact of reality on our expenditures is bigger than our sense of preparedness or perfection and this checks our sense of optimism and minimizes it to a certain extent.*
In other words, many people do not have contingency plans especially when they feel that their initial plans are just too good to fail. For example, a person who sells everything they have just to afford a visa to another country is placing perfection in their plans.
Let's consider the fact that this person might become established, make money, and don't even need to go back to their country, so if this is possible why isn't it also possible for them to be deported?
One of the reasons why people go from being poor to being rich in a short period is because they feel their initial plans are too good to fail.
Building "MONEY" Shock Absorbers
Many people are no longer rich like they used to be. Maybe due to an inevitable change in their cash flow. Nevertheless, the reason they're not back to ground zero is because of the contingency plans they've put in place when things were smooth.
Because of life's unpredictability, we have to put contingency plans in place especially because we cannot control our blind sides, we cannot see the future, and we cannot correctly predict tomorrow by looking at today.
People are volatile, since we don't see it, it's obvious in our investment choices and the way we react to changes in our financial status.
One of the things that prevent us from being caught unawares, is opening ourselves up for accountability, building up a lifestyle that's hardly influenced by a huge change in our income, and have multiple contingency plans.
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