After graduation from the University, I did my statutory one-year National service as a Teaching\/Research Assistant at my department. My best friend and study mate throughout University, Eric Dapaa, was also my colleague TA and we shared the same flat. A favourite, 5-star delicacy of most students then (and still, I believe) was Chinese food: fried rice and chicken with vegetables, which we called \u2018check check\u2019. In 1999\/2000, it was selling around \u20b54000 (about 44 cents) per package. Our allowance as Service personnel was \u20b5141,000 per month, which is about $16.<\/p>\n
To save cost and optimise the shelf life of our meagre allowance, which suffered stockouts a lot, amidst erratic supply, we cooked a lot in large quantities! Oh, those days of good recipes and delicacies! (My wife still doubts my culinary skills though!) But once in a while, Dapaa and I yearned to eat check-check to satisfy our souls. And those were the times we had to do iteration, cost-benefit analysis and subsequent cost-savings. Just \u20b54000 for an occasional check-check and so much optimization and thinking!<\/p>\n
In June 2000, I joined Unilever Ghana, and immediately one zero was added, relative to my Service salary. Wow! Because I was still doing my service on campus when I got the employment at Unilever, I had to go to Kumasi on weekends to conduct tutorials for the students. On one of the visits to campus, Dapaa and I felt for check-check and suddenly I realised that I could buy even ten packages without sweat! And I thought \u201cThis is so cheap! Are these sellers making any profits at all?!\u201d<\/p>\n
The average Ghanaian tries hard to live above his means. In the book, \u201cRich Dad, Poor Dad\u201d, the author Robert Kiyosaki asserts that it is usually the poor who strive to impress and show off, as if they were rich! The rich, on the other hand, strive to remain obscure! Proverbs 13:7 states that \u201cThere is one who makes himself rich, yet has nothing; and one who makes himself poor, yet has great riches.\u201d Visit any civil service\/government office and you will be amazed at the quantum of items that the workers buy on credit. In some cases, the value of these items is way above 200% of their monthly salaries.<\/p>\n
I believe in the principle of timing and priorities. I believe in categorisation of necessities and \u201cnice to have\u2019s\u201d. I believe that a time comes when you cannot do without some items and also you can afford them without any dent to your wallet or purse.<\/p>\n
On campus, it was interesting to see students with cars that they parked each day, because they didn’t really need them on campus. It was amazing seeing students invest heavily in furniture and electrical appliances that they deemed out of date immediately they graduated. It is still a wonder to me observing people striving to live beyond their means. Modesty is an alien world, a nonentity in their wardrobe of words.<\/p>\n
I challenge myself each day with the following questions, especially with acquisitions or purchases:<\/p>\n
a) Can I do without it? Can it wait?
\nb) Is it a priority?
\nc) Will it add value to my life, family, and performance at work? Will these areas of my life suffer without this?<\/p>\n
In other words, justify the acquisition. It helps if your spouse is the reviewer! When you have been able to use this exercise to free some \u201cspare money\u201d, then you can move to investment. It is said that you will never get time, you can only make time. In other words, if you stop what you are doing, you can make time for what you really want to do. In the same way, you may not be able to increase your salary in the short term, but you can make your salary or income seem more if you stop frivolous expenditure and challenge every outflow from your budget.<\/p>\n
In some ways, this reminds me of the function of valves on our production floors.<\/p>\n
A valve is a mechanical device for controlling the flow of a fluid, say a liquid which flows through a conduit. Ah, talking of valves reminds me of an incident in University at Kumasi. We were in a mechanical engineering laboratory session. The teaching assistant\/technician taking us through the session asked what a valve was. We all gave various definitions, none of which was acceptable. Then, one of my mates raised his hand, and when he was asked to give his opinion, he said \u201cA valve is simply an orifice!\u201d We all broke down in mirthful laughter! If we didn’t understand what a valve was, how could we appreciate an orifice?!<\/p>\n
Anyway, back to the valve. In most big production plants, engineers like to use automatic modulating valves, which are able to adjust the flow of the fluid when certain conditions are either met or exceeded. For instance, a modulating valve could open to allow flow of palm oil out of a tank once a particular level of the tank has been reached, to prevent overflow. Modulating valves could be operated manually or as indicated could also be self-operating, based on some process conditions or rules.<\/p>\n
I reflect on the conditions that the current global economic crisis have brought on all of us. In 2008, we had escalating prices increases in food and fuel in most parts of the world. Input materials for most production sites had significant increases in prices and to recover fixed production costs and overheads and to maintain their profit margins, most companies were forced to up their point of purchase prices of consumables especially. The situation over the past two years has not changed much, and the situation, though beginning to abate, will take awhile before reverting to normal, manageable conditions.<\/p>\n
What intrigues me in studying people within these two years is that most of us do not have economic modulating valves. We do not change anything in our lifestyles as the conditions around us change. In the height of the fuel increases in Ghana, I still saw cars with just one person driving all the way from Adenta to Accra central and back, each day for work. This is a distance of not less than seventy kilometers per journey. Why don\u2019t people pool cars and share, alternating each week, for instance?<\/p>\n
When the prices of imported rice rose by more than 50% in 2008, my wife and I changed the brand of rice we used. It was not pleasant (I am a rice eater!) but we needed to do that to keep our lifestyle within budget. That was a modulating valve at work.<\/p>\n
There are persons who adjust their standard of living upwards each time they get salary increases, when there is clearly no need! My concept is that a salary increase should go into a fund for investment, for a rainy day. Of course, there are those who hold to the ideology of Winston Churchill who believed that when the gap between expenditure and income becomes too wide for comfort, the solution is not to reduce expenditure but rather to increase income! Well, there is some sense in that, but reality is that in most cases, the rate of increase in income is not comparable to that in expenditure!<\/p>\n
In these hard times, those who will survive these conditions well with be those with self-modulating economic valves, and these valves must undergo regular maintenance!<\/p>\n
Are you living within your means? If yes, and you have money to spare, invest wisely. One of the secrets of wealth creation is the principle of postponing gratification of desire to spend. If you can do without a purchase, please do.<\/p>\n
For example, do you need the second car in your house? What is the percentage utilisation of that car? Do you need to buy that DVD player when you hardly stay at home to watch TV? Do you really need a new phone, the latest model in town? Do you need a brand new refrigerator, when the old one is serving you well?<\/p>\n
Professor Stephen Adei in his book \u201912 Keys to Financial Success\u2019 encourage us to live within 80% of our incomes. The formula here is: Pay God and society (tithes, giving to others, etc, using 10% of income), Pay Yourself (Investments, savings, etc, using 10% of income), and then Pay others (Bills, insurance, food, clothes, accommodation, etc, using 80% of income), in a 10:10:80 formulation (as we say in R&D).<\/p>\n
Again, let me ask you: are you living within your means?<\/p>\n
Quotes<\/p>\n
\u201cTo everything there is a season, a time for every purpose under heaven.\u201d Ecclesiastes 2:25<\/p>\n
\u201cThere is one who makes himself rich, yet has nothing; And one who makes himself poor, yet has great riches.\u201d Proverbs 13:7<\/p>\n
\u201cIt is vulgar to talk like a dentist when one isn\u2019t a dentist. It produces a false impression.\u201d Oscar Wilde<\/p>\n
\u201cHe who will not economise with have to agonise.\u201d Confucius<\/p>\n
\u201cEconomy does not consist in saving the coal, but in using the time while it burns.\u201d Ralph Waldo Emerson<\/p>\n
\u201cEconomy has frequently nothing whatever to do with the amount of money being spent, but with the wisdom used in spending it.\u201d Henry Ford<\/p>\n
\u201cI would rather have people laugh at my economies than weep for my extravagance.\u201d King Oscar II of Sweden<\/p>\n
\u201cThe love of economy is the root of all virtue.\u201d George Bernard Shaw<\/p>\n
\u201cModeration is the key of lasting enjoyment.\u201d Hosea Ballou<\/p>\n
\u201cEconomy is half the battle of life; it is not so hard to earn money as to spend it well.\u201d Charles H. Spurgeon<\/p>\n
\u201cEverything that exceeds the bounds of moderation has an unstable foundation.\u201d Seneca<\/p>\n
\u201cAbstinence from enjoyment is the only source of capital.\u201d Thomas Brassey<\/p>\n
\u201cWith parsimony a little is sufficient; without it nothing is sufficient, but frugality makes a poor man rich.\u201d Seneca<\/p>\n
<\/p>\n
By: Nana Awere Damoah
\nAuthor, I Speak of Ghana<\/p>\n","protected":false},"excerpt":{"rendered":"
After graduation from the University, I did my statutory one-year National service as a Teaching\/Research Assistant at my department. My best friend and study mate throughout University, Eric Dapaa, was also my colleague TA and we shared the same flat. A favourite, 5-star delicacy of most students then (and still, I believe) was Chinese food: […]<\/p>\n","protected":false},"author":14,"featured_media":26417,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[2],"tags":[8],"yoast_head":"\n