Parkinson’s theory; expenses always rise to meet income.
More salary will never make you rich. It is what you do with what you earn that takes you to the echelons of wealth. And note this, unless you are careful, the more salary you have the more debt you could land in.
It goes without saying that many of us are not disciplined enough to be frugal, a factor that mainly affects the middle class. Any increase in income somewhat always leads to an increase in expenditure, not savings.
No sooner do we anticipate a change in the pay slip figures than we move houses, make expensive purchases and start living large. I can’t take this away from you, there’s always that desire in us to live a beautiful life. By all means, strive for that, but let it not be at the expense of incurring more debt in the process.
How does that happen? We are busy listening to financial institutions that are eager to give advice based on the improved salary. Advertisements on low interest rates, longer repayment periods and unsecured loans are just but carrots being dangled.
Many a times, it is never planned. But the feeling of having your bank account awash with some liquid cash is too much to let go, especially in this day and age when money is never easy to come by and the economy is busy experiencing mood swings. So we apply for a loan, and in 48 hours, the account is choking with never seen before money.
But what do we do with that loan? It came as a pleasant surprise, didn’t it? Our minds go bananas. We buy cars, home furnishings and take a ‘much deserved’ vacation to our local exquisite destinations. In a short while, Parkinson’s theory knocks on your door, and you realize that with the improved pay slip, your debt has almost doubled.
When I say that your salary is enough, I am in no way implying that the HR managers should no longer enhance increments. Far from it. As long as it is company policy, salary increments have to be effected. But my point here is based on what you receive in your account.
Unlike people in self-employment or involved in business, employed persons face the risk of overspending since there is usually that belief that there’s a constant income. That is why unsecured loans are always paraded around. And who is their target client, if I may ask? Salaried persons.
Having constant deductions may make one plan well, but can actually put you into more debt. Constant monthly income takes one to a comfort zone. After all, come end of the month, you will still have some money, right?
But we find that reason – of constant monthly income – pushing us into the red zone, since when we take out a loan, the disposable income (income at hand or net income) becomes quite small. And we find ourselves rushing to borrow from our friends or family, pushing us into the red even more. As this cycle progresses, it worsens every month. Worse still, if family or friends cannot chip in, we consider the shylock’s den.
Unless you have a genuine need for a loan, maybe for a business venture via capital input, the last thing you need is to entertain any thoughts of it. Use what you have, it is what has been given to you, and you will find it more than enough.
Improved salaries and loans are supposed to help you accomplish more in life – to improve it, not to have increased unnecessary expenditures that make you worse off.