What is Your Default Financial Position?
Posted: 13/Feb/2018

Author of Practical Steps to Financial Independence and business and finance coach, Mr. Usiere Uko, writes about how to change your financial position

We all maintain a default financial position, a set point which we gravitate towards, subconsciously, anytime we are dealing with money. A week or two after you receive money; you are back to that place. It is your financial home, more or less.

The moment money gets into our hands, our money reflex kicks in. We do what we normally do. For most of us, we know what will happen to the money even before it arrives. Its fate has been sealed before we get the credit alert. Your default financial position is where you are when the dust settles after all the spending has been done.

The lean purse

There are people who always have money in their wallet. They don’t need to tell you to come back later. They have the money right there. There are also those whose wallet is always empty. George Clason in the classic ‘The Richest Man in Babylon’ calls it a lean purse. And then there are those who are in-between. There is still another set of people. They owe friends and family by the time they are done spending. The issue has nothing to do with not enough money coming in. No matter how much or little comes money in, they end up in that place. It has to do with self-control. In these days of electronic cash, your wallet also means your bank balance.

I belonged to the lean purse group; virtually all my working life. The fable of my empty wallet was legendary and subject of family jokes. Anytime I am looking for my wallet, everyone bursts into laughter. They wonder why bother when the wallet is empty ,anyway. Finding my wallet will do no one any good. My children often asked why my wallet was always empty while Mummy’s wallet always has money.

I often wondered about it myself. I remember my Dad of blessed memory. His wallet was also legendary. It was always filled with cash, almost bursting at the seams. The cash inside the wallet was neatly arranged according to denomination. I remember times when he needed to give us money. We would silently pray as he skipped the biggest denominations to fish for the lowest ones. He retired as a school principal.

I have often wondered why my Dad’s wallet was always full when he was not rich and had many children, while mine was always empty despite the fact that I earned much more than my Dad, and had fewer children. I made conscious effort several times to stuff my wallet with cash but within days, it was back to empty yet again. It seemed to have holes invisible to the eye.

The set point

It took me a while to realise that it is all in the mind. Our mind controls everything we do, including spending. It controls how much money you make, spend, invest and keep. My money reflex was to spend any cash available to me till it was all gone. No matter how much money came to me, I kept spending till my wallet was empty. Even when I became financially literate, I paid myself first and still spent all that was left till – you guessed it – my wallet was empty. The cue to stop spending was when my wallet was empty. That was where my problem was. My stop signal only came on when my wallet was empty. Empty wallet was my set point.

The light bulb came on in my head one day when I was at home alone doing some chores. As I pondered on this phenomenon of an empty wallet, it finally dawned on me. My stop set point was the issue. It was my Eureka moment. I needed to simply change my setting from empty to a higher setting that will leave some money in my wallet. I was tired of my empty wallet.

I have had enough. I was finally ready to change. I changed my set point that quiet mid-morning. From that day forward, my wallet started holding money.

To illustrate set points, let’s look at some illustrations. If you drive, there is a point your fuel gauge drops to before you decide to refill your tank. It differs for each person. For some, it is a half tank, for some quarter tank and for others, when the dial is on empty or the warning light comes on. There are still some who wait until the car stops before they go look for fuel.

That set point is your decision. For me, it used to the quarter tank. I have since upgraded to half tank so that I am not caught unawares whenever fuel queues return.

It is the same thing with food. While eating, your brain sends a signal that you are full. You can change the set point of how much food you eat till you become full. You can drink some water 30 minutes before meals and chew your food slowly. Your brain triggers a full signal before you have eaten much.

When I changed my set point, I started to slow down on spending when the money gets to a certain level (the new set point). I started to defer some expenses or find more cost-effective options so that I don’t fall below my new point.

I learned how to say NO to myself and frivolous demands from others. With this level of control, I have enough money to meet my day to day needs without running to my wife for a bailout like I used to do.

Your financial position has nothing to do with how much income you make. It has to do with how much control you have over your expenditure, and what your set point to stop spending is.

For questions or comments email usiere@gmail.com; to order the book PSFFI, call or SMS to 0808 275 0980. You visit www.financialfreedominspiration.com. Follow me on twitter @usiere

Source: Punch News

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