This is one of those rare and highly unlikely posts where I dig deep inside the troughs of my eccentric mind and harvest, using whatever infant and primitive tools that my collective brain possess, and set out stall for a topic where many opinions and possibly deliberations get their fuel from.
The irony of being financial smart — which smart are you?
There are 3 types of financially smart people in this day and age of the world. There is the thriftily smart, leveragingly smart, and the value smart.
Let’s unhinge a little more info on the value smart people. When you’re value smart, you understand and appreciate how much a given item values and you’d break limbs to ensure that whatever you’re paying, you’re getting the most out of it. You’d pay a hundred dollar for an item that you feel should cost a hundred dollar, and nothing more, even if that was your only hundred dollars for the month. If there was a hire purchase deal that lets you get 5 of that items for that hundred dollar that you possess currently, you staunchly decline as the interest rates that rack up overtime aren’t beneficial for you. Though you get more items and paying a much lesser amount, albeit in installments, hire purchase deal breakers are the last thing on your mind. Paying interests on these products are wasteful and you believe that spending more in the long run is an unwise form of return on investments.
You’re value smart. You’re smart but you may lose out on getting more out of what your dollars can. Perhaps you’re uncertain that paying off a monthly amount bears too much of a financial stress. Nevertheless, smart is smart.
And then there are those that chooses to leverage their hundred dollars per month. These are the ones who articulate in getting the best deals as much as they can, even though the interests racks up in the long run. To them, it’s worth it that you’re able to utilise more tools and applications as soon as possible, thus gaining much ground in productivity, while reasoning that the accumulated interests pays off by itself, thanks to an early start in productivity. But of course when things go wrong, they go really wrong, as seen recently with the recession where Dubai World, leveraging on huge debts, got hit hard. Then again, you could argue that it has transformed and cemented the emirate as a luxury hub for financial, entertainment and lifestyle services. If it didn’t leverage on debts, it would never have achieved this much. So when you’re leveraging, and unless you’re unlucky (like having a recession hit you), you’re still smart.
You’re leveragingly smart. You’re smart, but there’s a liaibility on your shoulders and unless you’re aptly covered, you’re tackling plenty of risks heads on. The bigger the risks, the greater the rewards eh?
Finally we come to the thriftily smart. They scrimp, they save, they find alternatives and they make sure that they absolutely only get the things that they need, and not just the things that they want. Why spend hundreds on a branded jeans when there’s a bargain cheap option? It’s not that they don’t possess desires but their thrifty ways ensure that they face less risks, carry less liabilities, and ultimately spending less while saving more. Being thrifty is excellent, and it is a sure way of ensuring that you’re able to survive whatever ominous onslaught the future may bring. Best of all, there’s very little to worry about financially and life’s a breeze.
You’re thriftily smart. You’re smart and trading peace of mind for luxuries is never your lifestyle choice. But though it brings you lesser gains and affordability, you’re in it for the long, comfortable run. There’s more to invest within life than mere financial or material products, right?
These are topics which I enjoy deliberating upon, open ended and with plenty of angles to tackle with. Anyway my point being that even if you think that you’re smart (whereby you’re an advocate of one of these three characteristics), it’s never a complete/perfect solution or advocacy. There are always holes in any given situation and I suppose the best way to describe a financially smart person is when he or she possesses all three characteristics and is able to react proactively to any situation and conditions.
And then this is one of those rare and highly unlikely post where I end it abruptly just because I’m not smart enough to come up with a smart quote. Bite me.