How much money you don’t have doesn’t matter next to how well you manage the money you do have.
This is a good thing! Because while no one can snap their fingers and make a million dollars appear out of nothing, anyone can start chopping back the weeds of their own financial garden and see more produce from the same small plot of ground, thanks to a little better management.
(We’re going all in on metaphors today. Strap in.)
But the way you think about money has a big effect on how you manage your money.
Most employees and workers tend to think of money as sunshine.
If the sun is shining today, and you know it will also be shining tomorrow and the day after and all weekend, too, it doesn’t really matter if you waste today’s sunshine. Sure, you could go out and take care of the yard work, paint the fence, wash the car (although that chore is way more fun in the rain), walk the dog, go to the park… but since it’s going to be sunny tomorrow, it doesn’t matter if you decide to stay inside instead, doing chores that could be done on a rainy day, or skipping all your chores altogether.
To an employee, money comes on time, every day (or every two weeks), and you can reliably predict how much is coming before it hits your bank account.
Smart employees realize that the sun doesn’t shine all the time, and they sock some of their earnings away for a rainy day. This thinking is sort of similar to water conservation.
I grew up in the country on a small property with a well. When the well went dry – which happened like clockwork when we had guests for more than a day during the peak of summer or in the middle of a drought (frequently the same thing) – the water coming out of the tap turned red and sandy, dropped down to a miserable trickle, and you could hear the pipes clunking with effort to move water that wasn’t there. You went into town to buy drinking water, crossed your fingers, and hoped the well would recharge and start flowing again before you had to take your BO to church.
Eventually Dad built a buffer tank, so water moved from the well to the tank and only then to the house. There was a lot of technical stuff involved with trip-switches and water levels, but essentially, when we were in a drought and the water table was low, we were pulling water from the tank instead of directly from the well. That eased the burden on the well enough that it didn’t empty out on us nearly so often.
But even if there’s a rainy day here and there, the sun does come back out, and the water table rises, and the next paycheck comes in.
Business owners, on the other hand, are thinking and playing to a different set of rules. As one business owner told me, “Money is blood. When you run out, your business dies.”
More than one businessperson has told me that long-term successful business owners never spend money that they don’t have to. There’s no guarantee that money will be replaced, after all, or how soon. (The mortgage doesn’t care if you’ve got enough money outstanding in unpaid customer invoices to pay the house off three times over; the check has to be written today.)
How would your approach to your budget change if you were rationing out blood instead of sunshine? And how does understanding that money is a business’s blood change how you see some of your employer’s decisions?
It’s a matter of perspective, but perspective changes attitudes, and attitudes change actions, and actions can change everything.