Have Your Cake AND Eat it!

Hi all

cupcake

Looks tasty, eh? But there is a saying that one cannot HAVE one’s cake AND eat it. And overall, it seems to make sense.

crumbs_saucer_fork1

After all, if you do EAT your cake, you no longer HAVE your cake. It’s gone! Exhaustive tests have been conducted by small children over a period of centuries that seem to bear this out. Of course, the experiment is always worth repeating another day 😉

But, the old saying does miss a vital point. One can learn how to make more cake. Maybe even how to make a bigger and better cake!

The point of all this is about how you view investment. Those with a poor-thinking mindset will eat that cake (or spend that money on ‘stuff’), and then mourn its loss. Those with a rich-thinking mindset will set about finding out how to make sure that there is a regular supply of cake (or money).

An investment in your financial education will reap rewards in a similar way to learning how to make more cake. You are learning how to make more money. You must learn about how to read the numbers, not just how much your investments may cost upfront. What is the expected return on investment (ROI), and over what period? How can you manage the risk? What is the risk/reward ratio? Are the figures you see realistic or pie-in-the-sky, and how can you tell?

Of course, you will then also need to invest in some raw ingredients and expend a little time and effort in order to secure your regular supply of cake. Similarly, whether you invest in a business, property, stocks and shares, or whatever, you will need to part with SOME of your money in order to make MORE money.

And there, in a nutshell (or a cake case), is the biggest difference between rich thinkers and poor thinkers. Deferred gratification. On payday, poor thinkers immediately use their money to supply their needs.

On payday, rich thinkers immediately use their money to invest in assets that will create even more money. Some of the extra money generated is then used to supply their daily needs. And some of the extra money can be used to buy even more investments, thus ensuring that their money grows even further still.

So, to join the rich, we must learn not simply to earn more (although that’s always a good start), but also to spend smarter so that we get to eat that bigger, better cake another day.

Over the next few posts, we’ll look at some of the tools you can use to improve your financial education.

Just some food for thought.

Carl

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