“Before you spend, Earn”
I recently stumbled on the above nugget from Williams Arthur Ward in a motivational and self-development page that I follow on Facebook. And I’ve been quite appreciative of the soundness of its logic.
The nugget initially seems self-explanatory and commonsensical. Of course, you have to earn money in order for you to be able to spend them on things that’ll enable you to satisfy your needs, desires or whatever motivation you may have. But a closer look at the nugget proves that it is much deeper than it seems. Implied in it is a law of wealth and the basic of financial intelligence.
To earn income, you must be willing and able to work or exchange your labour or service in advance. This law of earning is not rationally different compared to the fact of expenditure. Essentially, while you have to labour or contribute values in exchange for your earned income, you equally have to invoke labour and attract values to justify your expenses in the larger economy.
The logic here is that a free outflow of a resource whose inflow isn’t free is counterproductive. In other words, if your income is economically justifiable but your expenses are not, you are simply an irrational player in the economy. Frankly, the economy does not reward unproductivity or mediocrity neither does it celebrate irrationality.
Money is a conduit of economic exchange. And fundamental to economic life are the laws of demand and supply. Subject to these laws is the reality of scarce resources and the need to ration among alternatives. Thus, whether on the individual, institutional or national level, economic and financial breakthrough is contingent upon the capacity to make rational choices among alternatives.
The nugget underpinned one of the values upheld in a company I have worked with. In the organization, at the end of every month before the accountant got the Managing Director’s approval to proceed with payment of salaries, all the members of each department led by their departmental head must have done a general presentation of their review of activities and tasks for the month. There’s a particular section of the presentation which invariably came last. That’s the section that addressed the justification of remuneration.
“Have I earned my salary for the month?”
This was usually followed with a laughter or an applause or sometimes a reprimand by the MD. For the ones with watery review, even though evidences suggested otherwise, none would dare to say they did not merit a pay. But generally, the culture promoted presentation skills and good work ethic among the employees and it contributed to the growth of the company. However, as the organization expanded, the practice and some other important foundational values were lost to some new set of norms that supplanted micromanagement. This adversely affected the company in many ways.
I believe the same nugget can be extrapolated to understand Nigeria’s current fiscal reality which has steadfastly promoted a rent-seeking rather than productive economy. In the last decade Nigeria’s foreign reserves have continued to plummet while its annual budget deficit has been on the increase. Recently, the federal government turned in the appropriation bill for the year 2023 which is estimated at N20.51trn with a projected deficit of N10.78trn and debt servicing of N6.31trn.
Interrogating the bill, analysts have argued that even though current economic realities may justify external borrowing to sponsor the country’s fiscal policy, the recurring budgetary deficit and increasing debt of the country cannot be exonerated from several incidences of economic mismanagement by the Government during boom periods in the past.
Summarily, if you do not ration during abundance, you will be forced to do so during scarcity. There is no escaping the law of rationing. However, whereas the former is proactive and sustainable, the latter is reactive or adaptive.
