Twinn Swan

When it comes to wealth management, the formula–if you will–is rather simple. Earn, save, invest, spend and give. The significance of this formula lays not in the simple words that I just wrote. But rather, in the sequential cycle of events with which they are executed.

To master each of these steps–in the right order, no less–requires a certain mindset and ethics that are in line with the prevailing and preexisting conditions that exist in society.

The matter of livelihood–that is, how we earn–is inseparable from being alive as a human being. Most of us have ‘day jobs’. We work in order to earn our livelihood during the course of the day. Through our chosen vocation, we should endeavour to receive money as a medium of exchange for the value that we have given. The majority of people in the world today earn money by ‘making it’ either via employment or self-employment.

In our modern society, we tend to spend before we earn. It is the foundation of debt and all forms of pressure that we encounter when our wages can no longer cover our spending. Spending before one earns is unwise. We should cultivate a mindset that allows us to be free from being in extraneous debt.

Debt should never be used to cover essential life expenses. If we must borrow, we should always borrow moderately; and strive to repay the debt as soon as possible. Many institutions can and do entice and seduce us to be big spenders. They generate profit by way of incentivising certain behaviours; for instance, to spend our future earnings. This is a rat race and it can be a destructive one.

Debt can be a long-lasting economic burden. The decision to borrow cannot be taken lightly. Borrowing is necessary and beneficial in some circumstances; but when circumstances change, we can find ourselves over-leveraged and unable to meet our payments in time. The key principle when it comes to borrowing is to borrow moderately. When we over-leverage ourselves, we can end up being discredited.

The first step in the flow of finance is to begin by earning and paying heed to our level of indebtedness to others.