We have recently surpassed 40 days and 40 nights of Lockdown – a significant number in Biblical history and reverts to the story of Noah. What makes the story of Noah so remarkable is not the fact that it rained for weeks on end, but rather the discipline and obedience of one man which ultimately lead to him being ready and safe when disaster struck.
Disaster recently struck. Covid-19 drastically changed the way we live and operate, perhaps forever and as the days of Noah, most people were not ready.
We sit with a difficult conundrum:
On the one hand, we are facing a Virus that is a threat to our health and safety. An epidemic who currently infested around 10 000 people, killing almost 200, while statisticians predict and the overall virus-related death count of around 30 000 in SA over the next year.
On the other hand, we are faced with an Economic disaster that will surely send SA into a deep recession and possibly a depression which will possibly take years to recover. A scenario that impacts 99% of our population (if not all of us) and the longer the lockdown continues, the deeper the situation will worsen.
While we all wonder whether the Lockdown should continue or not, I believe we are asking the wrong question.
Most of us are not healthcare expert and neither are we specialists in the Macroeconomic environment. While we are all free to have an opinion, it might not be the best use of our time to read a few articles or watch a few videos and make a definitive decision that will have an impact on others.
But, what we can and should do however is to build our own Ark. – This is completely within our own control. (And while my condolences are with those industries that have been directly affected, we need to think differently and plan - Many companies and services were born in the 2008 crises.)
I recently read “The Richest Man in Babylon” It is a small little book by George Clason but with big basic truths. Nothing revolutionary or profound yet so true today as it was all those years ago. In this book, there is a short story of a Camel trader who was rotten in debt with very little income. Yet inside him, he had the urge to change his life around, pay off his debt and become a wealthy man.
He then went and seek advice for the richest man in all of Babylon to start his journey to becoming wealthy. To his disappointment, this mentor had no revolutionary secret or any magic formula, but advised him to follow a very basic principle:
“No matter what the income is you receive, you need to split it in the following way:
- The first 10% needs to be invested. This money needs to work for you and grow. They need to get children and their children need to get children and all these people need to actively work for you as time goes by. Do not withdraw from this account and do not skip a single month.
- The next 20% you must use to pay off your debt. Go to all your creditors, arrange with all of them and start paying off your debt. Start with those who have the highest interest and do not skip a single month.
- The 70% that is left you need to live off. Take care of your family and loved ones, pay attention to your expenses and enjoy life.”
In using this simple principle, the camel trader slowly but surely turned his life around. He paid off his debt in a couple of years and then used the additional 20% to invest as well. As time went on, he searched for additional income, changed occupations, moved cities, but he always stayed true to this simple principle.
At our wealth management firm, we see deal with many successful people and although they all made their money in different ways and in different industries, they all had the same mindset, the same principles in place.
Long term wealth is not created by luck, neither is it destroyed by a crisis. When you have a plan in place, a structure, a mindset to consistently increase your income, decrease expenses, invest in assets and pay off your debt you are sure to be on your way to long term wealth.
We recently formulated a 6 Step Financial Plan* which incorporated the principle used all those years ago. It is a workbook with principles you can implement and use on an ongoing basis to guide you to long term financial success.
So, while we all might have bright ideas, strong opinions, or feel we can predict the future, we need to remember that ideas are nothing without action.
As in the words of Warren Buffet:
"Predicting the rain doesn’t count, building arks does."