On Poverty

 Poverty comes in two versions. 

One is easier to fix than the other. There are systemic methods to deal with money shortages. The other is harder.

Fixing a money shortage

Money deficits happen two ways. Fixing it could take a while.

Income falls below the spending standard. If you know the nut, the money that is required to live each month, then income after taxes must be greater. If you lose your job or business turns down, there can be problems.  The question is for how long.

It could be like the flu. Short pain, return to normal. If it is longer,some assets must be disposed of or new debt incurred. New debt means next month will be harder still. If assets are disposed of some will reduce income or some will have new costs to make up for their loss.

Put money aside by spending less. That builds a reserve and even with an income loss, it works. You are safer if the nut is smaller and you save. Investments can earn compound interest and that is a huge advantage to avoiding money poverty.

The best money/poverty fix though is more income.  From more skills, better opportunities, better attitude, harder work and more rational expectations.

The other poverty. 

Poverty appears to be a constant.  People who have enough money, often don’t have enough time. Time poverty is a concern in Western societies.

The problem with time is each of us has a day of the same length. Time is the only capital we are given. You must earn money. We cannot earn more time nor can we store it for future use. It is a gift.

We can, however, avoid time poverty with several techniques:

  1. Do not commit to things in the future that we would find inconvenient to deliver today. The distant elephant problem. Be very cautious taking on tasks because someone else wants you to do so.
  2. Do not waste the time you have available. This is priority setting and discipline. Some people think they can spend the same dollar twice. Many people think they can use a given hour more than once. Everything is a trade off. An hour spent working cannot be spent with children.

    Abigail Van Buren, “If you want your children to turn out well, spend twice as much time with them, and half as much money”

  3. Trade money for time. Do-it-yourself is a time trap. Buy your way out of the situation and use the time for something you are good at or enjoy more.
  4. Value efficiency. Learn and practice better ways to solve problems. Take a speed reading course. Learn about comparative advantage and delegate some of the things you are good at to spend more time on what you are best at.
  5. Be more physically fit. Use your time better. When you are fatigued, the first thing to go is your higher brain skills. The army marches just 50 minutes in the hour. Higher brain skills are important to soldiers in combat. You are not tougher.

An interesting distinction.

People must learn that acquiring capital is what wealthy is about. It is not just money although money helps. Time capital matters too.

Being rich is having money; being wealthy is having time.   Margaret Bonnano

As with everything in life and financial planning in particular, balance matters.

Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario. 

In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you. don@moneyfyi.com  866-285-7772

3 Comments on “On Poverty

  1. Thank you will use the above in our School Committee meeting to better illustrate the time wasted in counterproductive things.Appreciated Don

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