In a previous article I mentioned the ‘financial rat race’. I wish to elaborate on this term in this article. I hope that you will see whether you have been running that race. I also hope that you will make a commitment to get yourself out of the lifestyle I will be describing if it speaks of you.
Rats are favourite animals for scientists when it comes to experimentation. Over the years they have conducted many experiments on rats and the results have contributed to their understanding of the behaviour of human beings.
To understand the behavior of rats, and hence people, scientists usually place the animals in a maze, which is a box with many hallways and doors inside it, and they set the rats loose. The scientists look down upon a box, but to the small minds of the rats inside the box, it is a huge place with many passages and doors. So the rats run around in the box, thinking that they have taken a long journey, whereas the truth is that they have been running around inside a box. And the first rat that comes out at the other end of the maze gets a cheese as a reward. This is a literal ‘rat race’.
A ‘financial rat race’ is a term used to describe a lifestyle that basically involves working at a job, getting paid, paying off debt, taxes and bills, and going back to work again, without any savings, no investments and a lot of debt. It is being an active part of a system that was designed to get people to work hard without making progress in their lives.
People that have been working for a long time, progressed professionally, received higher pay over the years, but have nothing to show for it, have been running the financial rat race. They don’t have any savings or investments. Instead, they live from payday to payday. When unexpected events take place, they take payday loans, usually from informal lenders who charge very high interest rates. Borrowing is the way they solve their financial problems.
I have conducted personal financial management and investing seminars for the employees of corporate organizations for several years now. What I have found is that the majority of working people in PNG spend almost all of what they earn within a few days of the money landing in their accounts. Many have in fact borrowed against future income, so they have effectively spent the money before they have received it! Such people don’t have any savings. What they leave in their accounts is the minimum balance required by their banks to keep the accounts current. Many have surrendered their bank cards to lenders, who keep the cards until the loans are repaid in full.
Another interesting thing is that the people with the most financial problems are those that are relatively highly educated and occupy higher-paying positions. It seems that the higher the pay, the higher the level of indebtedness. In other words, the more they earn, the more they misuse, and the more they borrow. On the other hand, low paid employees (especially cleaners and tea boys) tend to save a lot of money, and they tend to lend to their highly-paid colleagues.
If what I have briefly described is the kind of lifestyle you have been living, it is time for you to take a really hard look on your financial life and make the changes you know are necessary for you to get out of the rat race. You may think that it is hard to save money in this high and rising cost economy, but the truth is that you can. You just need to be determined to analyse your costs and cut out all unnecessary items, do a budget and stick with it no matter what. You just cannot go on working, earning and spending like you have been doing up to now, especially now that you know what a ‘financial rat race’ is.
Death of rugby league star unites PNG
5 weeks ago