I am continuously amazed to see the spending habits of individuals here in the city of New York.  Bottles at the club marked up 400%, individual drinks marked up 500%, $5 cups of coffee, excessive cab rides, $15 lunches, $25 dinners, etc…all of this on Friday!  Where are we headed?  I will tell you where we are headed…POVERTY!!!

This behavior is not just in this city, however.  You can find exuberant spending habits all over the nation.  In the US, by their 65th birthday, 93% people are either passed or require financial support of family, friends, and/or social security.  This means that only 7% of individuals are able to support themselves comfortably upon retirement.  It seems a shame to think that most in this nation will work for 40 – 50 years only to be dependent.

Our resource allocation really needs a lot of assistance.  A recent survey by AC Nielsen revealed that 28% of Americans have no spending cash after covering expenses.  Out of the 38 countries surveyed, we ranked among the highest in income, but we also ranked among the highest in consumer spending and debt acquisition.  In terms of saving of our assets, we ranked 33rd among the nations surveyed.  Bottom line is…we have to do better!

Each of us has an obligation to our future families and ourselves to be a responsible steward of our finances.  We can’t live like 50 Cent, if we only have 50 cents in our pocket.  We must determine what is important to us, and determine from our values and beliefs what will truly make us happy.  The majority of millionaires are unaffected by pressures of society, and from media hype that attempts to portray what is “cool”.  You will hear about Mike Tyson tipping a waitress $10,000, but you won’t hear about Warren Buffett still living in the same house he purchased with his wife before he made his fortune.  Or the multi-millionaire CFO of a major Fortune 500 company spotted in the Men’s Warehouse purchasing a $200 suit off the rack, then putting his new suit into the trunk of his brand new Honda Civic.

How much do you have left over after you have covered your expenses?  How many miscellaneous expenses are you incurring each month that aren’t necessary?  Do you really need to eat out every day?  When drinking alcohol, while you call yourself a social drinker, are you really drinking because you like to drink?  Or do you accept the 300%-400% markup on a beverage because of pressures of society (heaven forbid that you are the only one at the event without a drink in your hand)?

We each need to budget, plan, and save if we are to be able to achieve true wealth.  We must prepare for the days of necessity.  I will leave you with this Aesop’s fable…

The Ant and the Grasshopper

In a field one summer’s day a Grasshopper was hopping about, chirping and singing to its heart’s content.  An Ant passed by, bearing along with great toil an ear of corn he was taking to the nest.

“Why not come and chat with me,” said the Grasshopper, “instead of toiling and moiling in that way?”

“I am helping to lay up food for the winter,” said the Ant, “and recommend you to do the same.”

“Why bother about winter?” said the Grasshopper; we have got plenty of food at present.” But the Ant went on its way and continued its toil.  When the winter came the Grasshopper had no food and found itself dying of hunger, while it saw the ants distributing every day corn and grain from the stores they had collected in the summer. Then the Grasshopper knew:

Author:  Ryan C. Mack, President of Optimum Capital Management, LLC
Contact: 877-75-TEACH (83224) or info@optimum-capital.com