How We Can Escape the ‘Rat race’
The phrase ‘rat race’ has been used so much in contemporary society to refer to most of the working population. It refers to two rats that compete to get cheese in another room by outrunning each other, in the end, they spend more energy than the worth of the reward. The meaning of the word has not changed throughout history as it still refers to an endless and futile pursuit. It sounds dehumanizing but it hits hard when used from a financial perspective.
My financial educator pushed the right buttons when he asked if I was living from paycheck to paycheck. I had never taken time to reflect on my finances as long as I paid my bills and the check was coming. The question got me thinking, and alas! I was on the ‘paycheck to paycheck’ train. My job had become a necessity and without it, my life could crumble.
With nothing significant to show for all the years, I had to do something to stop living on the financial edge. ‘How could this be possible?’ I kept asking myself. I needed a silver lining. Unfortunately, this needed sweat hard work, and sacrifice. In this article, I share tips that I am using to escape the rat race and which I have learned from various seminars, podcasts, and tutorials on financial literacy.
Money is used as a medium of exchange, but in a real sense, Money is simply value. Refer to https://www.youtube.com/watch?v=9RJpIqD8MGg&t=949s. Our relationship with money matters so much in escaping the rat race. The relationship between our income and expenses will help in demystifying our money problems. When our expenses exceed our income, it means that we are left with nothing for the future and thus have to work to get more income. This cycle continues until we try to change it. Money or income enters our lives when we have produced some sort of value; Money also leaves our lives when we have consumed something. Therefore, our net worth will be the difference between production and consumption. When production exceeds consumption, our net worth is positive, the reverse is also true.
One could thus easily assume that by increasing production we could beat poverty and escape the rat race. However, this is partially true as our problem lies in the consumption part of the equation. Statistics have shown that every one in 10 workers in America who makes $100,00 or more is living paycheck to paycheck. Similarly, 59% of those in this income bracket are living in debt. Production means nothing when one has a problem with their consumption pattern. It is for this reason that most Athletes and basketball players end up being poor at the end of their careers despite making millions.
Silver lining:
Knowing your relationship with money. This is possible through budgeting (understanding your income versus your expenses). This involves planning in advance what amount you can spend and limiting your expenses to be left with money for saving. The strategy is not a walk in the park as it involves living below your means. To save one has to do away with the lifestyle that places him/her on the financial edge. Avoid ‘Keeping up with the Joneses. Many people buy what they don’t need with the money they don’t have thus sabotaging their efforts to escape the money trap. Instant gratification is a disease that tends to eat our savings.
Emergency fund. Keep an account that holds 3-6 months of your salary. This will help you when an emergency arises.
Making money vs frugality. Most people tend to criticize frugality as a strategy to get rich. One school of thought argues that making more money will help solve the money problem. However, think of it in this way, what’s the point of making money and using all of it. One thus needs to work non-stop to fund this lifestyle. This is the actual rat race. Frugality works for a wider range of people, but it’s not the best strategy. There should be a balance between making money and limiting our expenses.
The way out. We should focus on increasing income by scaling our production and offering value to the wider public. This strategy backed with minimizing expenses will ensure that we escape the rat race. The internet has helped in scaling certain businesses.
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