I was born in Yorkshire, in the north of England. That implies several things dependent on your preconceived ideas of what it means to be a Yorkshireman. Whilst I do not think I am typical of all of the stereotypes (I did leave the county aged six!), there is perhaps one that deep down inside I resonate with...begrudgingly anyway.
Being tight. Thinking that all spending is a waste of money.
There I said it!
OK, so in reality I am not actually tight - meaning tightfisted, or overly frugal with money, as many people that know me personally would testify, in fact I am seen as a generous person. So, perhaps tight is not the right description then.
However, I had something of an epiphany the other day - I realised that I have 'Poor Man's Thinking'. This is different to being tight
What is this Poor Man's Thinking then?
It is where the Poor Man inside of us doesn't want to spend money when we think we can get it for free in some way. He thinks all spending is a complete waste of money. I used to call this resourcefulness and it is true...one of my top Belbin Team Roles is that of a 'Resource Investigator' and so I like to hunt out ways to save rather than waste money. Fortunately, I am also a Plant & Shaper, so it's not all about details and networks, however I digress...
Not wanting to waste money...sounds like a good principle at face value. If we don't spend then we save right? Well, it depends on the context of the situation. With budgeting at home or on a project, then cutting out unnecessary expenditure can be a great quality and indeed does lead to savings. I would even go as far as to say this is an essential quality for a successful investor to have.
The subtle difference lies in failing to see certain expenditure as an Investment. An expense is something that is used to buy something that may have a use but will not necessarily create more value than it costs. An investment should always create more value than it costs. If some examples of expenses are food, clothes, transport and that kind of thing, then some example investments are education, assets, productivity aids and that kind of thing. This is a spectrum however and some people will swear blind that an Armani suit is a great investment!
Poor Man's Thinking & Spending Attitude
My Poor Man sometimes kicks in, holding me back in the process when it comes to Investment Spending. Investment Spending should by definition help me to create value and grow. Conversely, Expense Spending will at best will help me to stand still. In some respects I really do get the idea of Investment Spending...I buy properties, which are assets for goodness sake!
Where I realised I had a gap and my Poor Man's Thinking takes over is with smaller spending like: professional advice, software and apps, subscriptions and low-level administrative support / maintenance tasks in the main. I saw these as expenses, things like:
- I would struggle for hours trying to fix a 3-year old, 'blue screen' budget laptop rather than take it into that geeky guy who could do it in no time, or just buy a new one
- I would search for the free anti-virus software & free apps rather than shell out £35 a year of £1.99 for 'best in class' technology and maybe let a Trojan horse in
- I would trawl through the Internet and on forums for weeks rather than pay a specialist to tell me what he knows in half an hour to plug my 20% knowledge gap
You get the picture.
My epiphany
My epiphany moment is not really an epiphany at all, as in fact this limiting way of thinking has been creeping up on me for quite a long time in truth. But something did happen recently that created a paradigm shift in the way i think. I enlisted the services of a professional coaching team. I still had a bit of Poor Man Thinking even then, as I tried to convince them that I qualified for their budget classification rather than the intermediate one...everyone loves a trier after all 🙂
However, it was in discussing what I knew to be one of my biggest personal roadblocks in taking my business to the next stage that the penny REALLY dropped - money or time spent on setting up good systems is Investment Spending. I recall at this very moment a time around twenty years ago. I was fortunate enough to go on a 'Business Excellence' tour, organised and paid for by my employer. I saw some fantastic companies and it was easy to appreciate great marketing, service, product design, commercial prowess, etc. until I went to see TNT the parcel people. They did this massive presentation about their logistics operation and I said to myself - how on earth is this business excellence? Well, indeed excellence it is. It allowed them to be incredibly efficient in how they routed their parcels from pick-up to drop-off, with conveyor belt, lorries, aircraft and software-laden systems. This helped them to beat the competition and to create higher profits - the return on investment. I had my Poor Man's Thinking switched on back then and it had stuck with me a bit too long if I am honest.
Change is what was needed and I am comforted to know that reflection, being honest with ourselves and seeking personal growth are also characteristics that many successful people have. So, I stepped out of my Poor Man comfort zone and just recently have undertaken these previously unheard of things:
- Paid for premium software and had a better computing experience
- Bought paid for-apps and experienced more options
- Signed up for my own executive mentoring programme, gaining access to the inner thoughts of multi-millionaire, business people
- Upgraded some productivity services to premium versions and streamlined my systems
- Outsourced my website development & support and passed over time-consuming & niggly tasks to specialists
You get the picture!
Linking it to Property Investing
The relationship to our property investing may not have been too apparent so far but if we really do see property as a business venture, as indeed we should, then good systems are an integral aspect of this for sure. In the past, I was content to leave the systems stuff to the Implementer or Completer / Finisher in Belbin-speak and to be honest, I still will. Although, now I am of the opinion that I too need to take a much closer look at the whole area of systematising my own work and the property business far more than I do right now. Yes, I do have SOME systems in place though you may be relieved to hear!
The fundamental mindset shift is that of ridding myself of that Poor Man's Thinking and instead of trying to avoid spending £2 for an app, $10 a month for an automated email service or £100 a year for Office 365 Subscription...I am looking at it through new eyes instead.
I now ask myself: is this an investment i.e. will it create more time and / or money? If yes, then shouldn't I be investing my money instead or not spending it?
I wouldn't exactly say that the Poor Man is dead and buried but he is getting a smaller say in matters these days for sure.
I am applying the concept of Investment Spending to smaller level spending more and more and as a result I am seeing greater return on my investment spending.
What about you - do you recognise this Poor Man's Thinking and see all spending as a waste of money, or do you see Investment Spending more like I describe here?
[…] Poor man’s thinking…all spending is a waste of money!? […]