Common Sense is not so Common after all
It is amazing that we sometimes do not see the obvious even though we know it, or even worse not doing what we know is obvious. It is summed up by Josh Billings who defined common sense as “ the knack of seeing things as they are, and doing things as they ought to be done”. Abraham Lincoln put it like this: “When you have got an elephant by the hind legs and he is trying to run away, it's best to let him run”. There are many who believe that common sense is a sixth sense and that it helps us makes sense of all the other senses!
I am of the view that our education systems, legal regulations, technology advances and information overload in our daily rat race has blunted and blurred the appreciation and usage of common sense. Don’t get me wrong, I am not saying that these are not necessary or useful, it just that we have allowed these things to replace plain old common sense. It is also true that we have over simplified complexity and in other instances, we have made simple things extremely complex.
I am fond of saying that from a business and financial perspective, it took me 4 years of doing an MBA to re learn what I now appreciate as plain common sense. Basic things that past generations have been saying all along.
So here’s Bob’s list of common sense rules for financial/business success:
1. Spend less than you earn; in fact make 10c, spend 9c. Is this not basic cashflow management. But , you see the banking system is designed exactly opposite, eg credit cards, etc.
2. If you sell something for less than it cost you, you are making a loss. The converse is true.
3. Buy low, sell high. Basically here you buy when everyone is selling, and sell when everyone is buying. Yet most people do exactly the opposite, for eg in property.
4. You should never borrow money (debt ) for expenses; you only borrow money to finance an asset. Unfortunately for expenses, refer rule 1.
5. An asset is something that puts money in your pocket; anything else is a liability (Kyosaki).
6. If you borrow to buy, makes sure the payment period is shorter than the lifetime of the item you bought.
7. Be consciously aware of the difference between needs and wants. Satisfy your needs, and subject to rule 1, indulge your wants.
8. The less you have in terms of physical things (wants), the less you have to worry about.
9. You will make mistakes; Learn from your mistakes, move on.
10. Freedom of choice. You choose not to before you start, if have started, you can change and or stop it, So if you are in an uncomfortable place. You have a choice to make.
Nothing new or mindblowing, isn’t it? Common sense precisely!
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