When it comes to improving your financial outlook, you might want to look at an excavator as a good example of how to move forward. There are so many financial variables out there that can confuse. I spent years in business school learning about discount rates, interest rates, annuities, debits, credits, taxes, etc. In the confusing cloud of financial terms, if you dig to the foundation, there are two variables that everything else is built on.
I have done some work on mini excavators and they are amazing tools. There are 2 basic handles that control the machine. You sit in the seat, and there is no steering wheel. There are just 2 handles. The right handle controls the right track, and the left handle controls the left track. If you want to move the machine forward, you push the two handles forward. If you push the right handle more than the left, you will start turning to the left. If you push only the right one forward, you will go in a circle. If you pull the left handle back while pushing the right one forward, you’ll spin in a circle, going nowhere.
It’s the same model for finance. You have 2 handles that you can control. (Hopefully you can control them!)
In the book, Rick tells Shawn about Thrift and Industry. He says that if there is ever a financial question, he can flip a coin and decide between Thrift and Industry. If the coin comes up ‘heads,’ that means you need to use your head and figure out how to spend less. If it comes up tails, that means you need to get off your tail and get out there and work. The 2nd variable is Industry.
Just like the track hoe, if you push both Thrift and Industry forward, you’ll start cruising forward. And just like the track hoe, if you only push Industry forward, you’ll turn the other direction and will end up going in circles. You can earn all the money in the world, but if you don’t exercise Thrift, you’ll never get anywhere with it. Likewise, you can be the most thrifty, stingy person in the world, but if you don’t have any income generated, you’ll not go anywhere.
The 3rd and underlying variable is Prudence. It’s important to be SMART about being industrious. You can’t just work hard. You need to work smart. And likewise, you can’t just save hard, you need to learn how to save smart.