What do we do with that unexpected income? What do we do with that windfall? Not even the windfall, what do we do with the little extra that come our way? Do we apply the principle of delayed gratification in handling the extra income?
The response or lack of response on the part of many to Peter Obi’s suggestion that the Paris Club refund being shared by the State Governments ought to be dedicated in part or full to savings for the future speaks to our attitude to the unexpected income.
We can think back to the Udoji Arrears of the 1970s. Udoji & co had recommended civil service reforms with the adjustment in salary and allowances only being one leg. But all was seemingly lost to the windfall that came the way of public servants in terms of the arrears.
Many of our Fathers and Mothers ploughed the bounty into all forms of conspicuous consumption. Those who could not buy cars went for motorcycles. Those who could not afford those went for Television sets, Refrigerators and all that. There was no culture of delayed gratification. The unexpected income was generally put into a change in lifestyle and wild consumption of foreign goods.
Not much has changed over the years in our private and public lives. Windfall from rise in oil price was wasted by successive governments. No thought about setting a certain benchmark of what to be consumed today with anything above that set aside for the future. We have entrenched the culture of eating with both hands.
What do we do with the 13th month salary paid by some organisations? People retire and are paid hefty sum as gratuity and golden handshake, what do we do with it? Lock it up in dead assets? Commit them into wasting assets? Put them into liabilities?
Parkinson’s law says that as the supply of a resource increases, so does the demand of that same resource. In the sense here, often with a rise in income comes an increase in expense, sometimes in greater proportion. So, with an increase in salary, lifestyle changes immediately kick in, effectively nullifying gains that might have come on account of increase in income.
As it is with Nigeria so is it with many of us. We immediately capture the increased or extra income for spending. Yet we did not die when we had to make do with lower income.
Speaking to a group of Journalists on entrepreneurship last year, I remember telling them of the need to treat that little income that come in the ‘brown envelope’ as unexpected income that ought not to be spent at the nkwobi joint but put into savings or investment vehicle.
What do we do with the extra income that come our way? Save, Spend or Invest?
– Olorunfemi is a respected journalist and author