If you would like to become smarter with money, you can gain tremendous insight by exploring the wisdom in our beloved Jamaican proverbs. As the saying goes, “A word to the wise is sufficient;” and a few astute adages from our rich heritage can help you to increase your financial intelligence.

One smart saying that I have heard many Jamaican old-timers use is, “Don’t hang yuh cap whey yuh cyaan reach.” In Standard English the proverb translates to, “Don’t hang your hat higher than you can reach;” and it cautions persons not to expend more than they can afford.

The concept of ‘living within your means’ is a basic principle to financial success, yet it’s one of the money rules that is easiest to break. Many people have no idea what their ‘means’ really is, so they often find it difficult to remain within the acceptable limits whenever they spend their money.

How high is your hook?

Before you make any spending decisions, you need to know how far your financial arm can reach. You need to measure just how high you can set the hook before you can hang that cap. The only way to accurately determine the extent of your spending capacity is to work with a budget.

Many people think that a budget is just a means of dividing up their income across their expenses. They will often complain that their budgets don’t work, whenever they run out of money to pay bills. However, a budget will always be right if you understand its purpose and follow the proper process.

The correct way to budget is to create a spending plan for an entire year, to find out how much you need to earn to maintain your lifestyle. A budget allows you to see if your income will be insufficient to meet your expenses, so that you can make adjustments to your earning or spending ahead of time.

If you record all the things that you need to spend on throughout the year, you will be able to judge how far your money can stretch. So, you will know that the vacation on the North Coast is not a good idea because you need to put aside those funds to pay for the car insurance or school fees.

Be realistic about your reach

If you recognise that your reach is inadequate to cover your basic requirements, then you should look at ways of expanding your earning capacity. While it’s smart to stretch yourself to improve your financial position, you also need to be practical about what you can afford to do right now.

Sometimes people will set ambitious earning objectives to meet all their needs and wants, and optimistically believe that their income wish will come true quickly. So they start to spend in line with their expectations before they actually begin to generate more income in a sustainable way.

Let’s say that you decided to join a direct marketing business to make some extra money to pay for music lessons for your child. However, it would not be prudent to enrol your child in the programme without first seeing how well the new business opportunity progresses over several months.

Being realistic about your reach can also prevent you from overextending yourself when making commitments to others. So, you don’t need to feel guilty if you can no longer afford to host dinner for the holidays this year. Just be honest with yourself and others about your financial situation.

Choose your cap wisely

If you imagine that a cap could really hold all the things you would like to buy, then you would probably select the deepest, widest one that you could find! However, many people get into financial woes because they are not content with what they have and crave more possessions.

Shopping excursions can be great retail therapy, but you need to be careful that your spending desires are not compromising your financial stability. Do you really need to buy another little black dress or brand name bag to add to your collection? Could your money be put to better use?

While the ‘more is better’ philosophy puts profits in the hands of the shopkeepers, it can take away a source of funds that should be directed to your own prosperity plans. Instead of finding pleasure in mindless shopping sprees, decide to build wealth by learning how to invest your money wisely.

When you choose to defer spending today in favour of investing for tomorrow, you can actually develop a stronger financial position. With investment income, you don’t have to be dependent solely on your earnings from work, which can help you to truly afford to live the lifestyle you desire.

Copyright © 2015 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, September 17, 2015.

DON’T MISS MY NEXT ARTICLE! CLICK BELOW TO RECEIVE IT IN YOUR EMAIL:

Cherryl is a money coach and business mentor, and founder of Financially S.M.A.R.T. Services. See more of her work at www.entrepreneursinjamaica.com and www.financiallysmart.org. Contact Cherryl