How to Spend Money to
Make Money
Spending money is a skill. You can spend your money with intelligence or
stupidity. You can use money to your advantage or disadvantage.
Businesses that spend money intelligently make more profit. Their employees earn
higher salaries and their customers get better service.
Governments, especially in the USA, have a reputation for wasting money.
Millions are spent on programs that produce nothing and help no one. Money is
used to gain politician popularity instead of helping the country or its
citizens.
When you can skillfully spend money, you get richer. You use the "Bean Theory."
"The allocation paid out by Finance* to an organization or activity must BUY
SOMETHING.
"It buys more funds back from the activity than it paid out and it buys the
production of that activity.
"Finance is best understood as a COMMODITY* in terms of beans.
"So many beans issued to an activity and so many more beans back." -- L. Ron
Hubbard
(*Finance: The part of the organization that manages money.) (*Commodity: An
item that is bought, sold or traded.)
In other words, you look at your cash as a bunch of beans. You trade those beans
in such a way that you get more beans than you started with. You use your
spending to enhance your income.
Three Forms of Transportation
You need transportation to get to work. You can ride the bus for $65 per month,
buy a 2002 Saturn for $10,000 or buy a 1966 $35,000 Austin-Healey sports car in
mint condition. Which fits the Bean Theory best?
The bus is cheapest, but you arrive for work in a bad mood. You wait for the bus
in the rain for 10 minutes and if the bus makes lots of stops that day. After a
30-minute ordeal, you arrive for work 10 minutes late.
With the Saturn, you only need 10 minutes to get to work and arrive on time. The
car never breaks down if you maintain it. The maintenance and parts are
inexpensive. The gas mileage is excellent.
The Austin-Healey looks gorgeous. New paint, new engine, new tires. Everyone at
work stands around admiring your car. But a week after you buy it, it breaks
down on your way to work. You waste two hours getting a tow truck and a ride to
work. Only a few mechanics can fix it, so you have no transportation for two
weeks. You pay $2,000 for repairs. You also pay more for insurance.
Which car is best for your Bean Theory? Which will help you earn the most money?
What if you had another transportation need. For example, you needed a car to
take wealthy people around town to look at buildings for sale. What type of car
would make you the most money? Probably a large four-door Mercedes or Cadillac,
right? What if you were a carpenter or a brick mason?
Bean Theory Examples
You buy a $2500 stereo system with a credit card. The stereo system makes you no
money. It loses value over time. You pay $2000 in interest over five years
before you pay off the credit card debt. For 4500 beans, you get no beans back
and have an asset worth 1200 beans.
You buy a small, old house. You pay $25,000 as a down payment and a home loan
for $75,000. You invest $25,000 in upgrades and repairs. You pay $13,000 in
interest during the three years. You sell the house after three years for
$160,000. So for 25,000 beans for the down payment, 25,000 in repairs and 13,000
beans in loan interest, you get 85,000 beans after the loan is paid off. You
also lived in the house for three years which would run about $12,000 per year.
Total profit of 97,000 beans.
If you own a business, some of employees' pay may be good Bean Theory
application. For example, they do more than expected and add to the life of the
business. Other employees do less than you need and suck everyone down to their
unhappy existence. They are not a good investment of beans.
Your business activities can also be good or bad Bean Theory. For example, an
auto shop may find their auto paint department returns five beans for every bean
paid into it. But their muffler department only returns one bean for each two
beans it receives. The owners must invest more beans into the paint department
and less on mufflers until the muffler department straightens itself out.
Good Bean Theory application includes business tools, equipment, computers,
office furniture, efficient work spaces and so on. Spending beans to find the
best employees, train employees and pay your highest producers top wages are
also good investments.
Bad Bean Theory applications may include original paintings for your office,
expensive carpets in the waiting area, wild unproven ideas, exotic "business"
trips for you and your family, unearned bonuses to buddies, golf club
memberships and so on.
Perhaps the best Bean Theory application of all is investing beans in yourself.
Money and time spent to improve your knowledge or improve your control pay off
tremendously over the long term.
Application
Go through your spending records, such as your checkbook register, and decide
which are good Bean Theory expenditures and which are not.
For example, you might decide you have too much insurance or pay too much for
entertainment for the return you receive. You might find the money you spend on
computer classes have paid off ten times while your yoga classes have not helped
you at all.
Money for junk food is rarely a good investment. A health club membership might
or might not pay off, depending on how often you work out. Money for business
books often gives you more beans back while expensive newsletters on investments
may be money down the drain.
Money for electricity, water and gas may be vital as no beans are possible
without them. Yet money for a huge new home with a million-dollar view that
consumes two-thirds of your pay in loan interest will probably not give you more
beans than you pay.
If you only invest more beans into the things that return extra beans, you
improve your financial condition.
Beans can be other things besides money. Time and energy are beans you spend all
day long. Some of these beans give you money, time and energy. Other things
waste these beans.
Before spending your beans, ask yourself, "Will this expenditure return more
beans than I'm spending?" If yes, go for it! If no, don't. If you are not sure,
find out or run a cheap test first.
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