What’s the wisest thing to do to make sure you never run out of water in your house?
Will you haul buckets as you need water, or have a pipeline system that connects your house to the water source?
This simple analogy, if well thought about, is enough for us to comprehend the basics of personal finance. Money they say doesn’t come with a user manual. In the modern world, almost everything rests on money. It is the most-spoken language of exchange and transaction. More than this, money is the wlanguage of comfort and luxury that man craves for. Thinking of water as money, who will have more between the one who has to go out to get a fixed pay every time? Or the one has built a system (a business, investment, e.t.c.). A question we can also ask here is;
Where is money?
Or should I say, where does money reside?
In the Bank?
Maybe, but not totally.
Money actually resides with people. The more people we can meet their wants or needs, the more
money we have. Getting the water into your house using a pipeline system is no joke; it requires hard work, a lot of time, and patience. Unlike, hauling buckets to the stream, when you can just take some kegs or buckets and you have water for some time before fetching another. So is money, building a business or investment is no child’s play, it requires more hard work than to be fixedly paid 12 times a year. The day you are not fetching is the day you are not taking your bath. So the times you don’t work, are times you don’t have money.
Hauling buckets or building a pipeline is a story I first read in one of Robert Kiyosaki’s book; Cashflow Quadrant. It’s a story of a village in need of easily accessible water. So they sought for people who will help supply water to the village. Of the bids received, Eden and Hazard were awarded the contract individually, to make supply. (I use Eden and Hazard to replace the original names used in the story, which I can’t remember presently).
Eden quickly hit the ground running. He started supply immediately. He bought buckets and would go to the river to fetch water into the village. He worked hard every day to meet demands, and was making a lot of money. He would wake up very early to make water available for morning needs and would also fetch in the evening when people would have returned from work, and would need water for domestic chores. Business was booming for Eden. Soon, he bought more buckets, and employed workers. He enjoyed the market alone, because Hazard was yet to start business. Although, Eden couldn’t meet daily demand totally.
Hazard was nowhere to be found. The chiefs and the villagers were worried. They had deliberately awarded the contracts to both of them, so they could enjoy maximum water supply and good pricing as a result of the competition. The village was getting worried with Eden’s monopoly.
For 6 months, Hazards was yet to start supply. Hazard had been an example of the popular quote that if given 6 hours to cut a tree, 4hours should be used to sharpen the sword. Immediately after being awarded the contract, Hazard knew what he wanted to do, and the kind of business model he wanted to run. He knew people would not only need water in the morning and evening alone but every time. He also knew they wanted clean, quality and affordable one. More so, that water should also be in abundance. He knew hauling buckets won’t get him there. So he contracted a construction company to help build a pipeline from the river to the village.
Hazard had spent the past six months sealing agreements with different partners involved with the projects including Banks, and the only thing left is consent of the village. He explained his idea to the chiefs and it enjoyed a consensus acceptance and approval. Soon, the project began.
It took another 6months before the project was completed. Hazard could then start supplying water, but he started in style. The King commissioned the project, and the first supply was made to the King’s Palace. The water was fresher, cleaner, and cheaper than Eden’s. Moreso, Hazard could supply each household its water demand for a week. Hazard’s water gained a massive market acceptability, and more than that, new business opportunities arrived. The villagers needed containers to store water, since it’s now in abundance. So, Hazard started importing plastic drums to the village, which can contain more water than traditional pots. The neighbouring villages also started demanding for Hazard’s water. This meant Hazard needed expansion.
Eden on the other hand was getting frustrated. He was losing his customers, and workers too. He tried selling at Hazard’s price, but was running at loss. The few sales he made was from people of the neighbouring village, and he knew soon, Hazard’s water would get there.
How much will be okay to cater for your needs, your wants, and that of your family. Does your work have the capability to cater for you for a long period of time, even without necessarily “working”? Understanding the pipeline principle, is key to appreciate that, to always have resources to meet our desires, there must be a pipe that connects the source and our own pockets. Usually, such pipes are businesses and investments.
Whether we haul buckets, or build a pipeline, we’ll all have money, but not in same proportion. The choice is ours to make. To need to work all the time for a fixed pay, or to make some early sacrifices, build a business or an investment portfolio, and sleep as the bank account rises. The choice again is ours, we are the CEOs of our lives.
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