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08 September 2023

4 reasons why financial atrophy persist.

Merriam Webster defines atrophy as a decrease in size or wasting away of a body part or tissue. This is the basic biological definition of atrophy but atrophy can also occur in finance.

Financial atrophy is the decrease in size or wasting away of one’s financial resources due to ignorance and a lack of financial education. This is also a money sickness in a way and can only be cured through proper financial diagnosis and prescription.

Today we will take a look at what causes financial atrophy and how it manifest in the life’s of people.

When you know the root cause of financial atrophy then it becomes easy to deal with the issue and not only the symptoms.

  • Financial malnutrition

You can develop financial atrophy when you are deficient in financial information. Accounting is the language of finance, while finance is the language of business. To understand finance the only thing you need to know is addition, subtraction, division and multiplication, basic arithmetic that anyone can grasp.  

When you add up all your revenue and subtract from all your expenses, the difference becomes your gain or loss, therefore to increase your earnings, your revenue has to be more than your expenses. The surplus is what you put aside for reinvestment and growth.

However a lack of this basic understanding of how this arithmetic applies to your personal finance is what leads to financial atrophy.

Your salary forms part of your income from all sources. To achieve financial surplus what you need to do is to reduce your expenses by spending money on things that you need and bring you value, not on liabilities.

By the same breath, you may increase your revenue by scaling your work or business 10X to achieve a form of leverage in the marketplace. In order words you can multiply your contribution in the marketplace.

  • Lack of fiscal activity

You can overcome financial atrophy by participating in the money game, making money is a numbers game and those who actively play the game are rewarded. You will be paid in direct relation to your contribution.

 Neglect in playing the money game by resisting financial literacy will only lead to financial lack. The human body suffers atrophy when it does not engage in physical activity, so too with money.

Any financial asset left idle will rot physically, depreciate and lose value over time, money loves to go on errands, as soldiers they love to go to war every day and bring back more prisoners. It is the nature of money to always seek expression in one form or another, if you don’t intelligently keep them active the will seek expression somewhere else and in the hands of those who know how to put them to productive use.

  • Inflation

Inflation is the thief of money, it corrodes the value of money over time, especially when this financial resource is disused and not utilized in such a manner that can outpace inflation.

Inflation is the enemy of your money. Whenever the general price of goods and services rises, your unit of currency buys fewer and fewer goods or services thereby reducing your purchasing power and your ability to fully stretch the value of your labour.

It puts a limit on how much you can purchase with your unit of currency at any period.

Currency not put to productive use, will eventually lose its purchasing power and gradually suffer reduction in value and go into financial atrophy.

Whatever you do not put to good economic use within time changes form and location. Money is a form of energy that can neither be created nor destroyed, it can only change form. They can develop wings and fly away.

  • Financial genetics

These are habits or beliefs you may have picked up you’re your environment, mostly from family and society. These beliefs are self-limiting and self-defeating.

These self-limiting beliefs may be holding you back and until you cast down this strong hold, I am afraid there will be no financial progress.

These strong beliefs affect the human mind and have crippled many strong and hardworking people.

It manifest as fake life and ultimately poverty. Poverty is a curse that is self-inflicted.

It is a product of fear and misinformation and it is the number cause of financial atrophy. Nothing happens without a cause.

If there one chief cause of financial atrophy then it is the sickness of the mind, called poverty.

Financial atrophy as poverty is a type of trauma that sometimes is passed from one generation to another.

As a man thinketh so he is.

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