The rich man plans for tomorrow, the poor man for today.
-Chinese Proverb

Sometimes we’re positive-minded to a fault.

I’m a strong believer in the power of a positive mental attitude and that most people would live more successful lives if they trained their minds to think on what positive things.

I also see though that we’re positive to a fault, specifically when it comes to how we view our future circumstances – especially relating to finances.

The Up’s and Down’s of an Entrepreneur

As an entrepreneur, most likely your life’s circumstances will not be a 45-degree line continuing an up-and-to-the-right hockey stick curve. Instead it will probably resemble a ride at Six Flags – up, down, up, down.

My point is often we live and plan as if it will only get better, but most likely it won’t only get better 100% of the time. It may get better and hopefully will, but there will most likely be plenty of dips along the way.

This principle can apply to many areas of life, but I’d encourage us as entrepreneurs to apply it directly to finances. Instead of basing our personal financial spending plan on the ‘good’ times, base it on the valleys.

It’s Not Natural

I remember an ancient Hebrew story (from the Bible) about a man who went from being a prisoner to second-in-command of Egypt because he had the foresight (divinely given) to plan for famine while in the midst of a season of plenty. Read the story here. But wouldn’t that just be natural – not to treat seasons of plenty as if it will last forever? Well it seems it’s not natural.

When you have a good quarter or year it’s easy to act like it’s always going to be that way, and it may, but if it isn’t, you could be in trouble with unneeded stress.

Margin or Stress?

If you base your personal financial spending on the low times, you’ll have plenty of margin in the high times. If you base it on the high times, you’ll have stress and heartache in the low times.

Margin is our friend, overextension is the enemy.

Principle: The Valley is the Baseline, not the Peak