THE WEALTH COMPASS
The intention of the wealth compass is designed to point you towards true financial success. It will align you to Abundance, Wealth and Health and eliminate scarcity.
Steve Down is a man with a cause. A wealth coach with years of experience in creating as well as educating masses on wealth creation while running his own enterprises. Drawing lessons from his entrepreneurship journey, he has authored several books on financial freedom. He introduces an intriguing concept in one of his books on budgeting through the ‘wealth compass’.
The Wealth Compass is a metaphor that conceptualizes human spending. It is either influenced by emotions or logic, emotional spending is dictated by the west direction of the campus while logical spending is purely influenced by the east direction. To learn the art of wealth creation, money has to be spent logically by investing on the East side of the compass through appreciating assets.
The West spending of the compass represents assets bought for instant gratification that would depreciate in value over the years. As an investment, this would only eat up into your savings instead of generating constant cashflow. Examples of assets in the West side of the compass are furniture, vehicles, machinery, high end accessories, couture clothing.
The general rule for money going West is conservative spending.
South spending is allocated to repetitive purchases on everyday essentials such as food, clothes, rent, water and electricity. An income rise will lead to a rise in demand, but the increase for a necessity good is less than proportional to the rise in income so the proportion of expenditure on these goods falls as income rises. South spending when compounded eventually exhorts funds going East and may ultimately consume existing appreciating assets. South spending can equally expand and exceed your income level if not cautiously looked upon
The general rule of money going to the South is prudent spending.
North spending is equal to daily financial leaks driven by impulse while sometimes influenced by indulgence. Social media has cultivated on this as you get to follow directly pages with your tastes and preferences on food to clothing thus you will fall in a bandwagon of impulse purchases that violate your budget. This can be described by random take outs and fast foods deliveries, door to door delivery fee. These extra coins may seem harmless yet, with a given amount of time amounts to a substantial amount worthy of the East wind.
The general rule for money going North is minimum spending.
The West, North and South spending of the metaphorical compass represents depreciating liability and are collectively identified as West spending. Money is purely influenced by emotions as spending goes directly to luxury goods which in Economics are regarded as goods whose demand grows more and faster than an increase of the income of potential buyers, they are often of the highest quality meant to emphasize one’s social status.
The East is where you want your compass to point. The rich ensure their compass needle indicates towards True East side of the compass. East spending dictates that money is spent on assets that appreciate in value as guided by logic. Value of the assets purchased in this category are higher than their depreciable cost based on the market demands.
The general rule for money going East is maximum spending.
The wealth compass is the emblem of Financially Fit Africa; a company based in Kenya that seeks to disrupt the marketplace through its financial literacy programs which also illustrates cause capitalism in inspiring hope, vision and direction to individual., families and businesses.
“Never be bound to a budget, be wealth bound”
— Steve Down.
