Our actions provide the clothes for our thoughts. The implication is clear: good thinking leads to good actions/behaviour; faulty thinking is the basis of faulty actions/behaviour. I have observed after many years of teaching and counselling that almost every faulty action is based on some faulty thinking pattern. The faulty thinking pattern may be due to ignorance, misinformation or wrong assumptions. In this article, I want to highlight a few of such thought patterns in the handling of personal finance.

I will start saving/investing when I start earning more money . Closely associated with this thought pattern is I'll start saving someday . I will paraphrase what Jesus said in Luke 16:10 - He who saves/invests when he earns little will save/invest when he earns much; and he who does not save/invest when he earns little will not save/invest when he earns much . The British historian and author Cyril Northcote Parkinson became renowned as the formulator of "Parkinson's Law," the satiric dictum that "Work expands to fill the time available for its completion". Parkinson later devised a second law, "Expenditure rises to meet income". How true! As your pay increases, so does your taste. Saving should be a habit developed without making an excuse. The best time to start saving and investing was many years ago. Cheer up. The next best time is NOW. Procrastination is a great robber. Remember someday is not one of the days of the week.

It's so little. How can it amount to much? I might as well spend it. This thought pattern stems from ignorance of the power of compounding. Imagine this for a moment. Your grandfather left you a choice in his will either i). a N1million cheque or ii) a magical N1 coin that is doubled every week for six months. You have 5 seconds to decide. (Please pause and make a decision). When I posed this question to my audience at a recent speaking engagement, a significant number opted for the former. A Naira that doubles every week amounts to N67,108,863 after 26 weeks. John D Rockefeller once called compound interest the eighth wonder of the world . N100 invested monthly at an annual rate of 10% yields N20,484 after 10years; N75,937 after 20 years; N226,049 after 30 years. N1,000 saved monthly at an annual interest rate of 10% yields N204,845 after 10 years; N759,369 after 20 years; N2,260,488 after 30 years. Little becomes much over time. Thanks to the power of compound interest.

I am what I drive or own . Societal and peer pressures and a poor wobbly self image make you think that the vehicle you drive makes a statement about you – such statements include he's arrived , she's loaded or A poor struggling fellow . The truth is that what you drive has absolutely nothing to do with your value or self worth. May I suggest you read The Millionaire Next Door by Thomas J Stanley and William D Danko. You are not the car you drive. You are not the clothes you wear. You are not the wristwatch you put on. One's life does not consist in the abundance of the things one possesses. A car is a piece of metal and rubber and you are in God's image and likeness. Your worth should derive from that image.

I will rely on my pensions when I retire . Nigerian newspapers have carried stories of those who have died on pension queues. Many are retired and their gratuities have not been paid. The government (at federal, state and local levels) cannot be relied upon to look after you in old age. Even private sector organisations cannot be trusted (Remember Robert Maxwell, the millionaire newspaper publisher, who raided his companies pension fund in the UK a few years ago). It is important you develop financial intelligence. Reading about personal finance and investment and taking action can deliver you.

I'll borrow to buy that “ & Co” (wearing of similar attires at a party). Robert Kiyosaki best-selling author of Rich Dad, Poor Dad has succinctly said that a major problem for many people is to understand the difference between a liability and an asset. An asset puts money in your pocket. A liability takes money from your pockets. Many expenditures (such as naming, burial (and wedding!!!) ceremonies take money from one's pocket. Borrowing to finance a liability is one of the mistakes Dan Benson highlighted in his 12 Stupid Mistakes People Make With Their Money . N150,000 invested at 10% will yield N1,110,037 in 21 years. I wonder if a cheque of that amount presented to one's child at his 21 st birthday would be preferable to a naming ceremony that cost N150,000. It's just a thought!

I lack a university degree necessary to be a high-income earner . Only one of the ten richest men in the world has a university degree. A few of them dropped out of the university. A friend of mine turned 61 recently. He is widely travelled. He funded his children's education to university level. In partial retirement, he supports a couple in the UK. His investments in shares and properties are intimidating. They have been aided by the power of compound interest in the last three decades. I still learn a few investment techniques from him. And he is a “mere” carpenter. What are you making - excuse or progress? A university degree is good but you can learn many things informally. You do not need a certificate to be educated or to be a high-income earner.