You probably already know about the guns and butter theory in elementary economics. But how does it apply to Wealth and Financial success management? This short article examines. Enjoy it!
The guns and butter theory in elementary economics examines how families manage the conflict between their limited incomes and their unlimited wants and needs.
Because there are unlimited needs chasing limited incomes, families must choose what needs to satisfy and which ones to forgo. There are choices always. Families must choose whether to spend on guns or to spend on butter, or whatever combination of both.
Guns refer to assets such as land, property, stocks and investments, which appreciate in value with time. Butter refers to consumables such as flashy cars, television and stereo sets, jewellery, show-off items and such other things that make you look seemingly rich, but which depreciate and lose value with time.
The guns and butter theory makes it easy for you to see that the more guns (investments) you buy, the less butter (consumption) we can enjoy today; and the more butter you buy and enjoy today, the less you have left to invest on guns. You make a choice!
If you want to have enough butter for tomorrow, then spend more on guns today, and less on butter. Spend only on butter today, and there will be no guns to protect you when tomorrow comes; as you watch your butter items depreciate, melt away and vanish with time.
If you really want to become rich and successful, invest in guns. If you want to remain poor, spend on butter. Guns will protect you, butter will not. An armed man is powerful. An unarmed man is powerless. And there is no comparison between the two. Again, the choice is yours!
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