The “Pinch” Principle

There are so many ways how to save money that you can see or read through online.  Honestly, all tips seem to be legitimate and can actually work if you will really be disciplined enough to be strict when it comes to your earnings.  What I usually hear and read is once you receive your monthly salary, always get a certain amount from it that you have allotted for savings before you start paying your monthly dues not the other way around.  Savings is not the equivalent of salary minus expenses but instead, salary minus savings equals expenses.

But what really caught my attention was the “Kurot Principle” or in translation “Pinch Principle.”  Nope, you are not going to pinch yourself if you want to spend your savings for something extravagant.  The principle is way better than that.  Let me explain it to you.

If you want to buy something, something that is expensive like a new laptop or the newest smartphone or a car, of course you will check first your savings or income before purchasing right?  Let us say the new phone that you want to buy costs P40,000 and you have P500,000 in you bank account, you are definitely capable of buying the phone because P40,000 is just a “pinch” from P500,000 in your savings.  But if you only have P50,000 in your account, therefore, P40,000 is already a huge amount for you to spend.

However, if you want to buy a new smartphone that costs P40,000 but you do not have the money and instead used your credit card to buy it, that is what you call “debt.”

They say Chinese people are really good in businesses because when it comes to selling their products to their prospective customers, they do not add or increase the actual price too much.  If they bought a particular item for 50 pesos only, they are already happy if they will be able to sell it for 55 pesos.  Filipinos (and I am just sharing what I read) will add up to 100% from the original price but will spend the entire amount for something that is not that beneficial.

Here is another story or scenario that I want to share.  A Filipino and a Chinese both put up the same cart business.  They spent the same amount in building the business.  After one month, both of them have gotten back their investment with earnings of P50,000.  The Chinese did was took P20,000 from it and put it in the bank and the remaining P30,000 used it in expanding his business like adding more products or creating colorful and attractive logos to catch the customers’ attention.  On the other hand, the Filipino used the entire P50,000 to buy a new phone.

Another month has passed, both of them again gained or earned P80,000 from their business.  The Chinese put the P50,000 to his account (with now a total of P70,000 savings), used the P10,000 to buy a smartphone where he can use for his business and the remaining amount to expand again his business.  While the Filipino, used all of his earnings in buying more material stuff like a new entertainment system or an expensive part for his car.

After 6 months, the Filipino cart closed down but the Chinese cart is no longer a cart but a small eatery.  We should really know how to manage our money and invest it wisely if we want to earn more and live comfortably in life.

 

 

 

The following two tabs change content below.

Tuffy

I love writing about almost anything. I started writing frequently when I became a contributor for online restaurant guides three years ago.

6 thoughts on “The “Pinch” Principle”

  1. That Chinese Principle is what I am adopting myself into with the business that I am about to start. Money ois in getting a client to buy more with just a little mark up. So, I get to earn in bulk orders.

    Reply
  2. That’s agood business tactic, to gain even a little for an item, but one can gain much if he sold it in bulk. Also in savings, one has to earn a little each day, but it would sum up to something big in a month.

    Reply
  3. ouch.. why did you pinch me. LOL. However this is sooooo true, although

    I better hold my piece… I might offend people.

    Reply

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.