Strategic Thinking - vital for financial success
A frugal person practices strategic thinking. This is an approach to planning that requires you to take the long view to help win the economic war. A strategy is an overall plan or approach that encompasses a long term philosophy you're following to be successful - like frugal living.
It's important to understand the difference between a strategy and a technique or tactic. A strategy is a broad planned approach with a far reaching vision, whereas techniques and tactics are much more limited in vision and action.
You can build wealth through strategic thinking that results in a well planned approach to personal finance. You can save money along the way by implementing various money saving tips and negotiating tactics. The results of your tactics support your strategy, but they can't win the war.
Clipping coupons, shopping at sales, and being a regular saver are all tactics and techniques. Creating marketplace alternatives, buying low and selling high, becoming more self sufficient and self insured, and investing in real estate where you reside are all examples of more strategic approaches to personal finance.
Frugal individuals will think strategically as well as from a tactical standpoint. If you buy a house to live in, fix it up, then invest the appreciated value in a more expensive fixer-upper in a better neighborhood, and you keep doing this until you finally have a mansion on your hands, that's thinking strategically.
You can see that the investment in real estate is also an investment in shelter. In my mind, that makes it a strategic approach to building wealth.
If you create a business to make money, that's a good tactic. If you create a business to make money with the idea of building its value up to a point where you can sell it, then that is more of a strategic approach to creation of wealth.
Another example of strategy versus tactics is someone who invents something useful. The tactical thinker will sell the invention for a quick turn around in profit. He/she might also produce and sell the invention.
The individual who is focused on strategic thinking will sell the right to manufacture the invention, get a production guarantee from the manufacturer, make an arrangement to stay on as a paid product consultant, and sell the rights to the product in a manner that guarantees a lifetime of income.
To save money, think tactics. To create and preserve wealth, start thinking strategically.
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