Analogy of a Frog and Personal Finance

Edna B. Shearer

If you were to pick a frog and put it into shallow hot boiled water, the frog will instantly leaped from the pot and jump out to safety. However, if you were to pick up the same frog a little later and then put it into a shallow cold water, the frog will not react to it and will be comfortably be sitting there as it is a cold blooded animal. But, if you were to do experiments by heating up the cold pot with a very slow fire with the frog still sitting in it. The water will eventually rise up to 100 degrees. As any cold-blooded animal, the frog’s body will adapt to the rising heat and will adjust its blood temperature to the environment. Eventually, when the water reaches boiling point, the frog will die as a result of adapting itself to the environment without even realizing it.

So, what’s personal financing have to do with the frog story? People who started off their career start just like the frog in the shallow cold water. The money they received by the end of the month is enough to get by since their requirement for life is low. But, as your career and salary increase so does your desires and lifestyles. As you start to buy your first car, buy your first house, started to use credit cards, your lifestyle will change incrementally but not as fast as your salary increase. As same with the frog, you will not notice that you have a debt problem since the increment is not sudden. And when you realize it, it is too late and you will end up with a huge pile of debt.

There are many paths for us to achieve financial freedom, but the majority of us choose the path of job security. How can we blame them? The education system was shaped to produce workers and not entrepreneurs. Many people realized that as the company their working with starts to prosper, the owner of the company is the one who eventually benefits and the employees usually are not much richer compared to the first day they started working there. The reality is that the boss is not responsible to make you rich, but their responsibility is just to make sure you got your paycheck by the end of the month. It is your responsibility to make sure that you will end up rich and not somebody else.

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