“Necessity is the Mother of Invention”. This proverb is apt for the scenario that I am just about to describe.
Most, if not all have faced a shortage of money, at some point in our lives. In modern times, without adequate money, we feel deprived and lost. Deprived because we are unable to fulfill many of our needs and certainly all our wants. Lost because the task of managing money seems so daunting. So, we wonder if there is something that will help us out of this predicament.
Fortunately, we find something of use when we peer into the history of human accomplishments. After World War II, Japan was an impoverished nation and its industry was in the doldrums. Toyota Motor Company of Japan, that became the world’s largest producer of cars 10 years ago, was struggling to make even a small number of cars about 70 years ago and was finding it difficult to make both ends meet. It wanted to cut down staff since it was unable to pay wages. Rarely, you would find an example of a strike by workers in Japanese history, but Toyota workers struck work in April 1950. But, this scarcity of funds made human minds like that of Taiichi Ohno and his teacher Dr. Shigeo Shingo invents a new Lean process called the Toyota Production System (TPS). This new Lean process has revolutionized Toyota, other automobile manufacturers, and their suppliers, in Japan and elsewhere in the past nearly seven decades. So much so that application of Lean concepts in the rest of manufacturing as well as in the service industry worldwide is now all-pervasive.
What does this mean to us, for managing our money? Can we manage money using the Lean process?
Of course, the Lean process was developed for the automobile industry and then adapted for manufacturing and services industries. But, the central concept of Lean is avoidance of waste and creation of value for the customer, which is what we need to do when money is scarce. In this case, we are the customer and we can control the waste, if we know how to. So, how do we do it?
You can do it yourself, in 3 careful steps namely:
- Understand your money behaviour i.e., what is your attitude towards money and based on your mind set (and behaviour) what would work for you?
- Work out a plan for yourself that will enable you to work towards your financial goals by removing waste and adding value.
- Periodically review your progress and improve the plan.
Just like all else, managing money is a skill and can be learned. All our working lives, we have trained ourselves to be goal oriented, both in our official and personal lives.
The same process and principles can be applied to managing money as well the benefits of which transcend way beyond our financial wellbeing!