Four Box Strategy – If follow this, then you NEVER worry of Economic slowdown

The whole world is currently fearing due to economic slowdown. Salaried worried about their salary and businessman worried about their business slowdown and future growth. In such a situation, the concept called “Four Box Strategy” is a wonderful economic strategy to understand and implement.

Our NEEDS are CHEAP but WANTS are COSTLY

Current lock down teached one good lesson to all of us that our basic needs which we are spending during these lock down days are damn cheap. They hardly cost our income. But it was our wants which used to be costly for us. Our outing, dining out, spending on unnecessary cloths or habits used to cost us.

Many of our basic needs are at damn cheap. But in search of HAPPINESS, we are doing many things which are costing us more. At first, we are unable to define what is HAPPINESS. Because of this, we are on constant spree of spending money to find the happiness. However, the result is the more you are spending, the more you are turning unhappiness.

THE QUEST FOR FINDING THE TRUE MEANING OF HAPPINESS FAILED AND HENCE THE SPENDING IS ALSO ENDLESS. BECUASE OF THIS, OUR SEARCH FOR FINDING TRUE HAPPINESS TURNED TO BE VICIOUS CIRCLE.

Four Box Strategy – If follow this, then you NEVER worry of Economic slowdown

The problem with all these is we not thought of the source of our spending. Instead, we madly concentrating only on SPENDING. How this “Four Box Strategy” actually resolve your such fear?

The Four Box Strategy is simple to adopt and live a worry free life forever. However, to implement this, you must understand that few things are very much important to understand.

# Understanding your NEEDS

# Understanding your WANTS

# Understanding your PRIMARY INCOME

# Understanding your SECONDARY OR VARIABLE INCOME

If you define yourself on these four aspects of your life, then it is too easy to implement this Four Box Strategy. Let me share this strategy from below simple image.

Four Box Strategy

# Fixed Income-Income like salary or any other fixed-income like pension will usually be considered in this box. This box of income is completely meant for spending on your essential expenses and investing for your future. You are not going to spend a single rupee from this income on any of your lifestyle expenses or wants.

# Variable Income-It may be your yearly bonus or an income which is not GUARANTEED for you. Such income must be spent on your lifestyle expenses. By doing this, indirectly you are restricting yourself the spending habit.

# Essential Expenses (NEEDS)-Expenses of your household expenses, investment for your important goals like retirement or kids’ educational goal, insurance or loan repayments must be considered under this expense head.

# Discretionary Expenses (WANTS)-Any lifestyle expenses, entertainment, hobbies or any luxurious expenses should be considered in this box.

You are now clear that your Fixed Income must be utilized on Essential Expenses and your Variable Income must be funded to your Discretionary Expenses.

Advantages of Four Block Strategy

# You start to define what is NEED and what is WANT.

# You indirectly start the habit of budgeting and accounting.

# You try to find an answer of where you are spending a lot.

# You start to curb on your wants if there is no varible income for you.

Conclusion:-The basic idea of this Four Block Strategy is to making you aware of four things. One is what are your needs, second is what are your wants, third is what is your Fixed Income and fourth is to what are your varible income. By restricting yourself with this rule, you will try to find the source of income to fund towards your lifestyle expenses rather than spending hte same from your main income source. This really creates a freedom from worry and make sure you fund and invest properly for your rainy days in a better way.

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5 Comments

  1. Excellent !
    Wish I would have known this before. However , better late than ever

    Reply
  2. There is a liquid boundary between wants and needs in current lifestyles and peer pressure. Will it not be prudent to set ratios on your need or wants rather than boxing them

    Reply
    • Dear Rajagopalan,
      The above-explained strategy is simple and easy to implement. But you have to define what is your NEED and WANT.

      Reply
  3. VERY NICE ADVICE IN THE PRESENT CONTEXT.

    Reply

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