Not So Great Personal Finance Tips From Homer Simpson
The Simpsons have been around for somewhere close to 20 years, providing most Americans with untold amounts of laughter. However, its main character Homer also passes on an important financial message in nearly every episode. The tips very often come in the form of how not to do things.
The big hearted fella always seems to be getting himself carried away when it comes to matters relating to finance. Thankfully he nearly always manages to get himself out of some situation or another, mainly from the help of others plus a little bit of luck along the way.
This blog post will attempt to take an amusing look at a few of the situations that our larger than life friend has ended up in.
Business Opportunities
Homer’s attempt at starting his very own pumpkin business ended in near disaster. One episode of the hit series saw Homer exclaim, “This year I invested big in Pumpkins.” On face vale this might not be a bad proposition. Except for the fact that our hero followed up with, “they have been going up nicely during September and October; I’ve got a feeling that they are going to hit their peak sometime around January.” Homer quickly added to the statement by saying that, “this is when I intend to cash in.”
Clearly the humor in the above passage is there for all to see. However, there is also a key message included. Study the market as much as possible before trying to invest. By taking into account the risks and associated information you will be better placed to steer clear of a potential disaster investment.
The underlying message is that one shouldn’t look at business opportunities as a get rich quick method. Very often people end up losing more than they can afford in these situations.
Understanding Cash Flow and Profitability
Another important lesson that came courtesy of Mr. Simpson was during an episode in which he decided to buy an elephant. The beast was to be used to deliver profit via elephant rides.
The conversation between Homer and Marge went a little like this:
Homer – Look at this Marge, we made $58 today and all of it is profit. I must be the best businessman in the entire world.
Marge – Not so fast Homey, its food bill was $300
Homer – Please don’t humiliate me in-front of the money, Marge.
Earlier in the episode Homer came up with the idea to raise some cash from the sale of elephant rides, for which he set the price at $2. After the first day, Marge pointed out that they didn’t have a very good business as they had lost $242. Homer was a little aggrieved at this situation and decided to increase the price of the elephant rides. Sadly for our entrepreneur, the revised price of $500 per ride saw all of his customers take their business elsewhere.
The take-away here is that when a company spends more than it earns it will of course make a loss. When this continues for a period of time it will end up going out of business. Upon Marge’s explanation of the cost of feeding the elephant, they should have pulled the plug on this business venture.
The same principles can be applied to personal financing, continuing to spend more than you earn can only result in debt. The longer that this situation carries on for the more debt you will generate. Until such a time is reached when there is a need for consolidation or a cash advance to try to straighten things out.
Understanding the Value of Money
The final lesson in this blog post surrounds our friends misunderstanding of the value of money. One episode saw him exclaim to his doting son, “Bart, if we had $10,000 we’d be millionaires!”
The above passage can be wrapped up in much of the way that Homer leads his life. Almost, if not every day he can be seen lining the pockets of his good friend Moe. These antics see him blowing a good proportion of the family’s pay check. So much so that it seems the only way out of the impending financial doom is to come up with more and more hair brained money making ideas.
