How to save a dollar...

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Countryboy
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How to save a dollar...

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Next: how to save a dollar...
Whenever I hear folks talking about saving money, I am reminded of something Allen said in his diary years ago that stuck with me.

You can not save yourself into having a fortune. You must first earn your fortune before you have anything to save. (For folks that don't understand, keep in mind that there are limits to reducing costs, but potential gains are unlimited.)

Whenever folks say they saved X amount of money, I am often tempted (but usually hold my tongue) to ask if their bank account grew by X amount. If not, then they didn't save anything.

Savings are what is left over when you produce more than you consume. Reducing costs isn't saving money. It's holding onto your savings. But they are only savings as long as you hold onto them. The moment you spend them, your savings are gone.

I have some relatives who are major cheapskates, and will spend every last penny they have buying "bargains". (often worthless junk) They will gladly tell you how much money they saved, when all their "savings" got spent.

The easiest way to save a dollar is to stick it back into your pocket if you are tempted to spend it on something.
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Re: How to save a dollar...

Unread post by Allen Dick »

Although one cannot save one's way into a fortune, spending carefully can make a big difference.

One strong factor in favour of being careful with money when buying and consuming is that there is no tax on the money you save, whereas income and purchases are taxed. So a penny saved is as much as three pennies earned, especially where a person is heavily taxed.

When we buy something for $100, say, we have to earn that $100. Income taxes may vary from zero to 50% or more depending on income and jurisdiction, and sales taxes may vary from zero to 30% in some regions. There is also some cost to earning in terms of time, travel, clothing, risks, restaurant meals, gifts, etc. Saving money by not spending, by price comparison, or waiting for sales does not necessarily require any increased travel or investment.

Therefore, to buy a $100 item, worst case, some people must earn as much as $300!

On the other hand, if the $100 item is bought for $50, then only $150 must be earned and actually $150 in earnings is saved.
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Re: How to save a dollar...

Unread post by Vance G »

Your logic is compelling but of little satisfaction to the guy who hasn't already made the dollars and was known to Benjamin Franklin. It is like the old comedy scetch where you were told how to live on the interest off a million dollars. Then when he had your attention, he flipped off, "First! Get a million dollars! As a man no longer making any money and living off what I have saved, I have decided it is all about burn rate. My heirs are doing well enough not to need it or in a couple cases, won't be benefitted by a windfall on my death.
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Re: How to save a dollar...

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In the simplest terms if you want to save a dollar avoid the tax man. The feds take your money and offer very little in return. We’ve all heard about the proverbial $600 screen doors on submarines however I don’t believe any of us have heard any government spending our tax money wisely. I really don’t care what side of the border you’re on or what your country is called “governments waste money” because they do not have to work for it, at most they have to come up with a new bogus tax.

While I believe most of the active posters in this forum are small businesses or at least understand the ability to write something off against the earnings. Ultimately I think this is the easiest way to save money. It does generally does require an accountant to keep you out of trouble. It does go to prove the adage you need to spend money to make money; this adage needs the additional phrase you need to spend money to keep from giving it away for nothing. I personally do not enjoy the governments knowing how deep my pockets are because ultimately they want to turn my pockets inside out to find out whether or not I’m a Bush bunny or at Jack rabbit :lol: . My viewpoint could be tainted because my family could prove that accountants have a genetic gene :(  Really at the end of the day do not give your money to anyone else without receiving fair value for it is the easiest way to save a buck.

For me I would love to figure out a way of writing off all my bee related expenses it would probably save me a couple of grand in taxes. However there is no business case that I can come up with that the feds would believe or I would believe for that matter that would allow me to write off my hobby.
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Re: How to save a dollar...

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You have missed the gist of what I was saying. What many people call "saving money" is NOT saving money. It is reducing costs.

There is only one way, and one way only, to save money. You don't spend it. The moment you spend it, the savings are gone.

Reducing costs may help you to save money, but reducing costs is not saving money.

If you go shopping with $100, and every item you buy is 50% off, and you spend that whole $100...you did NOT save $100. You spent $100, and have no savings left.
One strong factor in favour of being careful with money when buying and consuming is that there is no tax on the money you save, whereas income and purchases are taxed. So a penny saved is as much as three pennies earned, especially where a person is heavily taxed.
Please forgive my skepticism, but I have never heard of a 300% tax.
In the simplest terms if you want to save a dollar avoid the tax man. The feds take your money and offer very little in return.
I'm not familiar with Canadian taxation. Here in America, the federal income tax is more accurately described as a tax on federal income. The income tax is a tax on federal privilege, measured by the dollars you receive by exercising that federal privilege. Only about 10% of Americans have federally privileged earnings. If your earnings are not federally privileged, you are not liable for the tax. (unless you lie and say your earnings were federally privileged, or someone else lies and says they paid you federally privileged money, and you don't rebut their lies.)

Historically for many hundreds, if not thousands of years, if you were charged more than a 10% tax you simply moved to a new jurisdiction with lower taxes. 10% was the standard tax. Any more than that, and the peasants got restless.
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Re: How to save a dollar...

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What many people call "saving money" is NOT saving money. It is reducing costs.
This is a tricky subject. As with the word, "inflation", there are a number of valid uses of the term, 'savings', and the meaning depends on the context.
Please forgive my skepticism, but I have never heard of a 300% tax.
Neither have I. Where did that idea come from?

Income taxes in England and other countries have approached 100% for the highest income brackets at times. That is why the Beatles wrote "Taxman".

Another concept that we often ignore is "disposable income". Each person has a base cost of living. What is left, if anything, after those expenses are met is "disposable income" and it is typically a small fraction of total income. This is the money left for discretionary expenses like entertainment, luxuries, charity, etc. -- and savings.

Any savings (alternate meaning) in the basic living costs goes directly to disposal income and this a 10% saving (alternate meaning) in living costs can mean a huge percentage increase in disposable income.

Example: Gross income is $30,000. Living costs are $27,000. Thus disposable income is $3,000.

Save 10% on living costs and that adds $2,700 to disposable income, increasing it by 90%!

Increasing disposable income by the same percentage by earning would require more than a $2,700 increase in earnings because earnings are taxed.

Of course those 'savings' could go into a 'savings' account and become the other kind of saving, too.
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Re: How to save a dollar...

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This is a tricky subject. As with the word, "inflation", there are a number of valid uses of the term, 'savings', and the meaning depends on the context.
I still consider the proper definition of inflation to be an increase in the money supply. It trickles down to higher consumer prices.
Please forgive my skepticism, but I have never heard of a 300% tax.


Neither have I. Where did that idea come from?
"So a penny saved is as much as three pennies earned, especially where a person is heavily taxed." is where I got that. On second thought, I guess 3 pennies comparable to one penny saved could be a 66% tax.

I think you are confusing disposable income with discretionary income. Disposable income is what remains after taxes. Discretionary income is what you have left after taxes and costs of living are taken out.

You are on the right track, but reducing expenses does not automatically give you more money saved. If you reduce expenses, but still spend every dollar of income, then you have saved nothing.

I've never had a budget. In my teens, I worked 48 hours a week and went to school. As soon as I got out of school, I started working a part-time and a full-time job. That turned into 2 full-time jobs, plus chasing a girl. I fell asleep driving, and had a bad auto accident. While I was recuperating, I took a mail order course on successful investing and money management.

The closest I came to a budget was giving myself a cash allowance of something like $175 a week. At the end of the week, any money remaining in my wallet was put in an envelope. At the end of the month, the money in the envelope was used to pay rent and utility bills. As I earned more money, I did bump up the weekly allowance. After a few years, I think I was up to $225 a week. By then, the habits were already developed, and the envelope became more of a pain than it was worth. The most I ever paid for rent over 15+ years was $300 a month.

I was always frugal, but I never started saving money until I stopped smoking and stopped buying tools. (I was always buying tools. Mechanic tools, woodworking tools, machine shop tools, welders, etc.)

You're not saving money when you reduce expenses. You save money when you stop spending it.
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Re: How to save a dollar...

Unread post by Biermann »

I remember going to the coffee shop some 30 years ago and have to say that the comments their were like what is voiced here. :roll:

What I miss is something about bees, not much coming anymore, guess all bees and -keepers are in winter(ing) mode.

Cheers, I hope for the spring.

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Re: How to save a dollar...

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I think you are confusing disposable income with discretionary income. Disposable income is what remains after taxes. Discretionary income is what you have left after taxes and costs of living are taken out.
Yes. You are right. I interchanged them. Good catch. First time I ever made a mistake in anything. It will not happen again.
I still consider the proper definition of inflation to be an increase in the money supply. It trickles down to higher consumer prices.
You are not alone in considering that -- monetary inflation -- to be the only valid definition, however the word is widely used by both laymen and economists to describe a number of phenomena, including price inflation.

In fact, there are several valid uses of the unmodified word, "inflation" and although they are somewhat correlated, there is no fixed (or predictable) direct relationship in either magnitude or timing. For clarity, one should really specify which 'inflation' it is that is being discussed, however users often leave it to the reader to ascertain the meaning from the context, and many use the word quite loosely.

Although inflating the money supply -- monetary inflation -- should theoretically lead to price inflation, that does not necessary occur in lockstep if there is similar growth in GDP and/or the velocity of money drops, as M1 and M2 have been, drastically, throughout the recent decade, and as MZM has been since 1980. http://www.economicgreenfield.com/2015/ ... y-30-2015/

The massive monetary inflation created by the desperate throwing of money out of helicopters (various bailouts and QEs) has barely held the deflation caused by dropping velocity at bay, and inflation is essential to keep debts from rolling back over governments, businesses and consumers all of whom find themselves at 'peak debt'.

The fact that most of the helicopter money seems to have landed on Wall Street and not Main Street might explain why these measures have not reignited velocity.

The following is (falsely) attributed to Jefferson, but is worth consideration in todays world of Currency Wars and QE 1,2,3...
"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered...I believe that banking institutions are more dangerous to our liberties than standing armies... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
As it happens, as I arrived home last night I just finished listening to the entire nine hours and fifty-five minutes of Jim Rickards' "Currency Wars". http://www.audible.com/pd/Nonfiction/Cu ... B006IWAWCA

IMO the whole matter of money is a fascinating and imponderable topic. It seems that although Rickards is an astute observer, he has no sure solution to prevent the inevitable train-wreck ahead.
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Re: How to save a dollar...

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What I miss is something about bees, not much coming anymore, guess all bees and -keepers are in winter(ing) mode.
Sorry about that. What can we say about bees? I looked at the ABC convention program and although my friends were there and some were on the speakers list, I could not convince myself to go.

Maybe I am an old fogey, but it seems to me there is nothing new in managing bees. Only the politics changes.

We have spent millions on bee research and as far as I can see basic beekeeping is still basic beekeeping.

The only news I am hearing is that Amitraz is losing effectiveness, and that is old news. Fortunately, Amitraz efficacy fades slowly and efficacy returns fairly quickly after Amitraz is not used for a while.

Of course, there is the flap about Small Hive Beetle. IMO, SHB is as big a worry here as wax moth. We see wax moth from time to time, but it always goes away over winter and any damage to combs stored in the cold is minimal.

Scuttlebutt has it that SHB has been seen in Alberta a number of times, but never officially. A recent search for SHB in Alberta hives turned up nothing.
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Re: How to save a dollar...

Unread post by PeterP »

Since this thread seems like a meeting around the coffee machine, I'll join in.

Buying something because it is a deal when you don't need it is no deal and saves nothing.

We get paid for three things and only three things;

1) labour
2) knowledge
3) risk.

Beekeeping involves a lot of labour, a lot of knowledge, and a lot of risk therefore it should be easy to find a way to make money.

Regards Peter
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Re: How to save a dollar...

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Beekeeping involves a lot of labour, a lot of knowledge, and a lot of risk therefore it should be easy to find a way to make money.
Some people do make a lot of money in bees. One reason that many do not is that they insist on doing things the way they think they should be done instead of copying a beekeeper who obviously is doing well.

Successful commercial beekeeping is not necessarily 'good' beekeeping. To be successful, it has to be good business first.
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Re: How to save a dollar...

Unread post by Allen Dick »

What was lost in the discussion, I think was that I was not suggesting looking through the fliers to find' savings', then going out and buying things you did not know you needed -- or even wanted.

My point was that if you know you are going to use a case of toilet paper a year, then instead of running down to the convenience store when you run out at ten PM, rather go to Costco and buy a case before you need it.

Instead of buying a roast on the day you have company, if you see a good roast for two thirds of what you expect to pay, buy it and freeze it until you need it.

Those savings if I am allowed to use the word mean that you buy when you are on site anyhow and only spend a fraction of what you would otherwise. The difference is value you effectively 'earned' and nobody can tax it.
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Re: How to save a dollar...

Unread post by PeterP »

Allen, I see your savings from buying low and in quantity as investments. You are using your knowledge of prices and taking a risk you will actually use the goods. You are also betting they won't be cheaper in the short term. I don't buy some things at Costco, even though the price is cheaper, because the quantities may spoil before I use it.

Money in the bank is not saving, it is a low risk investment paying about .6%, unless you have locked it up at a higher return.

Regards Peter
PS I buy TP by the case at Costco. I do not buy it 10 cases at a time even though I think it would pay better then my savings account because I am willing to forego the profit and keep the storage space.
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Re: How to save a dollar...

Unread post by Allen Dick »

Actually. rather than saving in dollars in a bank, I am saving in toilet paper in my closet. Who do I trust mere -- my closet or the bank? No comment.

In some places, toilet paper is used as currency, and for that matter, some say the US dollar is actually turning into toilet paper, having lost 90% of its value over the past century.

Some say it takes a government to take a valuable commodity like paper, slap some ink on to it and make it worthless. No comment, but I see we are now using plastic dollars up here in the Great White North.
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Re: How to save a dollar...

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What I miss is something about bees, not much coming anymore, guess all bees and -keepers are in winter(ing) mode.
Like Allen pointed out in a later post, financial management and having 'business sense' are every bit as important to running a successful bee operation as good beekeeping.

Here in Central Ohio, many beekeepers are saying we had the best fall flow they had ever seen.

I run single deeps in the summer. I start getting hives ready for winter the end of August. I throw a couple empty supers under the brood box, and put in Apivar. 6 weeks later when I returned to pull the old Apivar strip and do any last minute feeding, I found hives with over 100 pounds of goldenrod honey. I haven't had to do any supplemental feeding on hives to prepare for winter.

Today was probably the last nice day this year. It got up to 70. There are a couple days next week it is supposed to get in the low 60's. After that, most days will only have highs in the 50's, and keep getting colder. If you don't have hives ready for winter, you are running out of time to get it done.
First time I ever made a mistake in anything. It will not happen again.
Well, if that's the worst mistake you ever make, I'd say you are set pretty good.
As it happens, as I arrived home last night I just finished listening to the entire nine hours and fifty-five minutes of Jim Rickards' "Currency Wars".
I also think Jim Rickards is worth paying attention to, even if I don't agree 100% with him on everything.

His new book is "The Death of Money."
Buying something because it is a deal when you don't need it is no deal and saves nothing.
Not always. A good friend of mine's brother is what old timers would call a 'horse trader'. He is always wheeling and dealing.
As Steve has said on numerous occasions, "Something bought right is already half sold."

I've bought a lot of stuff I didn't need, and would never use...simply because it was a deal...and then I resold it.
Beekeeping involves a lot of labour, a lot of knowledge, and a lot of risk therefore it should be easy to find a way to make money.
Risk is called risk for a reason. There are more ways to lose money with bees than to make money with bees.

And old joke...
I've heard there is a lot of money in bees.
Yeah, but the hard part is getting it back out of them.
Those savings if I am allowed to use the word mean that you buy when you are on site anyhow and only spend a fraction of what you would otherwise. The difference is value you effectively 'earned' and nobody can tax it.
You are on the right track. You have reduced your costs, but you still haven't quite "saved" the money yet. If you spend the value you "earned" on another purchase, then you never realized those savings. In order to save the money, you have to reduce your costs, and then not spend the money on another purchase.

If you are able to get $5 off that roast you are buying, and then spend that $5 on increased consumption and treat yourself to snacks and a pop at the gas station, then you have not saved any money.
I don't buy some things at Costco, even though the price is cheaper, because the quantities may spoil before I use it.

PS I buy TP by the case at Costco. I do not buy it 10 cases at a time even though I think it would pay better then my savings account because I am willing to forego the profit and keep the storage space.
My grandparents were raised during the Depression. They stockpiled stuff. They probably had 20 or 30 cases each of TP and paper towels. The mice had a heyday. Believe it or not, TP can spoil if you buy too much and put it in storage for decades.

My grandparents also stockpiled sugar. They had bags of sugar with coupons on the bags that expired back in the 70's. I think some of the bags were even older than that, but we had no way of dating the bags to know how old they were. And yes, mice got into those bags too. (But I inherited those sugar bags to use for bee feed.)
Money in the bank is not saving, it is a low risk investment paying about .6%, unless you have locked it up at a higher return.
Don't forget to factor in the cost of inflation. Money in the bank usually pays less than 0.6%.

You can't overlook opportunity cost though. The person who can make the deal gets the deal. (A quote from a self-made millionaire I know.) You can't take advantage of bargains if you don't have the cash to make the deal happen.
Some say it takes a government to take a valuable commodity like paper, slap some ink on to it and make it worthless.
Even when it is worthless, it still isn't worthless.

Back during the hyperinflation of the Weimar Republic (Germany) people would burn bundles of money in their furnaces. Burning bundles of money was cheaper than burning firewood or coal.

I do agree with Jim Rickards that folks should put some money in physical gold and silver that is in their immediate possession, as a way of saving money. I do not view gold coins as an investment - it is a way of saving money.
For the past few thousand years you could buy a very nice suit of clothes for an ounce of gold....or 400 loaves of bread...about the same amount of goods or services that an ounce of gold will buy you today.
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Re: How to save a dollar...

Unread post by Charlie »

This is a thread that I was going to stay out of however with everything that's been written I need to throw my two cents worth in.

If I may the whole conversation and subjective! You cannot possibly come up with one set of rules to cover all situations. I for example I think it's a good idea to buy tools at PrincessAuto at 50% off if I think I'm going to need them in the next five years. As an example this week I bought a pipe wrench Kit for $12.50 Canadian and for my pennies I got 1-12 inch pipe wrench, 2-14 inch pipe wrenches and 1-18 inch pipe wrench. At the moment I have no need for a pipe wrench or in the foreseeable future but for $12.50; I will roll the dice because I'm sure before I push up daisies I will be glad that I payed $12.50 for four pipe wrenches. The price of these wrenches are only going to escalate in the future and while I'm only gaining 1% interest on my money at the bank I still think it's a good deal. I was in PrincessAuto anyway so there's no extra time, no extra mileage, no extra gas and no inconvenience and yeah I am confident that at some point in the future I will need a pipe wrench and will be very glad that I do not need to drive out to the store and pay some horrendous retail fee to get the job done.


A really good deal is something that is on sale that you know we're going to use in the future. To save 50% today on a tool that I may not need for five years that will cost 50% more in five years has just save me of something like 75% if you don't include the couple of percent that I would've gained from the bank.

Each situation is different, each event is different and I don't believe there's any hard and fast rules to save a buck. With one exception: the best way to save a buck is to make sure you gets value for every buck you spend". Because prices on only going to go up in the future I believe they called it inflation and inflation always outstrips the percentage of money that you can gain from interest bank.

Spending something that you'll never user need is a complete waste of money. Spending something at a good discount for something that has a high probability that you will use in the future is a good deal. In the corporate world cost avoidance is considered saving money. To stock up on chicken breasts agt 25% off and you have room in your freezer saves A buck. Spending money unnecessarily is always a waste of money.

No two people or no to corporations are ever going to save money the same way just as one size fits all is never going to FIT anybody at all. The sharing of ideas is what is important keeping in mind that sometimes The idea Will work and sometimes It won't.

However if you want to save "a buck" the gas Buddy "APP" is worth the download. Yesterday it gave me an alert the gas was expected to go up six cents a liter roughly 24 cents a gallon and I filled up. Sure enough today the gas a jump $.06-$.07 a liter depending where you were. For our US friends multiplied by four and change the liter to gallon. It is not exact but close enough for conversational purposes.

Never give the feds one penny more then you have to regardless of what country you're in. Because we all know the can waste it somehow.
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Re: How to save a dollar...

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well said Countryboy !!!
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Re: How to save a dollar...

Unread post by Allen Dick »

His new book is "The Death of Money."
I have that one, too, but have not listened to it yet. I wonder if it is just the same book over again, said differently. He was running out of gas at the end of the last one. There is only so much to say on the topic.

As for buying things, I have had a rule to always have something to show for money spent. That rule has served me well, but maybe too well. I have a lot of stuff to get rid of. The consumables and services I have purchased over the years have not piled up the way the items I bought have.

George Carlin Talks About "Stuff"
https://www.youtube.com/watch?v=MvgN5gCuLac
Allen Dick, RR#1 Swalwell, Alberta, Canada T0M 1Y0
51° 33'39.64"N 113°18'52.45"W
http://www.honeybeeworld.com/Allen%27s%20Beehives.kmz
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Countryboy
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Posts: 605
Joined: November 8th, 2010, 9:37 pm
Location: Central Ohio
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Re: How to save a dollar...

Unread post by Countryboy »

As for buying things, I have had a rule to always have something to show for money spent.
That's a good rule to follow, but you can still end up with junk, I mean stuff, that you don't really need or use.

A rule I have tried to follow is to buy stuff that can make me money, or help save me money by reducing costs.

We've talked about reducing costs to help us save money. Let's talk about the other half of the equation, which people often overlook. They concentrate on trying to reduce costs, thinking they are saving money, but they ignore how to make money. They have the employee mindset that earnings are a fixed amount, when in reality, income can be just as variable as costs.

There are only 4 ways in which wealth is created. Agriculture, mining/extraction, forestry, and fishing. This is often known as the primary economy.

The secondary economy is manufacturing, ie the value added processes.
The tertiary economy is services, anything from trucking and retail sales to maids.
The quaternary economy is the knowledge based stuff, such as R&D, education, consulting, etc.

Our bees produce honey and wax. This is the primary economy.
When we strain and bottle the honey, we are engaging in the secondary economy.
When we deliver a case of bottled honey to a store, or rent hives for pollination, we are engaging in the tertiary economy.
When we breed queens, do our formal and informal studies of beekeeping aspects, teach beekeeping classes or instructional videos, etc. we are in the quaternary economy.

Even though the primary economy is where wealth is actually created, producers usually get paid peanuts compared to prices further down the line. If we want to make better money, we need to find ways of advancing our beekeeping business economy. If we bottle and do wholesale or retail sales, we will make more money than selling in barrels to a packer. Ohio's largest honey producer no longer sells to packers. He sells all his honey to beekeepers who can sell more honey than they can produce. He buckets a lot of his honey, and sells buckets for $3 a pound instead of barrels at $2 a pound. These are the kinds of things we need to do, rather than allowing ourselves to be limited to being a low cost producer.

The more advanced we build our beekeeping business economy, (diversification) the better we can weather any economic storms that may face us.
B. Farmer Honey
Central Ohio
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