1) Allocate your monthly salary
Are you serving money by managing it or by ignoring it?
If you are ignoring it, have no financial options, live hand to mouth, are buried in debt, then you are a slave to it.If you are the slave, then it is the master.
The earn and spend cycle is a vicious one. The duel income family for the most part is not born out of necessity but out of want. Yes everything cost more "these days" but our income has for the most part kept up with inflation.
We just simply spend more money on discretionary items than we did 50 years ago. This is call the live style inflation. You start to fancy starbuck more than kopitiam coffee.
Allocate them so that your money work for you to achieve you personal aims:
10- 20% of income for protection, 30-40% for saving and investment and 50% on expenses. You won’t go wrong if you follow these. Each allocation do have it purpose and can complement each other to gain in value.
Imagine you already have:
- $1 Million coverage for protection,
- Retirement income of about $2000 to 3000 /mth or more base on the value now that can last for 20 years.
Would your life be always good, you just want to make a good life to a greater life. You won’t be really worry about what going to happen to my kids, my parents, my wife, my whatever if something happen to you, you won’t be so worry about when you are old, do you still need to work to support yourself or working is an option.
2) Cut down on spending
How much money you earn has no relationship to your wealth, is how much money you spend that is closely related to your wealth. Just an example, If Mr A earn 10k per month and spend 9k and Mr B earn 2k and spend 500. Eventually Mr B will be richer.
This is the hardest concept for people to understand as we spend our adult lives trying to earn more money. While this is not necessarily a bad thing most people really don't have much control over how much money they make. So cut down on spending so that you have more saving and will lead to your ultimate wealth.
3) Good debt and bad debt
I quote “The rich rule over the poor, and the borrower is servant to the lender.” And the most wonderful things is if you reserve your debt for appreciating assets, your assets will always be larger than your debt.
There are only 2 assets that fall into the appreciating category, real estate and businesses. –
- Businesses include both private and public companies. This means there are a whole lot of "things" that should not be purchased with borrowed money.
From Robert Kiyosaki (Rich Dad, Poor Dad) has a great quote, "the rich only buy assets, the poor only buy liabilities, and the middle class buy liabilities they think are assets".
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My definition of an asset is anything that appreciates in value over time, again only real estate and businesses qualify. Anything that depreciates over time is a liability. Using debt to purchase "liabilities" means you pay interest to own something that eventually becomes worthless.
These "liabilities" include cars, everything inside your house, and every toy in your home.
The key to increasing wealth is never borrow to purchase liabilities, and limit the purchase of all liabilities using cash.
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4) Teach your children
School don’t teach financial education at all. I think is the duty of their parents to teach them from young on these. Introduce to them how money work for you, show them dividend, interest, rent, incoming producing vehicle, and the power of compounding.
Teach them to take note of their expenses and set a goal to save a certain amount to achieve, weekly, monthly goal.
I think that the best education your kids will get for their entire life.
5) Be discipline
Discipline is in yourself. No one can ask you or stop you for spending for what is outside the plan. With no discipline, you get to no where.
6) Donate
What goes around comes around. Help the less fortunate.
Especially those earning money from trading, investment, gamble. In the market, you earn money someone lose money. If you don’t donate some out, you will find that one fine day you will buy an investment without knowing why and that will be a failure investment. Don’t make sense right. But this happen.
Donate a comfortable amount to help the poor and less fortunate. What goes around comes around.
7) Receive money that is rightfully yours
The money that is yours is yours. Money that is not yours do not try to think about it. Take what is yours and do not fancy what is not.
8) Watch your money
Inflation is a silence killer. You think by not allocating your money properly and save a lot is fine? You are silently being murdered by inflation. Do investment in real estate and business. Things like predevelopment land, unit trust investment be it lump sum or regularly, insurance policy, stocks, bonds. ( Regular investment have a higher chance of profit for a long term.)
Start early, the power of compounding work magic. Starting early can let you alter plans in life and making sure things are still in place. And can Grow a passive income, so that you can retire much earlier.
9) Learn and be open
Always learn. Learn from your investment mistakes. Learn from others mistakes. Be open to accept information, new ideas and trends.
10) Share it with your close ones and friends
When sharing it with them, you learn more. Your friends too will share with you about his experience so it becomes an information exchange. These can bridge you and your loves ones and friend relationship as there are more things to talk about.
You don’t want a situation where you are so much richer than your friend, he is jealous of you and the friendship turn sour. This too will lead to if something happen to them; they will look for you to borrow money. If you don’t lend them, you feel bad and if you lend them the money, it may delay or cancel some of your plans in life.
