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      Love and Protect Your Wealth 0

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Wealth Management, The Simple Rules

No, you do not need a doctorate in wealth management or financial planning to do well financially. Learning all the rules of game but not playing your cards right forfeits all you have.

We do have all the skills we need to play our cards right. And there’s alot to learn from your family and friends. From the people that I interact with, I’ve learnt that some behaviour, though sometimes repulsive can be put to good use when dealing with wealth.

Guard your wealth, the way your kid guards his toys (repulsive behaviour?)
Yes, they say sharing is kind, is what we should practise. I’d say it doesn’t apply to wealth. Well, unless you have too much of it, like Bill Gates, then yes, please share with the less fortunate. If you don’t even have enough for yourself, guard your wealth like how your kid guards his new robot. The bottom line is, have enough for yourself first, then decide on how much to share. Being overly generous makes you look like an idiot in wealth management and hurts your savings significantly over time. So, guard it till the day you have more than enough to share.

Love your wealth, the way you love your wife
Loving your wife means you try your best to keep her by your side (the same goes for your wealth?), by spending time on it, nurturing it day after day. Yes, you need to spend time on your wealth (otherwise, how do you manage it? Got it?) Spend some time, say every 2 weeks, to go through your financials. Always be up to date on your financial status.

Know how much you are earning, spending, including your savings, liabilities, loans etc… Keep a spreadsheet so you can plot a graph for it when you need it. Nonetheless, love your wealth and make sure nobody meddles with it, unless you say so.

      Living within your Means 0

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Adopt a lifestyle you can afford

The average amount that a person spends in a month is mostly based on his lifestyle and spending habits. A guy with a simple lifestyle (takes public transport to work, eats at fast food joints and only spends on what he needs) would most probably spend less than one who drives an BMW to work, eats at classy restaurants and lives an extravagant lifestyle.

So what kicks off an unaffordable lifestyle?

Little rewards, Big leakage
Many of us enjoy showering ourselves with “little” rewards, like taking a taxi when you think it’s late or there are too many people on the bus, or splurging on a sumptuous meal after working overtime for a week. We tell ourselves that we don’t do it often anyway, so it’s probably okay. But, silently, all these are creeping into our lifestyle and making it a habit. Soon, we find that we are spending much more than we should and we can hardly pinpoint the leakage of wealth!

Peer Pressure
Yes, your friends are doing really well, they are getting houses and cars and wearing diamonds that you need to pawn your underwear to afford. And no, you do not need to compare your financial status with your friends. If your friends can afford that extravagant lifestyle, so be it. You do not need to follow their footsteps or compete to see who has a bigger house, bigger car and bigger diamonds. These are not going to see you through your retirement. If your friends are spending so much on these, they most probably don’t have much left to save for their retirement? So, never be pressured by friends or salesmen to commit on items that are going to cost you dearly. Live within your means and have the last laugh when you retire at 40 and see them slog till 60 with that big house, rusty car and yellowish diamond!

So how do you live within your means?

First, jot down your gross salary (the amount you bring home each month). Then, list down your expenses below it. List them in detail, like house loan repayment - $500, groceries - $300, electricity bill - $200, not unknown lump sums under a miscellaneous category. If you are unsure where your money is draining to, it’s okay. Draw up a worksheet like those Excel spreadsheets, and fill in tomorrow’s date. For a month, diligently record down your expenses. Yes, every SINGLE day. This is the only way to spot your wealth leakage.

After a month, tally your income and expenses. If you are spending more than 80% of your paycheck, you are definitely spending too much! You should save at least 30% of your income as a guideline. From your expenses worksheet, spot your wealth leakages and eradicate them. They are most probably luxurious items or multiple “little” rewards. Don’t fool yourself by consoling yourself that it’s just this month that you overspent - because it’s your wife’s birthday and you had to get that diamond ring for her, or oh, you had to buy that plasma TV that you’ve been eyeing for so long and it’s on sale. Well, next month it would be your grandma’s birthday and the following would be your wedding anniversary. What next?

Every little pleasure you indulge in and every impulsive costly purchase builds up on your expenditure and kills your budget. Always pay yourself (that 30% you need to save) first, then allocate your remaining budget and live within it!

The 3 Golden Rules
1. Know how much you earn and how much you can afford to spend each month. If you can’t even work this out, how ould you know you overspent? And on what?

2. Do not get influenced into getting big ticket items. If the salesman tells you the item is only on sale today, that you’ll miss the offer tomorrow and you have to make a decision immediately, say NO. If you can’t make up your mind at any oint of time, always say NO.

3. Pay yourself (for savings) first, then allocate the remaining amount for expenses. Balance your lifestyle and live strictly within that budget.

Otherwise, you’ll never have the last laugh. Most probably you’ll be the last to laugh.

      Cents and Sensibility 0

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Be sensible when dealing with coins

When I was younger, I used to think that coins are worthless, that I wouldn’t be able to buy anything with those few cents. Most of the time, I would waste them on little items like candies or snacks. It never occurred to me that if I had lots of coins, it could be a significant sum too.

The pure existence of the “piggy bank” (those coin boxes that looks like pig) suggests that someone intended for us to save the coins as well? “Piggy banks” have its roots tied to kids saving up their coins for rainy day. So why can’t an adult do the same? Not literally using a “piggy bank” maybe, but its the same idea I guess.

There’s a computer fraud called the salami method where a person (usually a computer programmer in a bank) rounds off a fraction of the cents to his own account. You wouldn’t notice the difference of $128.43 and $128.41, would you? Yes, 2 cents isn’t much, you can’t even get a sweet nowadays. But, what if he was siphoning from hundreds of thousands of accounts? Let’s do some mathemathics. Say he siphons from 500,000 accounts, 2 cents a month. Well, he would be getting $10,000 a month! This shows the importance of cents!

Start Saving your coins
I keep an empty can (Yah, those Campbell soup cans will do) for my coins. I have a coin pouch that I use when I’m out, to keep the coins I get during the day. After each day, I come back and empty the coins into my can. You will be amazed how fast the can fills up!

What next?
Once the can reaches the brim, pour them all out and start counting them! See how much you have saved! Bank in the coins along with your monthly savings. Do not splurge them on unnecessary items thinking those are extra cash. Keep them for your savings!

The 3 Golden Rules

1. Don’t waste your coins on small unnecessary items.

2. Get an empty can/coin box. Save your coins in it. Do not empty it until it’s full!

3. Once full, bank them into your savings account. Do not splurge them on anything!

I wouldn’t encourage you to keep several cans of coins just because you are too busy (or lazy) to bank them into your account. Keeping that extra cash in a can/coin box instead of your bank account means you are forgoing the interest that it would have generated (no matter how little it may be).