Tag Archives: Save money

Secrets To Financial Freedom

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You work very hard. Day in. Day out.

Yet, you could not yield the results you want – which is to achieve financial freedom.

Today, I’m gonna share with you the secrets to financial freedom.

Create Your Networth Target

Creating a budget never really makes sense to me in the first place.

I went through many online material that talks about budgeting & yet, they continue talking about cutting spending & never really got to the core of budgeting.

Whilst it is a no-brainer to cut down spending, I was clueless as to how much is considered a good budget.

I was directionless.

Then I discovered how important net-worth is and how helpful it is when it comes to creating a budget.

Basically, you need to come up with a targeted net-worth & how long you’d think it requires to reach that target.

Once you have a target, all you need now is to reverse engineer that figure into tangible numbers using simple math – giving you an idea how much you need to save every month and so on.

In a nutshell, let’s say you’re aiming to reach a networth of $100,000 in 3 years. This means you need to make $2777.77 every month.

This is where you decide where to cut your expenses or how much money are you short from achieving the figure. It all comes down to simple math.

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Apply The 50/30/20 Rule In Budget

I’ve also talked about this rule.

For those who are not familiar, the 50/30/20 rule was introduced as guidelines to how much you should spend based on needs, wants & savings

Although this is a good place to start, I believe there should be some tweaks depending on where you are today.

In short, I believe the rule should be re-introduced as 40/10/50 – where savings should be the priority, so you can add more money into investment later on.

If you want to know more about it, check out my other article where I discussed this in details.

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Seek Wise Men/Women For Advise On Investment

This is the toughest topic to talk to you about.

Honestly speaking, there is no such thing as an investment that fits all.

Different investment has different settings, different mentality and so on – which can be challenging if you’re not used to the environment.

My experience tells me that the best person to talk to about investment are those whom you have personal relationship with – who have gone through the experience from becoming poor to wealthy.

Gaining their insight is valuable as it gives you first hand lessons, mistakes & failures that you can avoid in the future which is priceless.

Then, once you’re certain – you can go all in.

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Improve Tax Awareness

You have no idea how much money you can save by starting to listen to your accountant.

Credited accountants are able to tell you exactly how and where to spend in order to get the best tax reliefs, or tax reductions.

Getting tax reliefs is always great – so maximize its uses.

If you run a company, it’s even better. You can gain more tax reliefs under company spending.

So go talk to a credited accountant now before that next tax declaration dateline.

My Final Two Cent

If you’re clueless as to where to begin, then, seek advice from wise men or women. Take note every single thing they share with you – even if you disagree with some of the ideas.

Always keep in mind, the best entrepreneur are the ones who are open-minded and do not have answer to every question.

Let me know what you think about the article in the comment below.

Don’t forget to Execute

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Why I Disagree With 50/30/20 Rule In Budgeting

What’s up future millionaires? I’m gonna share with you the reasons why I don’t like the 50/30/20 Rule.

For those who are not familiar with it, the 50/30/20 rule represents how much you need to spend based on needs, wants & savings respectively.

While it is good that people are finally taking more care of their personal finances with this rule, I feel there needs to be more adjustment.

Create 40/10/50 Budget

I personally don’t like the idea of the 50/30/20 Rule.

The ’50’ needs should be reduced, for example, try staying in a cheaper apartment, or rent out a room in your house to reduce your monthly installment.

My personal view is that the 30 wants also needs to be reduced. Avoid from spending on luxury goods – or try to reduce spending at least. Sacrifice today so you can leave a better life tomorrow.

Instead, add more into the savings/investment. This increases from 20 to 50 giving you a lot of cushion for investment and money for emergency.

Therefore, I feel the 50/30/20 rule should be re-introduced as 40/10/50 instead.

When I was in my mid-20s, I worked while doing my studies. Even then, I managed to save up to 80% or sometimes more from my income. Most of that savings are put into investment. I could do this back then since I didn’t have much commitments. That was about 10 years ago.

The reason I’m sharing this is demonstrate to you that the Rule is also time dependent. If you’re a single bachelor, it’s always the best idea to put more money into savings/investment since there aren’t much monthly commitments for you to make.

My Final Two Cent

My final two cent? Don’t get too caught up with the 50/30/20 Rule. Use it as your guideline. My rule of thumb, try your best to have higher percentage for savings/investment.

I know not able to spend money on your wants sounds terrifying after hard days of work.

But this is only temporarily till you can live on dividends alone – which you can loosen up the strict spending then.

Let me know in the comment section below if you feel otherwise. Cheers.

Why Making Money Is Actually Boring? The Truth

I know what you are thinking. Who in their mind get bored when making money?

These days, I’m seeing a lot of people aspiring to become rich but not willing to hear what they should hear.

At the end, these people ended up listening to many of these so-called business gurus offering online classes worth thousands dollars ended up disappointed.

The reality is you need to do what every successful people in the entire of mankind’s history has been doing, which is to SAVE MONEY!

By now, I’m sure many of you clicked to not read this article further – not wanting to face reality.

Honestly, saving money is the key to becoming and remain wealthy.

No matter how much you make, if you still fail to save money, you’ll eventually become not wealthy.

Don’t believe it?

Just look at the number of business people, celebrities and athletes who made millions of dollars in their prime; yet despite all of the money, they still ended up in bankruptcy.

SO HOW TO SAVE?

“Not Wasting Money Is The Best Way to Save Money.” – Mokokoma Mokhonoana

Saving money alone is not efficient if you want to become wealthy. You need to devise a plan. A budget plan. This allows you to have clearer picture of where your money should be spent and where not to.

Budget plan does not help you solving your financial problems, it helps you see the problems!

Below is a simple process to create a budget:

  • Create Your Networth Target – Create where you’d like your total networth be within a dateline. E.g. You aim a total of $500,000 within next 5 years. This means you need to make $8333 each month. This is where you start creating a budget.
  • Budget – With a target, creating budget becomes easier. This is where you need to look at your personal finances. Start looking at expenses and cut whatever is necessary. Try to be as lean as possible in your spending. Then, look at your income and determine how much more you need to make money in order to make that $8333 per month. When you’re able to see where you are today in the aspect of wealth and how far are you away from reaching that target, your money awareness is heightened. This is the ‘awareness’ that every individual needs to help them save money.

Obviously, there’s more to it in devising a financial budget – but it would be a very long article to write about, something which I look forward to writing in the future.

Remember! Budget plan does not help you solving your financial problems, it helps you see the problems!

That’s it for today. Let me know in comment section of what you think about the article.

 

 

 

 

 

How The Rich Spend Their Money And Why You Should Start Doing It Too

Is it true that the rich spends differently than poor people?

The answer is Yes.

Today, I’m gonna share with you how the rich people spend their money and why you should do it too.

Poor People

Lets start with how poor people spends their money.

For poor people, when they receive their paycheque, lets say at $10,000 for demonstration purpose, they’ll immediately use the money to pay off their monthly bills.

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$5,000 into paying things which are necessary.

$4,000 into buying things they want.

$1,000 into savings (if lucky).

So whats wrong with this?

At the end of every month, poor people often ends with networth of about $1,000 if lucky.

This is what the line ‘Live paycheque to paycheque’ means.

Successful People

Successful people, on the other hand, when they receive their paycheque, spends differently.

Firstly, successful people have different philosophy when it comes to money management.

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They’ll put aside 30% for monthly commitments such as mortgages, car loans, etc.

And the remaining 70%, they’ll put aside for investment. Some successful people are even rumored to be able to invest up to 90% of their earned income.

0% will be put aside on things they want such as luxury goods or eating in restaurants

Once the money invested bears profits, they’ll use 10% from the dividends to buy luxury goods and so on.

In this way, their total networth remains between $6,000 – 7,000 plus dividends.

Now imagine they repeat this spending habit for years to come – this is the secret to true wealth.

My Two Cent

It’s clear, successful people spend with a long term plan in mind.

They continue to add more money into investment to be able to grow their net worth and also able to live off dividends alone

They know earned income is not permanent, therefore, don’t rely on it completely. In case of economic downturn, they’ll always have cash to rely; such as their other sources of income and savings.

On the other hand, the poor relies completely on their earned income. If they lose their jobs, they have nothing else to rely on.

Let me know what you think about the article in comment section below. I’d really like to know what you think about it

Keep grinding and hustling. Don’t forget to execute!