How Do i handle my money? – part 4

Welcome to the fourth part of how to handle my money? If you haven’t already ready the first 3 parts, please do so by navigating to the right side-bar , under “popular stuff” ^^

So in this fourth series, I would like to start on the theme of “paying oneself first”. Now what does that mean?

You see, every time we receive our allowance or salary, who do we pay? lets look at it

we pay..

 

the hawker, the barber, the technician , the entertainment stores . etc . But do we ever pay ourselves? Hardly, every cent that goes into our left hand, is paid to others from our right hand. Even if we do “save” up some money, we eventually spend it on something “big”.

Ultimately, none of the money we get ever stays with us.

So you may ask, why do we need to pay ourselves? The answer is simple, we cannot always be exchanging time for money. or for some, we simply do not want to change time for money. Let’s look at the typical mindset of modern day typical citizen..

Time <—> Money <—> Spend

This formula gets us stuck, because once we dont have time  ,we dont have money and we dont have money to spend ?!

That’s not what we want… If we expect to live a life of greater quality , we need to build momentum towards that goal, we have to slowly eliminate exchanging time for money, so we can spend time on more meaningful things.. Eventually, we hope to achieve the following

Money ----> More Money ---> Spend

Simply put, we let our money make us money. I know this may sound “idealistic” , but let me paint you a very simple picture ,(please note that this takes TIME), you save enough money to buy a bungalow , but instead of buying one bungalow, you bought 2 HDB flats, one for rent and one for personal stay.

You have effectively make your money work for you, because your cash is generating cash for you! Every month you get rental (automatically) without doing anything! now isnt that wonderful?

I know this is a very simplistic concept, so let me share with you something more substantial – something I just came across today.

I came across the opening of a cafe with a brand new concept and solid business model, in the opening, the senior consultant of the cafe mention that anyone interested could buy the “preference” shares for the cafe and would be entitled to monthly returns (as such is the nature of a preference share). At the end of 90 months (approx 8 years) , you would earn about 3 times what you put in, amazing? the best part, in this 90 months, you do not need to do anything.

Although you may think its “too good to be true”, to be honest, the company would’ve used this 90 months to gain leverage on the cash you put in and earned more than 3 times its original value – feel free to skip this part if you do not understand.

So part 4 of this series is simple – if you want to live a life of abundance and one that gives you more freedom , more time and more “life” , start paying yourself today. It doesn’t matter how small the amount is, start somewhere, and make sure you never spend this money on anything else other than making it work for you (not applicable to emergency cases).

Pay Yourself First

How Do i handle my money – part 3

If you havent already read the first two series of this , please do so :

 part 1

part 2

Alright today I am going to talk about the one thing most people dont do when it comes to their money , and that’s taking action. The first series taught us the “why” we should save, the second series taught us the “how" , now in the third series I would like to encourage you to take action!

Taking Action Is Imperative To a Good Financial Health

So here’s a list of actions I would recommend you take to work towards your financial health

1. Plan your savings
2. Records your savings
3. Be generous
4. Set one day a week to reward yourself for doing well the entire week
5. Ask questions actively – on how to have better financial health
6. Save on the soft drinks – better health too
7. Bring your own lunch to work
8. Work out at home instead of at gym
9. Sleep early
10. Engage in sports – that’s free

So thats 10 steps for you…

got a step for our readers? leave a comment and share with us!

How Do I Handle My Money? – Part 2

Hi all ^^ If you haven’t already read part 1 of this series , please do so here.

This series of “How Do I Handle My Money” is to share with you my experience in effectively handling my money and the joys you can get by implementing these simple steps ^^

Before I go on to the actual strategy ,I would like to emphasis something

 

“$ management is a long term investment , it takes time and effort to build up good money habits and reap the rewards later – it’s not a “quick fix”

So if you are reading this , expecting it to solve your money problems instantly – you will be disappointed.

Okay , on to actual practical strategies !

Strategy 1) Plan & Record Your Spendings

What do I mean by plan your spendings? That means sitting down and actually gauge how much you need to spend on a monthly basis .

To do this, I would like you to grab a pen and paper now, and write down the answers to the following questions , do it now!

 

Q1) What are the things I must spend on a monthly basis? (transport? meals?)

Q2) What are the things I splurge on a monthly basis? (nike apparels, billabong wallets)

Now do it ! Don’t wait..!

Okay, now that you have a list of items you spend on, next step would be to write down next to each item in your list how much you are currently spending on that item

Example:

Meals - S$ 200 / month

Transport - S$58 / month (concession + etc)

Games - S$ 30 / month

“But I don’t know how much I am spending on each item =X ”

That my friends, is one of the causes of you always not having enough to spend!

But it’s okay, whether you are able to write down how much you spend or not, we can move on to the next step

The next step is to record your spendings.

What I would introduce people to do is to record their spendings in this manner:

Use your list (in step 1 – Plan your spendings) to complement your records.

What do I mean by this?

Everytime you record a spending, it should fall nicely into one of the items in your list , example:

Description	Item Type	Amount
Chicken Rice	Meals	S$ 2.50
Top Up Ez-link	Transport	S$ 10.00
Nike Shoes	Luxury	S$ 159.95

You get the idea ^^ So at the end of every month, you would’ve know how much you spend in each category

Remember,

“If you fail to plan for success, then you’re planning for failure”

You’re probably asking, okay yu song, so what’s my first step now?

Where Should I Start? :

I’ve say start by

Recording your spendings on a daily-basis (make this a habit for life) – it takes only 5 mins per day

Start to plan your spendings simultaneously.

Do it NOW!

Part 3 coming up , next week ^^

How Do I Handle My Money? – Part 1

I am half-writing this to remind myself about the importance of proper finance management ( ability to handle money) and half writing this to suggest a way of handling money to all my readers.

There are many questions shrouding the mystery of handling one’s cash and one’s ever elusive conquest to master his money.

Before I go on to the actual strategy of handling cash, perhaps a fitting question to ask is

 

“Why Should I Learn How To Handle My Money?”

I am going to list out some benefits here

1. You will never be in a situation where you need to borrow – to survive
2. You will have the money to buy the stuff you want – besides your needs
3. You will be able to provide for your family with point 1. and point 2.

These are just some immediate benefits you’ll see , there are other long term factors as well.

So alot of people at this point of time will say

“I Already Don’t Have Enough Money To Spend , How Can I Save?!”

Bingo! It’s precisely because you don’t have enough to spend, that’s why you must save!

When I first started having my own money, I also fell into the trap of never having enough to spend! And when I needed something (think ipod , computers) , I found that I have no money to pay for it ! How disappointing!

However, now I often have enough to spend and often can “splurge” money on some “luxury” items ^^

Let’s examine this together, let me use a metaphor here, let’s say the roof has holes and when it rains the roof leaks. What do you do ? Repair the roof or wait for it to rain then start sweeping?

I think the answer is obvious – repair your roof. In the same way, the cause of having not enough to spend is improper money management. Hence , if you want to have money to spend you need to start managing your money well – by saving first.

“Ok So I Start Saving For The Things I Want To Buy?”

Yes and No.

Yes , because it’s the the better way to buy the stuff you want

No , because if you spend all your savings on the stuff you want, then you’re back to zero again – and this does not solve the long term problem of money.

There is a way to manage your money such that you’ll be able to both save for the things you want and solve the issue of money in long term.

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I’ll leave you to ponder about what I’ve just written =)

Keep checking back at this blog to find out how you can manage your money in such a way that it can solve money issues in the long term!