Im writing this blog to help thousands or millions of our Kababayan to become savvy towards achieving financial success. Im writing this hindi para makiuso sa sikat na 52 Week Savings Challenge. Just to expound it even further for all of you.
Repeating it again, Saving Challenge will not make you financially successful.
Financial success does not start from learning how to start saving but rather investing in your financial Intelligence or in short invest in yourself.
Usong uso na naman ang Savings Challenge.. It is good but still very much incomplete.
Im not saying its bad cause it has helped many people saved money and was surprised how much they can accumulate in a year. Saving is only good if you have a very short financial goal such as going for a holiday, family reunion, etc.. later I will explain this further.
The concept I will share works best for people with surplus in their monthly cashflow. If you still follow 52weeks, 12months saving challenge, then you truly are being mistaken. But if your cashflow does not have a surplus, this is still good for you but first check and look for a problem. Im sure something is wrong there which is why you cannot go further ahead with your goals. What you need to do first is good budgeting and allocation to have a surplus then you can follow this concept I will share.
What am I saying is saving alone will not make you rich and financially successful. Have you met a successful person who becomes successful just by saving money in the bank (you just make the bank richer, you remain poor), under the bed or putting it inside the vault? I bet none.
If you think you have, how do you define financially successful?
There are so much more at play... Simply adding INFLATION in the equation makes your money lose in value.. the longer it is, the bigger the drop in value. Your savings interests given by the bank wont be enough to cover for inflation. TRUST ME.
Inflation, simply erodes the value of your money. You and I feel it. We are aware but most of us do not act. Go back 10years ago, how much can you buy with a P1,000 bill in your hand comparing to today's value. The value shrank quite a lot right? That's inflation right there.
Guys, let me just share my thoughts and learnings about personal finance from different studies. I will tackle more about cashflow.
Let me share to you the 4 Vital Money Allocation I have been using to make my cashflow stronger and healthier every year.
I will not share with you how to become a mega rich person like those business tycoons or what Robert Kiyosaki teaches us to be like to become financially successful. Im not very rich but I follow financial planning in a balanced portfolio to just simply have a balanced life, enjoying family with my kids soon, good retirement as planned, and have a wealth to leave my children and the next generation. In short a comfortable happy life with lesser stress. Same goes to some of my clients I shared with.
(1) Emergency Fund
(2) Insurance
(3) Investments
(4) Chocolates
EMERGENCY FUNDS
-this is one of the most important foundation of your salary. Alxways remember that it is not accumulated for illnesses or accidents to pay the hospital.. yes, you can use it only for partial liquidity but it is not its main purpose.
Its main purpose is to make sure that you still have the capacity to maintain all your obligations per month even without a job. Losing a job is an urgent matter you should take seriously. Imagine you are paying a property investment and lose your job because of retrenchment. Where will you get your money to pay the loan?
Most of us who don't have emergency fund tends to borrow money from a friend that sometimes hampers other family's money. I believe you agree with me not becoming a burden to anybody else where in the first place it was our mistake not saving for this important fund. Some people tend to bring it to a higher level by borrowing money from a lending company or sometimes a bank. Without proper planning, it will hamper you greatly which might costs you more by paying interest and sometimes, can cost all your investment to stop because of this and later go back from scratch..
Can this happen? Does it happen? Absolutely! It can happen to all of us. But for my part, I have emergency fund. How about you?
How do you know how much Emergency Fund will you need? There's no definite answer to this.
In financial planning basis, if you are single and with lesser obligations, sum up all your obligations per month and multiply it to 3 to 6months.. assuming you have $1500 monthly obligations X 3months = $4,500. Then that is your fund requirement.
For married couple and for single with very high obligation level, use 6 to 12months as your basis multiply with your obligations.
I urge you to get the lowest month in computation. Like 3 months only for singles and 6 months for married couple. The logic behind is to give you a sense of urgency. Imagine having 12 months of emergency fund for couples, most of the time we tend to become lazy to look for a new job since you have all 12 months covered. Always remember, a few months of laziness affects your overall accumulation of wealth thru investment compounding.
INSURANCES
-another important funds in building your Financial backbone. Its purpose is like emergency fund but not for losing jobs and liquidity.
Its main purpose is to assure and protect all your financial goals and the reasons you invested. To assure that your plans will realised and achieved for yourself and family should you become ill or get into an accident or hospitalised. It is to protect all the investments you have accumulated to reach its desired point.
Most people avoid this vital allocation of your money simply because we think that nothing happens. Who the hell who wants to have himself hospitalised let alone be in an accident? Nobody wants to use insurance as much as possible. Even I myself dont want it. But if it happens and we are all sure it will happen we just don't know when, start thinking how prepared are you to lose all your investment, the education of your child, your retirement plans and your financial goals for yourself and family.
Imagine yourself hospitalised for few weeks due to accident or illness.. how about cancer, heart attack, stroke, comatose, etc... have you ever thought what can happen to all your investments, your emergency fund do you think its enough where it is only computed based on monthly obligations?
If this happens and with all your investments like stocks and mutual funds will be withdrawn prematurely causing you to lose more. Your property, because of non payment of loans will most likely be taken away by the bank. It is painful to just think that all major financial plans will go to zero and sometimes affects your family as well.
Assess yourself, why did you buy those investments? Im sure you have goals... but all those might be taken away from you. Many people experienced this..many rich people felt this.. why not you?
There are many types of insurances and it is not the topic of my blog so will have to do this some other time. But if you need any help do not hesitate to contact me and inquire what and the how of this.
Importantly is for you to have a cover for death, total disability, early and critical illness, hospitalisation and accidents.
INVESTMENTS AND BUSINESS OPPORTUNITY
-this is the most loved to be heard and learn by everybody. This is my 2nd most attractive allocation. This is the 3rd component where achieving your financial goals can be realised.
-it is best not to focus on this one yet without strong foundation. Even so, still allocate a portion in investing to start working your financial goals. There are many ways to do this, opportunities are so vast nowadays. The first thing you should do is to go to internet and check some available investment opportunities that suit you. It does not matter what investment you are in as long as it is inclined to your long term plans.
Do not just go into investment tool because your friend say so.. how sure are you that your friend is financially savvy in investing? Is this person credible to you? Always see that point.
In investing, first is study before you act. Do not make hasty actions because your friend tells you "its making money for me"... Guys, go back and assess yourself.. what is it you really wanted, your passion, and what you hope to accomplish as an OFW in Singapore or anywhere around the world. Always ask this question, is it inclined with my financial plans for myself and family?There’s so many to consider first and we all have different reasons. What are yours?
Many people fall to this mistake of following other people. When did you let other people decide what you want? You and that person have totally different situation. For instance, I met some people buying property because other people say so and later costs them money, time and effort. After a year of buying, they found out that its not in the best interest for the family and totally not inclined with what they really wanted to achieve in life. Please do not get me wrong, Im not saying property is bad. In fact, it is one of the best investment tool out there and its one of my favourite too. My point is most of the time you buy big things that are not inclined to you. I believe some people feel this scenario because it happened to them and some do not because in the first place, they bought it inclined to their long term financial plans.
It is important to note that there are always risks in doing investment. Rule of thumb in investing.
(1) Higher risks, potential higher return; Lower risks, lower potential return"
(2) The earlier you start, the faster you can reach your financial goals
Time flies. you start later, you regret big time.. If you started early you might be a millionaire now or multi millionaire by now..
Many people are fully aware of this yet many people still fails to act accordingly. We rush so much our investment that in the end we end up losing. I have met quite a few people who were not aware that the investment they bought has great risks and later regretting have it in the first place. If you still want to take risks in investing, make sure that it is a surplus of your cashflow. Different financial tools bring different risks.
It is important to know what is your risk profile.
Are you an adventurous type of person who can take greater risk in exchange of potential high return. Are you a cautious or balanced person who can take only minimal risk which comes with a lower potential return. Or a risk averse type person who really cannot take so much risk.
Investing should be planned long term not short term. If you are looking for an investment within 1 year, It might cost you or make more for you. But placing it long term, provides ample time for recovery, developments and more so chances of earning will be better.
Investing should not be rushed. Patience and discipline is required.
In investing, it is always important to set a specific value you wish to attain and work to reach that value. For instance, you wish to have a P10million liquid money in 10 years time. Now, you should ask yourself, what are you doing right now and what can you do right now to reach that amount. Then and there you will see what available investment tools can help you reach that level. Now you see why investment should be inclined to your goal. Reassess yourself, what do you really want then start look for potential investment tool to reach that.
There is more about investing that needs to be understood. That will come in another blog. So we go to the next important fund allocation.
CHOCOLATE
-why are you working in Singapore? We all have our reasons. But in general, we work here because we wanted bigger income right?
-guys you work very hard to make money. Dont you think its also good to pay yourself some chocolates? What do I mean with?
Chocolate means enjoyment... So have a chocolate.
This is where a portion of your money go. Short term goals accumulated in a year, then PUFF!
Go for travel. Enjoy life. See the world. Be in love. Live as you deserve it. Go out with your love ones, we don't grow old stronger, we grow weaker in body. Live life as a gift from God to see his wonders.
This is important as this will be used up for refreshment of your mind and body. This is in a way like sharpening the saw by Rick Warren, as a car driving a long road, at certain point of your travel, you should have time to take gas. In a sense get out of the hectic all future actions you are doing. It is not all about money guys. It is not all about money.
Chocolate allocation, should be lowest allocation and best to plan in a year. Saving challenge works great with this.
How is it so?
You will save regular monthly to reach your desired amount or target in a year.
Let's say you want to go to Bali, Indonesia next year and needed $1,000 for 1 week.
Now, divide it in 12 equal payment you will get $83.3 per month or weekly if you wanted to..
Before you do that, go back to basic again, make sure this is the smallest allocation since you still have to invest, ensure and build your emergency fund. It is a continuous cycle.
The bigger your income the bigger your chocolates. The faster you build your emergency, the faster you can invest more, and the bigger your chocolate again. it is a continuous cycle.it is hard for me to explain here without diagram.
I am a strong believer of delayed gratifications. But allocating a portion for chocolate will give you more sense of accomplishment, more alive and more fun.
There is a METHOD on how to play this powerfully strong... I can teach you more how.
Leave a comment, message me in my facebook page, or contact me thru 84285361.
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