Author: akosiallan

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Life Lessons Personal Finance

How much is your time worth?

The other day I was reflecting on whether it is really all worth it giving up your time for a hefty paycheck.  After all, it does pay the bills…and more.  But if you don’t have time to enjoy any of it, does it really matter whether you have all the money in the world?

Should we just wait for our retirement to be able to enjoy the fruits of our labor?  But you say, “it’s why we have vacations throughout the year!”

Is that really the case?

Tell that to a father who has to give up attending his son’s birthday just to fix an “emergency” situation at the office.

Or to the proud mother who has to miss her daughter’s recital just so she can keep the business going during a “major” software upgrade.

Or to the countless call center agents who are on a “graveyard-shift” struggling to stay awake, feeling like zombies while listening to endless rants and complaints from angry customers on Christmas day!

Over the years, I’ve personally observed how our own personal time is being taken upside down.  There’s no such thing as a vacation anymore. Or even a holiday for that matter.  The dates to celebrate  holidays keep on changing.   Your boss allows you to have a vacation, only if you agree to be “on-call”…which literally means, you can’t go anywhere but within 100 meter radius from the office.  It doesn’t make sense.  It’s depressing, especially for a hardworking office worker who doesn’t have any choice other than quitting the job.

So, who makes the rules?  Who makes a 40-hour workweek, a 45-hour one, or even a 60-hour one?  Who says you can only take holidays only if the business doesn’t need you anymore?

Who decides how you spend your time?

Is it really you?…Or someone else.

Categories
Life Lessons Personal Finance

Multiple Stream of Income

Are you currently earning from multiple streams of income? How many income streams do you currently have?  How many ways does money come to you? 

Some people rely only on their job to earn money.  That’s their only stream of income.  The danger of having only one income source is that once you get fired the money stops and you are forced to find another way to earn money.  This is even more risky during a recession because it is harder to find another job.

Other people earn very high income using their specialized skills.  Doctors, lawyers, dentists, architects, consultants, small business owners earn a lot of money – which is good, but for some, it stops there. 

Most professionals have only one income stream – working using their specialized skill.  If they stop working, the money also stops.  When their skill becomes obsolete, they are forced to accept a reduction in pay to make money.  Or worse, to shift to another profession.

The few who are really rich in both money and time, have a different strategy. They build multiple streams of income.  They earn money through various ways.

For example, really big businesses like the SM malls of Henry Sy not only earn from you when you buy groceries from its SM supermarket, but it also earns income from the stores who are renting their mall space.  That’s creating multiple streams of income.

So what streams of income are available?  In what ways are other people earning residual income today?  Here’s a list of the many types of passive income streams from the book Multiple Streams of Income by Robert G. Allen.

  • Savers earn interest
  • Songwriters earn royalties on their songs
  • Authors earn royalties from their books and tapes
  • Insurance agents get residual business
  • Securities agents get residual sales
  • Network marketers get residual commissions
  • Actors get a piece of the action
  • Entrepreneurs get business profits
  • Franchisors get franchising fees
  • Investors get dividends, interest and appreciation
  • Visual artists get royalties from their creations
  • Software creators get royalties
  • Game designers get royalties
  • Inventors get royalties
  • Partners can get profits
  • Mailing-list owners get rental fees
  • Real estate owners can get cash flow profits
  • Retired persons can get pensions
  • Celebrity endorsers get a percentage of gross profits
  • Marketing consultants get a percentage of profit or gross revenue

Since the list was written about 10 years ago, it obviously doesn’t include how some people are now earning money online through the internet.  If I may add to the list,

  • Some bloggers earn money from every Google Adsense ad clicks on their sites
  • Popular bloggers earn money from paid advertisement on their sites
  • Online retailers earn money selling their stuffs online
  • Giant online retailers earn profits by selling other people’s stuffs online

How about you?  What can you add to the list? What additional income stream are you earning money from today?

Categories
Business Life Lessons Money Mindset Personal Finance

7 Ways to Celebrate Christmas Without Breaking Your Piggy Bank

Christmas is just around the corner.  Many of us are already planning how to spend our vacation.  Some are even singing a tune or two of their favorite Christmas carols.  Christmas in the Philippines is really special.  In fact, the season spans at least 3 months, starting in the early “ber” months of September until the misty dawns of December and even extends until the first few days of January.  What’s with the three kings and all?  🙂

With all the 13th and 14th month pays being given just before the month of December, everyone enjoys his own “extra” jolt of cash.  Suddenly, people have money to spend.  So they spend their money left and right, partying, buying gifts, busily getting into debt through the “easy monthly payments” for the brand new “ultra cool” mobile phone or flat screen TV. These expenses, if not controlled, can cause a strain on your budget even with the sudden influx of cash. Worse, after spending more money than you have, you end up needing to break your piggy bank.

 

Here are 7 ways to Celebrate Christmas Without Breaking Your Piggy Bank

1) Give your time.

Time is indeed gold.  In the world of business, it is an undeniable fact that your time is worth money.  As a contractor or employee, you get paid per hour of you time.  Your business generally earns money as long as it is open, which is also restricted by the time of your employees.  As the world becomes busier by the minute, your ability to give time is becoming more valuable more than ever.  In my opinion, your time is even more valuable than money.

So give your time.  Spend it with your family.  Take a walk.  Play outside the house.  Enjoy some time gardening.  Smell the fresh air.  Your precious time is more valuable than any gift you can ever give them this Christmas season.

2) Decorate your Christmas Tree Together

When I was growing up, we’d always decorate our Christmas tree together.  Most of the time, we’d use indigenous materials as decoration.  We would use white soap for a snow.  We would pick up stones and wrap them up as candies and hung them under the Christmas tree.  One time, we even made a “parol” (star) out of banana stalks.  It was a lot of fun and we didn’t even have to pay a dime. 🙂

3) Sing Christmas carols with your friends

There was a time when me and my friends would go out at night, knock from door to door to sing a Christmas carol or two.  Our neighbors being so kind and gentle would give us coins and gifts.  We enjoyed it so much we even brought our musical instruments along. We had a lyre, a trumpet, drums, and my favorite – a home-made tambourine made out of flattened aluminum caps.  And at the end of it all, we even earned some money from the whole thing.

4) Share stories with old friends

The yuletide season is one of those days where everyone is going to their home town.  It is a great blessing to be able to catch up with your old friends and enjoy the season together.  Long lost high school friends ask who is  already married and who is next in line.  They might even ask you to be the godfather of their own kids. There is something refreshing in meeting up old friends.  With all the stress we endure at work throughout the year, it is a very welcome opportunity to spend some time with those you’ve spent most of your childhood with.

5) Sing and dance to your heart’s content

We Filipinos are a happy people.  We love to sing! We are all singers, even if we cannot carry a single decent tune!  Everyone knows the hottest song on the radio is the Korean hit sensation “Nobody, nobody but you?!” 

We also love to dance.  Why do you think noon time shows are full of dancing from hip-hop, to modern to ethnic dance?…They even have dance contests all year round!

During Christmas, you have an excuse to celebrate.  So sing your favorite song on your videoke!  Dance like crazy! Live life and have fun!

6) Watch the stars

During the whole month of December, the cool winds clear out the clouds so the stars can come out at night!  Watching the glittering stars on a clear night sky is both relaxing and peaceful.  The stars are saying…”settle down…be calm…rest for a while”.

It is one of those rare opportunities to really reflect and reconnect with nature and the universe.  So grab the chance to watch the stars and marvel at the wonders of the world!

7) Give love!

Just like what the popular Christmas carol says…

Give love on Christmas day (Christmas day!)

No greater gift…is there than love.

What the world needs is love!

Yes the world needs your love…

Why don’t you…give love (Repeat Chorus)

Love is priceless. Love is “cheesy”. 

Love other people.  Love your neighbor.  Love your dog.  Love your son.  Love your daughter.  Love your parents.  Love yourself. 

Love is the only thing that grows and comes back to you a million fold when you give it away. 

 

Christmas is a season of celebrating joy and happiness.  Be happy! Smile!  There’s nothing that can take that away from you.  Not working on a night shift on the eve of Christmas day.  Not enduring the very long ride home just to catch your family’s Noche Buena.  Not even your problems on work, money or family. 

You dictate how to celebrate Christmas.  You alone can make it the best day of the year!  You have the power to give, to sing, to dance, to share, to love, to be happy and smile!  You can do all these things…even without breaking your piggy bank.

Categories
Life Lessons Money Mindset Personal Finance

How to save money on drinking water

When my wife and I moved to a new condo a couple of months back, we were having
a hard time looking for a place to buy drinking water.  On the first week, we had to buy a gallon or two of distilled drinking water from the nearby mall.  As some of you might know, distilled water does NOT come cheap. But we had no choice, we HAD to buy the distilled water because we badly needed something to drink! 🙂

After getting fed up of carrying the heavy gallon of distilled water from the mall to our condo, I asked our condo’s receptionist if they know of any water refilling stations nearby who deliver water to the condo.  Fortunately (or unfortunately), they did!

I thought, finally, here’s the solution to my problem.   Much to my dismay, the delivery service from the water refilling station was far from satisfactory.  First, they required us to buy at least 2 “new” water containers.  Second, they could NOT deliver the water on that day…they could only delivery the next day at 7:30 pm.  And lastly, they stopped delivering to us after only refilling the water containers once, saying we should order drinking water from someone else going forward.

So we’re back to square one. 🙁

Then just last week, we finally solved our problem.  We bought a drinking water filter at a nearby Handyman store.  It’s easy to use and install.  It is safe (so far). And, more importantly, we won’t need to buy drinking water, ever again. 🙂

The cost of the water filter is PhP 2,500 – flat.  No extra charges. No recurring monthly/weekly payments. No headaches.

The filter can be cleaned just by wiping it out with a damp cloth or a scrub and washing it on a running tap water.  No need to buy a replacement filter worth PhP 1,000 unless it is broken.

I made some quick calculations at the top of my head to see if the deal makes sense.

Here’s what I figured. My wife and I consume an average of PhP 30 of refilled drinking water every week.  At this rate, we would reach PhP 2,500 pesos after 1 year and 8 months.  That means we would only get our money’s worth after more than one and a half years of using the water filter.  Hardly exciting. 🙂

But what if

  • you are ordering drinking water for your company of 500 people
  • you own a restaurant serving drinking water to your customers
  • you live with your extended family: parents, grandparents, nephews, nieces and other relatives

Imagine the savings you’ll get just by replacing the delivered/purified drinking water by a water filter directly tapped from your faucet.  What if you only get 10% off of what you currently pay for on your drinking water?  That may mean a monthly savings of PhP 30,000 for your company of 500 people.  What if you managed to save 30% instead?  Or 50%?

The possibilities are endless.

How about you?  How do you save money on your drinking water?

Categories
Online banking Personal Finance

How to Enroll Additional Accounts into your BPI Express Online Account in 3 easy steps

In my previous article How to Enroll a BPI Express Online Account in 3 easy steps, I described how I was able to enroll my BPI savings account into BPI Express Online.  Since I also have another BPI checking account, I wanted to link my two accounts together so that I can monitor both of them online.

The good thing about being able to tie your accounts together is that you can transfer funds between your accounts in an instant, anywhere and any time you want.  No need to go to your branch, wait in line or be put on hold while waiting for the next customer service rep to pick up the phone.

Another good reason to link your accounts together is for your security and peace of mind.  For example, if someone stole your ATM card, you can simply logon to your BPI express online account and transfer the funds from your ATM card to your other account.  So even if someone tries to withdraw money from your stolen card, he won’t be able to withdraw any, since there are no more funds on that account.  That is, assuming only one of your ATM cards is stolen and the other one is kept somewhere safe 🙂

Here’s How to Enroll Additional Accounts into Your Existing BPI Express Online Account  in 3 easy steps

Step 1: Logon to your BPI Express Online Account

You need to have an existing BPI Express Online Account.  If you still don’t have one, you can enroll your BPI account by following the steps mentioned in my previous article How to Enroll a BPI Express Online Account in 3 easy steps. Once your BPI account enrollment is activated, you can go to BPI Express Online website at http://www.bpiexpressonline.com and logon to your account using your Login ID and Password.

Step 2: Go to My Portfolio > Enroll Additional Accounts

Once logged on, click on the ‘Go to My Portfolio’ on the upper left side of the menu.  A drop down list will appear.  Click ‘Enroll Additional Accounts’ from the list.  You will be asked which of the following 5 types of account you wish to enroll into your BPI express online account:

  • Savings and Checking Accounts
  • Time Deposit Accounts
  • Auto Loan Accounts
  • Housing Loan Accounts
  • Credit Card Accounts

Choose the type of the additional account you want to enroll then click ‘Continue’.  The next step will ask you to enter your account number.  Once done, click the ‘Submit’ button.  A confirmation page will be displayed indicating your account enrollment request’s Confirmation Number along with the Transaction Date & Time.  Take note of this information, or better yet, print it out for future reference.

Step 3: Wait for the bank to approve your enrollment

The bank will review your additional account enrollment application and verify that you really are the owner of the account.  The verification and enrollment activation is completed within 5 banking days.  Once your additional account enrollment is activated, you will be sent another notification email.  You can then logon to your BPI express online account to verify if you are able to view the account details of your other account online.

Even though you have to wait for around 1 week to have your additional account activated, the great thing about it is you don’t need to manually activate your enrollment via the ATM machine anymore. You also don’t need to go to your branch and wait for hours just to activate your enrollment.

Personally, I’d rather have the bank take their time to make sure that it is really me who is enrolling the additional account.  Otherwise, it could be a security issue.  This is, IMHO, still hassle free online banking.

DISCLAIMER: This is simply a guide to illustrate how easy it is to enroll an additional account into your existing BPI express online account.  No guarantees in the accuracy of the above steps is implied in any manner, whatsoever.  It is best to ask your local BPI branch customer representative or call BPI hotline 89-100 for more accurate instructions on how to enroll you account to BPI express online.

Categories
Business Credit Card Money Mindset Online banking Personal Finance

8 Best Home Budgeting Software Features I’d Really Love To Have

I’ve been looking for a home budgeting software for quite some time but I haven’t really found anything that has all the features I’d really love to have. You see, my wife and I have been relying on the good old excel spreadsheet to track our income and expenses.  Sometimes it works.  Sometimes it doesn’t.  There are days (usually at the start of the year) where we would be very excited (and committed) to enter our daily transactions into the spreadsheet.  But after a couple of months, the excitement dies down along with our budget.  As a result, unexpected expenses happen.  And we wonder where our money went. 🙂

Here are the 8 Powerful Home Budgeting Software Features I’d Really Love to Have

1. Secure

I may not have billions of dollars in my bank, investment and credit card accounts, but even then I still want my privacy when it comes to my own money.  In this day and age when information can be easily sold to unscrupulous individuals with not so good intentions, and with the many scams we hear every now and then, I think it is but prudent to take some extra precautions regarding your own personal financial information.  Security is the first feature I’d really love to have in a good home budgeting software.  Without it, all other features really don’t matter.

2. Easy To Use

One of the main reasons I hesitate to use most of the available home budgeting software out there is because they all require me to “manually” download the transactions from my bank or credit card account and then “manually” upload the same information into the budgeting software.  This is a complete waste of time, not to mention a complete bore.  When I heard about Mint.com and its ability to automatically download/upload the transactions from your accounts, I thought finally someone had found a neat way to solve this problem.  The bad news is – it is only available in the US at the moment.  Not to mention the privacy concerns raised by other people since the data is being kept by Mint.com on its own servers.

3.  Visually Appealing Charts and Graphs

The human mind understands pictures better than words.  One look at a picture and you know whether you are spending more than you are earning.  One look at the chart and you know your income or expenses are going up month after month.  Looking at rows and rows of transaction details is NOT a great way to organize the financial information available from your bank statements.  It will only add to the clutter that you don’t need and don’t really like to have.  As they say, “a picture is worth a thousand words”.

4.  Voice, SMS and Email Alerts

More and more people are attached to their mobile phones today than ever.  Aside from keys to your car, you cannot leave the house unless you have your mobile phone with you.  I bet you’ll even go back to your house in case you forget it.  Sometimes, you even feel incomplete without it.  For people on the go, it is very important to stay informed especially about anything related to your own money.  You can receive alerts if there’s any suspicious activities involving your finances.  You will be notified if someone just withdrawn half of your money from the bank.  Good banks would do just that.  But sometimes it is not always the case.  That added security of receiving alerts wherever you are is a welcome convenience to give you peace of mind.

5.  I-Phone/Mobile Phone App

The financial services industry is being revolutionized by the Apple I-Phone.  There are hundreds of cool apps you can install on your I-Phone or mobile phone free of charge or for a small fee.  A lot of these applications help manage your money and budget. Today, everything can be literally controlled from your fingertips wherever you are and whenever you want.  You can view your account balance.  You can receive reminders to pay for your bills that are due.  You can be notified if you’re going over budget after paying for that coffee using your credit card.  A cool app extends your home budgeting software beyond your home PC or laptop.  It is the only way to go for mobile people that are always on the go.

6.  Update Feature

Today, most home budgeting software can only read/browse through your transactions.  They can only make sense of the information that you give it.  It is passive.  It can only give you information.  You cannot tell it to do something other than spit out a report or chart.  The one feature that would really make a home budgeting software powerful is the ability to process “push” services like updating your account information, transfer funds through your mobile phone, or do everything you can do on your bank account and more.  Wouldn’t it be great if you can do everything without going to your bank and wait for hours just so you can have a customer service representative update your account for you?

7.  Track Cash

In Asia where most transactions are still made in cash, using a home budgeting software is not effective.  To be able to make use of the software, you have to manually key in the transaction details by yourself.  It is a complete waste of time and counter productive.  Besides, who would want to carry a notebook everywhere and jot down the transaction details when paying for his lunch at the cafe?  Certainly not me.  The really cool home budgeting software must be able to record cash transactions easily and track it effectively. Most important of all, it must be able to treat cash just like any other transaction.

8. One Account

Most people maintain a lot of accounts.  They may have multiple accounts in several banks.  They receive many credit card offers on the mail each month.  Not to mention their retirement and investment accounts in different brokerage firms.  Organizing your finances under one roof is getting harder and harder every day.  If you cannot link all your accounts together, the information you have of your finances is incomplete.  The home budgeting software of choice is able to integrate everything together under one roof so you don’t have to do it yourself.

These are the 8 powerful features I’d really love to have in a home budgeting software.

In the end, these features will only take you so far.  You still have to take control of your own money.  You still have to challenge yourself to make more money and keep it.  You still need the discipline to know when your expenses are helping you achieve your goals or not.  In the end it is still up to YOU to become rich or poor.

How about you?  What features would you like to have if you were to build the most amazing home budgeting software in the world?

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Categories
Bonds Books Business Investing Money Mindset Stocks

Increase Your Financial IQ Book Review – Part 5: Improving Your Financial Information

Today, you will learn Financial IQ #5 – Improving Your Financial Information.  This article is the last part of Rich Money Habits’ review on Robert Kiyosaki’s book Increase Your Financial IQ: Get Smarter With Your Money.

To read parts 1 to 4 of the book review, you can checkout the following links.

Increase Your Financial IQ Book Review – Part 5: Improving Your Financial Information

Information is the most important asset you can have.  For soldiers in the midst of war, using the information they have against their enemies determines whether they will live or die. 

Information is the key to Manny Pacquiao’s victory against the likes of Oscar De La Hoya, Ricky Hatton and Miguel Cotto.  Freddie Roach, his coach, is without a doubt a master strategist.  He is great at identifying the smallest weaknesses of Pacquaio’s opponents and skillfully using those to draw up a game plan for Pacquaio to win each of his fights. 

Today, leveraging the power of information can make you very rich.  Young twenty-year olds have proven that.  Armed with only their dreams and technology, they have built up Facebook, You Tube and My Space and became billionaires. 

The Four Ages of Humanity

  1. Hunter-Gatherer Age
    • Nature provided the wealth. 
    • There’s only one group – everyone is poor.
  2. Agrarian Age
    • Land became wealth. 
    • There are now 2 groups of people:
      • The rich kings and queens who own the lands, and
      • The poor peasants.
  3. Industrial Age
    • People who own the biggest factories, skyscrapers and industries are the new rich. 
    • There are now 3 groups of people:
      • The rich owners of industrial companies
      • The middle class who work for those companies
      • The poor who are still caught up in the Agrarian & Hunter Gatherer age.
  4. Information Age
    • The new super rich are 20 something kids who leverage information to become billionaires
    • There are now 4 groups of people:
      • The super rich – young billionaires leveraging information.
      • The rich who are still struggling to bring their industrial companies to the new information age.
      • The middle class who are now working as employees to more and more companies of the rich and the super rich.
      • The poor who are clueless how they can use technology to become rich.

According to Robert Kiyosaki, a lot of people are struggling today because they are clinging to the Hunter-Gatherer, Agrarian and Industrial Age ideas.  They are “perishing because of obsolete or inadequate information.” They still think having a safe secure job with great benefits is a good idea.  The good news for you is that you don’t have to be like them. You can become rich just by having the “right information.”

Tips on Classifying Information to Become Richer

  1. Facts vs Opinions
    • Know the difference between facts and opinions. 
    • Many people think investing is risky because they don’t know if they are basing their investment decisions on opinions or facts
  2. Insane Solutions
    • Acting on insane solutions is risky.
    • If your investment decision is based on an opinion, it can lead to your financial ruin.
  3. Risky Actions
    • A person who invests for capital gains is investing on an opinion.
    • A person who invests for cash flow is investing on a fact.
    • A smart investor uses both opinions and facts to invest for both capital gains and cash flow.
  4. Control Over the Asset
    • Most people investing in paper assets have very little control over their investments.
    • These investors are hoping their opinions turn into facts – which is very risky.
  5. What are the Rules?
    • Know the rules of money.  Knowing the rules gives you valuable information on how to play the money game.
    • Without rules, there is chaos, and your assets would decline in value.
  6. Trends
    • A small investor with superior information and intelligence about local and global markets can beat the giants who rely only on international information
    • Know and invest with the trend.  The trend is your friend.
    • Robert Kiyosaki says “Financial intelligence is the ability to take information and make it meaningful.”

Rich Money Habits Review Notes:

Today, more than ever, you need the right information.  Information can make you rich or poor.  With the right information, anyone can become rich. The only problem is that in a rapidly changing world, the old ideas of yesterday may no longer work today.  That’s why it is very important to continue to learn and be discerning of the information you receive, always making sure if your decision is based on facts or opinions.

Categories
Bonds Books Business Credit Card Investing Money Mindset Mutual Fund Stocks

Increase Your Financial IQ Book Review – Part 4: Leveraging Your Money

Today, you will learn Financial IQ #4 – Leveraging Your Money.  This article is part 4 of Rich Money Habits’ review on Robert Kiyosaki’s book Increase Your Financial IQ: Get Smarter with Your Money.

To read parts 1 to 3 of the book review, you can checkout the following links.

Increase Your Financial IQ Book Review – Part 4: Leveraging Your Money

According to Robert Kiyosaki, leverage, in its simplest terms, is basically “doing more with less”.  It could be in the form of leveraging other people’s money like acquiring a loan for your house. It could be leveraging other people’s time by hiring employees for your business.  Or it could be leveraging technology like putting up an online store to reach out to more people, 24 hours a day, 7 days a week.

Things to note when applying leverage:

  1. There are many types of leverage: leverage of debt, leverage of financial intelligence, leverage of technology and more
  2. Most investors have little control over their investments such as savings, stocks, bonds, mutual funds, index funds.  Without control, the investment becomes risky.
  3. Higher returns does not mean higher risk.  The key to minimizing risk is applying financial intelligence.
  4. Most financial advisors are sales people – NOT investors.
  5. To gain control of your investments, you need to take control of your own financial education.
  6. Leverage can work in two ways – it can work for you, or work against you
  7. Warren Buffet, the second richest man in the world, says “diversification is a protection against ignorance.”

Investing for capital gains vs investing for cashflow

Some people invest only for capital gains.  Their motto is “buy low, sell high”.  When you purchase a house for PHP 1 Million in the hope that you can sell it for PHP 5 Million after a few years, you are investing for capital gains.

Others invest only for cash flow.  They want to receive a steady fixed amount of income every month.  When you invest in Retail Treasury Bonds and receive a regular interest earnings, or invest in stocks that give dividends, you are investing for cashflow.

To invest for both capital gains and cashflow, you need to increase your financial intelligence so you can control the investment and increase its value at the same time provide a steady stream of income for you.

More tips on taking the first step to apply leverage

  1. Don’t let your problem of not having enough money stop you from becoming rich.  Take that first step, make mistakes.  Continue learning even if you fail. The experience will increase your financial intelligence.
  2. Start small and take baby steps.  Take the time to read books, attend seminars and learn from great financial mentors before you invest.
  3. Dream BIG.  Instead of living below your means, let your BIG dreams inspire you to learn and invest carefully to allow you to magnify your income and go beyond your means.

Rich Money Habits Review Notes:

Leverage is a very powerful tool.  But it can work both ways.  It can make you money or it can work against you. Be careful. I experienced the other side of leverage when I got into credit card debt.  To know how I managed to pay for it, you can read my personal finance story.


Categories
Books Business Investing Money Mindset Personal Finance

Increase Your Financial IQ Book Review – Part 3: Budgeting Your Money

Today, you will learn Financial IQ #3 – Budgeting Your Money.  This article is part 3 of Rich Money Habits’ review on Robert Kiyosaki’s book Increase Your Financial IQ: Get Smarter with Your Money.

To read part 1 and part 2 of the book review, you can checkout the following links.

Increase Your Financial IQ Book Review – Part 3: Budgeting Your Money

After learning to make more money and finding out ways to protect your money, you next need to learn how to budget your money for maximum utilization.

According to the book, a budget is a plan to coordinate your most important resources (such as money and time) and expenditures.  There are 2 kinds of budgets:

  • Budget deficit
    • excess of spending over income
    • you spend more than you earn
  • Budget surplus
    • excess of income over spending
    • you earn more than you spend

The reason most people are poor is because all their lives, all they’ve known is not having enough money, hence, they only have a plan for “budget deficit”.   They have never experienced having more money than they could ever expect to spend.  They think only lottery winners, corrupt politicians, or greedy businessmen can have a “budget surplus”.   The key to having a budget surplus is realizing that it is possible for you to have it.

There are 2 ways to generate a budget surplus:

  1. You can apply Financial IQ # 1 to make more money, thereby increasing your income, or
  2. You can cut expenses, and reduce your spending.

Both strategies will tip the equation to your favor such that your income will be greater than your expenses and you create that extra cash a.k.a. “budget surplus”.

Most people and businesses only know how to cut expenses, especially in these times of financial uncertainty.  But you can only do so much in terms of cutting expenses without sacrificing your mental, emotional and physical health.  You don’t need to starve yourself to create a budget surplus. If you apply Financial IQ # 1 – make more money, you can stretch the other side of the equation and achieve the same thing.  The same applies to business. A business without sales is NOT a business. So aside from minimizing the costs of your business, you also need to learn to sell more and boost your income!

Robert Kiyosaki offers 4 tips to plan for a budget surplus:

  • Budget tip #1 – A budget surplus is an expense
    • Make spending for budget surplus a priority
    • Pay yourself first, even when income is less than your expenses
    • Use the pressure of not having enough money to think of ways on how to generate that extra cash
  • Budget tip #2 – The expense column is the crystal ball
    • Discover what you’re spending on, and you will know if your plan is working to give you a budget surplus or a budget deficit
    • Robert Kiyosaki’s Rich Dad says, “you can tell a person’s future by looking at what they spend their time and money on.”
  • Budget tip #3 – My assets pay for my liabilities
    • Instead of using your hard-earned money to pay for your liabilities like a car or a flat screen TV, make that money work for you by using it to build assets and use the income from those assets to pay for your car or your flat screen TV.
  • Budget tip #4 – Spend to get rich
    • Know when to spend and when to cut back.  Most people only know how to cut back.  Spending wisely to grow your money is a harder skill to master.
    • Learn to do more with less and use the pressure to become smarter in making more money

Rich Money Habits Review Notes:

  • Budgeting is boring.  That’s what most people say.  However, it is one the most important rich money habits that you will have to learn.  A budget is like a map.  The only way to get to your destination is to know where you are right now, and use your plan to discover how to get to where you want to be.
  • Consciously working on your money habits is a life-long process, and it starts with taking care of the resources that you have – that is budgeting your money and time.  What others don’t realize is that we all have 24 hours in a day.  Some people multiply their impact by providing livelihood to thousands of people and generating more money not only for themselves but for the whole community.  Others just sit around all day never doing anything to make their lives easier.  To me, it is not a question of do we need to budget or not.  It is a matter of realizing that to live your life to the fullest, you need to make the most of what you have.
  • Be patient.  The problem of TV shows is that everything is fast.  Yesterday a child was born. The next day he’s already a teenager.  The next week he himself is already having his own kid.  Life is not a TV show.  It is a series of small steps earned each day.  So have a plan and learn to adjust that plan along the way.  As Robert Kiyosaki says “take it one day at a time.”

P.S. You’ve just read part 3 (Financial IQ #3: Budgeting Your Money) of Rich Money Habits’ review on Robert Kiyosaki’s book Increase Your Financial IQ: Get Smarter with Your Money.  How about you? How are you budgeting your time and money today?

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Increase Your Financial IQ Book Review – Part 2: Protecting Your Money

Today, you will learn Financial IQ #2 – Protecting Your Money.  This article is part 2 of Rich Money Habits’ review on Robert Kiyosaki’s book Increase Your Financial IQ: Get Smarter with Your Money.  To read part 1 of the book review, you can checkout Increase Your Financial IQ Book Review – Part 1: Making More Money.

Increase Your Financial IQ Book Review – Part 2: Protecting Your Money

In the first part of the book review you’ve learned that to earn more money, you must learn to solve money problems.  Once you have learned to solve problems and earn some money, the next thing you need to do is to protect that money from what Robert Kiyosaki calls “financial predators”.  Real world predators do not always look the part. Sometimes, they are ordinary people with well-meaning intentions.  Their job is to “legally” take money from your pocket…and your job is to “legally” have them take as little as possible.

According to the book, there are 7 financial predators you need to protect your money from.  They are:

  1. Bureaucrats who legally take money from you through “taxes”
    • Taxes are your single largest expense
    • Know which type of income you’re earning money from and paying in taxes
      • Earned Income – salary, commission, etc
      • Portfolio Income – income from paper assets such as interests, dividends, etc
      • Passive Income – royalties, rental income from real-estate, licensing, etc
  2. Bankers who legally take money from you through “fees”
    • Banks and credit card companies charge you with all kinds of fees, some of them you or your company might not even be aware of
    • For every dollar you have in the bank, the bank can lend out twenty dollars to your credit card.  The bank pays you 5 percent for one dollar and makes 20 percent on twenty dollars.  That is how banks make money.
  3. Brokers who legally take money from you through “commissions”
    • Look for brokers who are students of their profession and invest in what they sell
      • For real-estate brokers, ask them how many properties they are invested in.
      • For stock brokers, ask them which stocks they personally invest in.
    • “Good” brokers make you rich, “bad” brokers make you poor.  Build a relationship with “good” brokers.
  4. Businesses who legally take money from you through “profits”
    • Buy products that make you rich
    • Poor people buy products that make them poor, paying them for years with a very high interest rate
  5. Brides and Beaus who legally take money from you through “alimony/marital asset split”
    • Get a prenuptial agreement before you marry
    • Think of your exit plan before you enter into the agreement
  6. Brothers-in-law who legally take money from you through “inheritance or financial wishes”
    • Consult an estate planning specialist to plan your exit
    • Use legal vehicles such as wills & trusts to protect your wealth from death predators
  7. Barristers who legally take money from you through “court & legal fees”
    • Hold assets of value in legal entities instead of your own name
    • You must buy insurance before you need it…not the moment you need it.

Rich Money Habits Review Notes:

  • Protecting your money is like plugging holes.  You first need to be aware what the holes are before you can actually plan on fixing them to stop the cash from flowing out.
  • Learning to protect your money is a never ending process as the rules regularly change.  The ways to protect your money yesterday may no longer be able to protect your money today or tomorrow.
  • Protecting your money reduces your expenses. The more money you keep, the more money you can utilize for productive endeavors.

You’ve just read part 2 (Financial IQ #2: Protecting Your Money) of Rich Money Habits’ review on Robert Kiyosaki’s book Increase Your Financial IQ: Get Smarter with Your Money.  How about you? How are you protecting your money today?