Money Management: Is rich equivalent to lots of money?

Is a high income earner a rich man? Is a person who is driving a big car and staying in a big house a rich man? Is blue collar’s life hard as they are earning less?

Not necessary.

If you spend every single cent you earned and involve in huge credit card outstanding, the financial condition of this white collar is actually worse than those blue collars with savings.

Take an example. Say a white collar earns $10,000 a month. He will not have any savings if his monthly spending is at $10,500. He has no savings but need to spare another $500. On the other hand, a blue collar with $1,000 monthly salary, he will be richer than the white collar if his monthly spending is at $800. The blue collar will be able to save $200 every month while the white collar has to work hard to pay off his debt.

The bottom line is, high income does not mean rich. The true meaning of rich is how much you can save but not how much you earn.

Shall we plan ourselves to become “rich” man?

Money Management: Smart Kids

One day, my eldest son asked me out for fast food. I agreed to bring them on the coming weekend. My son further then asked, “Daddy, who will pay?”

What a smart kid. He will rather opt to drop the meal if I ask him to pay.

Be a good parent, we should always convey the right message on value of money. Most of the things can be bought by spending money but some cannot. For example, a family gathering is invaluable in monetary value but money is only a bridge for us to opt for a good place to achieve this purpose.

Money Management: Is rich equals to richness?

Yes, may be.

However, richness does not only depend on money but also our daily life.

So, what is life richness? It is how you plan your life to become more meaningful. It may be the case that you allocate an hour a day to chat with you family or to get around with you children. You may also allocate some time for yourself to do what you love to do. Or you may share you view with your friends about the book you just completed. Isn’t it will make you happy?

Live happily means richness but not necessary based on money. In fact, your happiness will provide you more energy to achieve your target. Keep it up.

Investment: Do you know what you want?

“Is now the right time to buy stock?”; “What should be the buy price for ABC stock?”; “What should I do if stock market is falling?”

I received these questions from my friend quite often. However, my reply to them is, “Do you know what you want?”

In our daily life, we are facing many problems. Some problems for us are just piece of cake as we have the capability to solve it. However, whenever you face problems that you have limited knowledge with, you will feel uncertain. In other words, if you do not know well about stock market, you will have a problem. Therefore, you will ask someone that you think he/she knows how. But how do you judge whether is he/she knowing what stock market is all about?

Well, only you know what you want. Keep learning and exercise what you learned. Knowledge will tell you what to do. More importantly, you should learn from mistake and avoid to making it again.

Money Management: Make credit card become your slave

Whenever you visit supermarket or hypermarket, most likely you will be surrounded by credit card “promoters”. You might ignore them. But, sometime, you might sign up with them after their explanation of benefits that you can get.

Some people who are unable to utilize credit card wisely will end up becoming a slave of credit card. Worse still, they might opt for “Balance Transfer” to avoid payment due. Pity them.

Investment: Rate of Return (Part 2)

“I have earned $5,000 from share investment!” Again, hold on first.

If your investment capital was $50,000, then the rate of return is 10%; However, if your principal was $500,000, the return is only 1%.

How to calculate it? Well the formula is ((V1/V0)-1)*100 where V1 is current investment value while V0 is your principal.

Let us take an example. Say your principal was $50,000 (i.e. V0) and you earned $5,000. Therefore, your current investment value is $55,000 (i.e. V1). The total rate of return will be ((55,000/50,000)-1)*100 which will generate a value 10 which means 10%. To make it more meaningful, we shall consider time frame into this calculation as well.

So, whenever there is someone to show off in front of you that he/she has earned $XXX from share investment, ask him/her about her investment capital first.

Money Management: Bookkeeping

Do you know how much you spent and saved every month? Do you know where did your money go? If you cannot give the answer right away, very high chance, you are working for money.

To be a master of money, you must know where your every single cent went. Only good bookkeeping habit will achieve this.

There are many money management software around that featured on helping you to record down your expenses and categorize them.

Advantages of bookkeeping will enable you to:
1. know your expenses on “needs” and “wants”. You should reduce or delay your “wants”
2. know how much do you save immediately
3. effectively allocating your fund for emergency buffer, investment or other financial items
4. have proper cash flow planning

I believe it does not need much time to do it while allow you to control your cash flow. Isn’t it great?

Local Bank Service

Today, I went to a local bank for online service. As I cannot get any information at the information counter, the receptionist brought me to a customer service manager. Again, the said manager cannot provide any information. As a result, he called his HQ for help.

He passed on the phone to me. I talked to his HQ for almost 20 minutes. Finally, I decided not to have online service with this bank. What happened was when I was on the phone, the other side just keep me on hold from more than 15 minutes as they also need to search for information I inquired.

By having this kind of service, what do you think our local bank’s competitiveness as compared with those off-shore bank?