Professional Documents
Culture Documents
1. 2. 3. 4. 5. 6. 7.
Be a financial genius Know whats your time worth Focus on increasing income Get rich using excessive debt Have a budget plan Employ Compound Interest to work for you Quickly evaluate an investment using the Rule of 72
Money-Making Tips
Earn passive income while surfing the Internet 9. Liquidate those junks in your house 10. Turn your passion into money making machine 11. Turn your credit cards from foes to friends 12. Learn the Essential Rules of Investing
8.
Money-Saving Tips
your first car FREE 14. Enjoy tax relief for education purposes 15. Minimize Upfront Service Charges in Unit Trust investment 16. Manoeuvre your Mortgage 17. Upgrade your lifestyle while cutting down expenses
13. Get
Money-Protection Tips
Basic Insurance Benefit You shouldnt lack 19. Traditional plan vs. Investment-linked plan 20. Understand Insurance Switching 21. Investment Replacement Feature 22. Beware of the Worst Advice from Insurance Agents
18. Five
23. Premium:
Monthly, Quarterly, Half-yearly, or Yearly? 24. Minimum Effort to keep you Investment-linked policy in force.
Introduction
After I graduated, I didnt get a job. During the final year studying in university, I had determined that I am not the kind of person to be an employee. While my school mates were busy sending out resumes applying for jobs, I was busy thinking of alternative ways of not to have a day job. There is really nothing wrong to have a job, and work on it from seven to eleven, even though during weekends. It is just my own choice not to work as an engineer. However, it is an undeniable fact that time had to be traded in exchange of money. There are people who work their whole life, just for the money. Money cant be everything. But without money, we are most probably left with nothing. This leads to my quest to gain more knowledge in personal finance. You can spend your whole working hard just to earn more money. But without knowledge in personal finance, you are just sailing blindly in the middle of the ocean. So I buy a lot of books, study them, digest the content, practice the tips, and finally I ended up involving in the financial service industry. Unlike most personal finance books that preach on a certain concept, this book will show you many simple, and practical tricks and tips. Most of the tricks can be used right away. Some of the tips here just require slight changes in your daily habits in order to be effective. Hopefully, this book will be an eye-opener for you to achieve more with your limited financial resources. This book is arranged into four parts: Part 1: Smart Money Tips - You will learn important money concepts that will tune your mindset to the right frequency. Part 2: Money Making Tips I will share some easy tips for making more income that doesnt require a lot of work. Part 3: Money Saving Tips Collection of tips that will save you money, without significant downgrading of lifestyle. Part 4: Money Protection Tips This part includes information and advices on insurance planning. Accumulating wealth require strong foundation of risk management. I share tricks that even insurance agents never realize.
It is your decision to be made. Defer? You will get richer. Or spend it now? We all learn the simple arithmetic in primary schools. For example, you certainly know 8 = 10-2. There is really no challenging mathematics involved in personal finance. Simple plus and minus equation is all you need. The two most essential equations in personal finance are: S=IE Where S = savings, I = income, E = expenses & NW = A L Where NW = net worth, A = assets, L = liabilities In the quest of acquiring wealth, one must have a positive S all the time. Only through smart utilization of your savings can ensure that your net worth will increase over time.
There are three general shape First, lets look at the chart of the mediocre. Hacking the Charts of the Mediocre
Cash Flow
Net Worth
Liabilities
Savings
Net Worth
Financial situation: always spend less than they earn save a portion from their pay check every month conservative passive investors who mostly keep their money in the bank buy a house, buy a car, go to work and wait for retirement net worth grow slowly (probably too slow). they are very afraid of debt and try hard to pay it off as soon as possible
Liabilities
Deficits
Financial Situation: at first, there is some tiny saving left at the end of the month but they use the little surplus to acquire more debt - buying stuff they cant afford liability is greater than the amount of asset, resulted in negative net worth excessive amount of liabilities put more load to the overall expenses because they need to pay interest charges - Negative cash flow when they finally got a career promotion with higher income, they use the tiny surplus to acquire more liability switch to a bigger house, a bigger car etc frugal is a word that doesnt exist in their dictionary
Expenses
Liabilities
Incomes Savings
Financial Situation:
they are definitely the Millionaire Next Door normally they work hard to increase their income they earn better than the mediocre but still spend like the mediocre. they save a lot from every paycheck which is normally invested, in the area they are familiar of, probably in their own businesses. some ultra rich know how to use the leverage of good debt. They might get into deeper debt, but at the same time the debt is being used to acquire justifiably greater assets. Assets contributes more earning and improve their cash flow chart. financially, they are independent. They are the prodigious Accumulator of Wealth
How do your cash flow and net worth charts look like? Whats the shape? There are two rules to follow: 1. Have a positive saving (the S) you must have surplus or saving in your cash flow chart 2. Use the saving (the S) to acquire more assets (A), not liability (L)
Financial Idiot
Eddy is a fresh graduate who earns RM1800 per month. Right before graduation, he bought a new Toyota Vios with minimum down payment. After paying the hire purchase installment, he is left with RM1000 for all other expenses. He rented a room in Kuala Lumpur that costs RM300 per month. Without proper budgeting, he pays for all other
expenses with his credit card whenever possible, such as petrol, fine dining, and some other consumer spending. Just within a few months, he had reached the maximum credit limit of his first credit card. Not enough still, he applied more credit cards from other financial institutions. Another six months down the road, he can no longer afford to pay the credit card minimum payment. Finally, he lost everything. This is a typical story of a financial idiot. Lets look at the net worth chart of a financial idiot.
Net worth chart of a financial idiot This chart shows an idiot digging a never ending debt hole. Until the day he is too broke to even declare bankruptcy, he will be buried in the deep pile of debt shit. There is no other way to help this guy unless he is willing to delay gratification, cut a lot of expenses, and work hard to save!
Financially Disciplined
If you are educated enough and have the discipline to save, you will get the chart shown below:
Net worth chart of a financially disciplined This is a typical chart of a graduate, who takes up a study loan to obtain his tertiary education certificate. Thats why you will see the line chart drops to the negative part. After he graduates, he knows that he is in debt. He gets a job and moves up the corporate ladder. Meanwhile, by spending less than he earns, hes able to settle the study loan, and build up some assets. You will see that his net worth goes up and finally stops at the retirement age. After he retires, there is no more active income generated and he starts to
spend his hard earned retirement fund. This fund might be just enough for him to spend until the day he rests in peace. This is not too bad right? In fact, there is a study that shows that only 5 out 100 fresh graduates can successfully achieve the net worth trend shown above. These people are said to have achieved financial independence. They dont need monetary sponsorship from family members nor the public. These are the financially educated group.
Financial Genius
Lets look at another story about John. He is a frugal person. Every month when he gets his salary, he saves at least 20% of the net income. The savings are used for investment. His income grows every year, so as his savings because he still keeps saving 20% of what he earns. While earning active income from his job, he also tries various ways of making more money through investment and other business. Finally he acquires a large amount of wealth that he will never have to worry about working hard for money anymore.
Net worth chart of a financial genius A financial genius is someone who is really good with handling money. It doesnt require a Ph.D in Maths or Economics to pull off something shown above. What ones need to know is some simple arithmetical operations. He definitely knows that to have a positive net worth, assets have to be greater than liabilities at all times. He would also know that savings is equal to income minus expenses. Please plot your own net worth chart using the past historic data of your financial status. Whats your net worth when you are still studying at secondary school? Whats your net
worth now? And extrapolate the line graph. Is it moving up? Or is it going down? Is it forming the shape that you want, like the financial geniuses? I think financial idiots know these simple principles too. The only difference is that the financial geniuses know that wealth and money is unlimited, but time is limited and scarce. Time ends at our last breath. Thats why financial idiots dont save money from the start. They never want to compromise to delay gratification. They think that time is abundant and retirement is still very far away. They dont know what their time worth is! __________________________ END OF PREVIEW _______________________
You can purchase and read the rest of the book here: http://kclau.com/about-2/moneytipsbook Hopefully these money tips have helped you to make more money, save more money and make you wealthy.
If you wish to find out more money tips, do check out My blog: Personal Finance Money Tips (http://kclau.com) And please share your personal money tips at the forum: http://forum.kclau.com