Save for a Reason

Big goals get big results. No goals gets no results or somebody else's results. ~ Mark Victor Hansen

I can't help but find the above quote extremely true. How many times have I started saving my hard-earned money in the bank only to have it "disappear" due to some "fantastic buy". Other times, they vanish because of a sales pitch that seemed like a once-in-a-lifetime opportunity. That said, after the many years of working and trying to save, the realization that wanting to save is not as important as having a reason to save.

In fact, I had never ever accumulated anything more than $5,000 in my bank ever since I started working. Truth to tell, my savings constantly dwindled to a couple of hundreds and at times, I even had barely enough to get through the month, hoping for my next paycheck so I could pay off my outstanding debts.

Fortunately, as I have a contracted job, I am assured of a paycheck every single month. Many of you however, don't. I, myself, will lose this security in a couple of months when my contract expires. When I realized the impact of this, having an aim in mind truly changed my saving attitude & my attitude towards money. I began planning for my long-term portfolio first as these need much longer time to grow & mature. With this aim, wonders started happening. Only in the last couple of months did I see my bank account grow to more than double that amount. The accumulated amount was recently invested and from what I was told from my consultant, has begun to show slight profits. I am already aiming for my next investment in Jan '10.

So the experience & knowledge that I hope to pass on to you is simply to have an aim if you're intending to save. In every case of saving up some cash, it doesn't matter if the reason is financial freedom (which I hope it is), a new car, your children's education or your anniversary. You have to have a reason so as not to get distracted and to find your way back to the path when you get sidetracked. In our context of achieving financial freedom, setting your aim of perhaps accumulating $10,000, will provide the motivation for you to reduce expenditure & increase your income, two vital components in helping you accumulate your big sum of money faster.

In summary, if you want to save, aim to save and save with an aim.

Cheers,

~K

Increase Your Savings - Pay Yourself First

If you would be wealthy, think of saving as well as getting ~ Benjamin Franklin

On a final note on increasing your savings, the single most important tip would be to pay yourself first. Although this was mentioned previously. I can't stress this enough. Many people usually pay everyone else first (like what was shown in the Profit & Loss statement post) and then save the balance.

What would be smarter to achieve your goals faster & more efficiently is to pay yourself first. Whenever you get your pay or total income, just immediately set aside 10 - 20%, or more if you can afford it, into your savings account. Then pay everyone else with the balance you have left. If you find that you're left with insufficient funds to pay them, then instead of touching your savings account, cut your expenses or increase your income as I explained previously. Do not touch your savings unless it really is an emergency case. Be discipline. Do not be discouraged or impatient at the speed of growth of your savings. This is only setting the foundations in place for more opportunities to emerge. The turtle eventually won the race compared to the hare, remember?

However at the end of the day, it comes down to what you really want. If you wish to be finally financially free or at least have more than pennies in your savings account then please start saving. If you want immediate gratification and have a need to spend lavishly then just know that you risk having pennies in your savings account at the end of the day and after years of working. It's your choice in the end. This is only a blog to share about what I've learnt from the various authors, searches & talks that I attended.

Happy saving and good journeying in your path towards financial freedom.

Till next time,

~K

Increase your Savings - Increase Your Income

A penny saved, is a dollar earned ~ Benjamin Franklin

The US Open Men's Semifinals is starting so I thought I'd blog a bit before the action starts. =)

So now that you've got an idea of sorting your expenses out and how you might be able to reduce them, the second way of increasing your savings, is to increase your income. Obvious isn't it? However, while it may seem the obvious thing to do, you'd be surprise to learn how many people don't seem to have enough no matter how much money comes into their pocket. Instead of more savings as a result of more income, what occurs is an increase in expenditure! This is because with an increased income, the person normally feels that now he/she can afford that much coveted item to satisfy his or her desire. From eons of studies & examples, human nature is such that there's no such thing as satisfying a desire. As soon as one desire is satisfied, human nature finds another desire to be satisfied. As such, disciplining yourself into parking your extra income may be a challenging thing to do.

What then would be a good approach? Well, I think that if you're earning extra income, be it from your year-end bonus or an extra job, that you should reward yourself. Since you are working harder for that money it would seem criminal not to feel good about yourself for receiving some much deserved extras. So go out, enjoy yourself, pamper yourself a bit, have a beer or buy that bag you much longed for or what else you want...BUT all in total of a certain percentage of the extra income. What do I mean by this? Means if you earn an extra of $1000 for the month, that you should portion out about 20% to be spend on leisure items & activities while saving the balance 80%. This way, you get to feel that satisfaction and still not resent saving.

These are some ideas to increase your income:

1. Get a second job - dog walking, babysitting, tuition, etc.

2. Start an internet business

3. Do paid online surveys - CashCrate.com, OnlinePaidSurveys.net etc.

4. Join affiliate programs & market their products. - Amazon.com, ClickBank.com etc.

5. Go into consultation with regards to your expertise

6. Publish and sell your ebook or if you're driven enough, aim to publish a book proper

7. Do freelance work.

8. Provide financial planning services part-time - Prudential, IPP etc.

9. Sell yours or other peoples old unwanted stuff - Ebay.com, garage sales, push carts

10. Provide a service - offer to clean your mum's or neighbour's house for a fee

11. Rent out a room

12. Rent out a service - web designing, computer fixing/servicing, paint a friend's house, help someone to move, etc.

Well, personally I know how tedious these tasks can be. Myself, I have only just begun in my search increasing my income. I was previously concentrating a lot on investment vehicles which I will share in future posts. Currently, am looking into starting an internet business but have not decided my niche as yet. Things like this will take time, be it starting an internet business, writing an ebook & getting it sold, renting out a room etc. All this takes time to build. The important thing is to get yourself started. With persistence, once you start moving, the momentum you gain will propel you on to bigger things.

Hope this helps.

Till next time,

~K

Increasing your Savings - Reduce your expense

It is not how much you earn that is important, it is how much you keep that matters.

Well to link back to my previous post, I mentioned that you could increase your savings by putting your money with high-yield banks like ING Direct. Another bank which also gives pretty good interest rates, as I've found in the last couple of weeks is Emigrant Direct. Both banks offer 1.3% interest which you have to admit, sure beats the usual 0.25% here in Singapore, doesn't it? I wonder if Singapore have any high-yield banks. Anyway, as I caution again about the risk of currency fluctuation I also think that if you wanna diversify the portfolio (in your cash portion) with some foreign currency then perhaps this would be a good time. Currency conversion rates are after all at a all-time low. I will be blogging about portfolio construction in future posts for your understanding so please bear with me. Right now, it's just the basics that I hope to put in place for you so you can have a good start.

Anyway, moving on. The next way to increase your savings is simply to reduce your expenses. Now this may seem common sense, and it really is. However, you'd be surprise how many people spend without any knowledge of where their money goes on. I've been in that situation myself so I can perfectly relate and understand this phenomenon. One way to track your expenditure is to put all your incomes & expenses into a personal profit and loss (P&L) statement. No! It's not difficult at all. Rest assured that you'll find it extremely easy to prepare.

Steps:

1. Divide your page into two.

2. The left of the page, is your Income entries.

3. Enter all monthly income - net pay, dividends, interest, rental paid by your tenant, etc.

4. The left of the page is your Expense entries.

5. Enter all monthly expense - shopping, food, entertainment, necessities, facial products, car expenses etc.

6. Add the entries up per column.

7. See which column is more, the Income column or the Expense column

Here's an example. Pls pardon the format. I've been trying to arrange the format for the last 20 mins with no success.

Personal Income Statement

Income $

Net Pay 2,400

Dividends 50

------------

$2,450

Expense $

Credit Card 100

Clothes 56

Movies 100

Food 450

Insurance 80

Car Fuel 500

Car Maintenance 200

Parking Coupons 100

Wife 400

Mum 250

Handphone 100

Internet 80

Balance 34

------------

$2,450

So $34 would be what's left to save. Easy isn't it?

By doing this you can see exactly how much you can put aside in your savings account. Also, if you do this, you can see all the unnecessary expenses and thereby cut down on them. You'd be surprise how much you're spending in total when you put it into a P&L statement. A friend of mine who's a financial planner told me today that she attended to a client who didn't realize he spent $150 a month on Famous Amos & Subway cookies! That said, if you have problems balancing your finances, engaging a financial planner is a really good way to start maximizing your savings. And the best part? It's FREE service! That's right. You don't pay unless you buy a product that they recommend. Now before you misinterpret my intentions, I'm not recommending that you cheat a financial planner of his/her worth. Truth be told, the financial planners I know are worth their weight in gold. They allow excellent idea bouncing and I am extremely grateful for their help & assistance in planning mine & my loved ones future. So my advice is, find a financial advisor to start a saving plan tailored to meet your desired goal(s). In Singapore, I like IPP Financial Advisors as they are not linked to any Insurance company and can do a fair comparison to ensure that you have the best deals. If you live outside Singapore, I'm pretty certain that there are independent financial advisors as well. Worldwide Financial Planning, for example, is an independent financial advisor group based in UK. You can also approach banks and insurance companies like Prudential to assign you a financial planner to help you meet your objectives. We'll talk more about insurance & finding a good financial planner in future posts. Right now, it's good to broaden your knowledge about what's available.

In summary, by reducing your expenses, you allow more to be put into your savings which will enable you to start investing it earlier for faster growth & higher returns which if you recall, is the aim of saving up. With the help of a financial advisor, you'll be certain to achieve this much faster.

Good luck!

~K