Are you a money master or cashless clown?
Financial success hinges on three disciplines as per below,
- Making time our ally
- Forcing our money to work for us
- Actively learning about financial planning
We are currently living in the era of lengthening lifespans and careers. Vast amount of knowledge has become readily available online. Almost anyone who is serious about becoming a student of personal finance can easily find the information they need. If we manage our money correctly while we are young, we have ultimate control over our financial destiny. To do that, we must first realize the importance of time and compounding interest.
1. Making time our ally
Our most important asset is not our house, car or portfolio but our lifetime capacity for paid work.
Let’s imagine that you are able to hop into a time machine. You travel into the future to the day you retire. You meet with your older self and sit down together to figure out how much active income was earned throughout your entire working career. Let’s assume that the amount is RM3 million.
Ask your older self:
- How much of that enormous lifetime income was spent wisely?
- How much was wasted on things you didn’t need?
- How much was productively saved and invested to meet important financial goals and to achieve financial freedom?
The vast majority of people would end up feeling depressed and regretting lots of their spending choices. Now, travel back to today. You now have the power to correct your financial mistakes and learn to manage time well. You have a second chance! Time management is life management. If we learn how to manage our time well, we will live a good life.
2. Forcing our money to work for us
As we manage our time superbly, we should also manage our money well. Saving should be part of our life.
If you’ve never saved a ringgit before in your life, you can buy a cute piggy bank and put it somewhere in your house; somewhere easy to see. Force yourself to feed the pig a few ringgit every day.
For smokers, consider quitting or at least cut back from smoking. Quitting will help you save at least RM100,000 over the next three decades.
Transfer your money from your piggy bank to a savings account each month. Eventually, it will snowball into hundreds and thousands and then tens of thousands of ringgit. It will grow faster if you put them into investment vehicles in your portfolio.
You will end up utilizing savings account, fixed deposit account, unit trust funds encompassing money market, bond, local equity, international equity and property funds, stock and real estate.
3. Actively learning about financial planning
Once we begin to save and invest intelligently, we’ll have more peace of mind. A well-structured personal financial plan will take into account wealth accumulation, wealth protection and wealth distribution in order to achieve financial freedom.
We can get more information online, from financial books, classes, seminars, or learn from those who have already achieved success.
You may also decide to seek out the services of a qualified financial planner licensed by the Securities Commission.
You may choose to ignore or act upon these 3 tips that you’ve learned. Your next step determines your financial destiny. Making the right choices will transform you into a money master.
