Problem : When I get to expose to wealth book, remembered the first was rich dad poor dad, who moved my cheese, secret of self-made millionaire etc. Understand the importance of saving first then spend. If you don't control and track your spending, somehow it will consume all your earning or even exceed. Flash back 5 + years ago when I was an engineer and I came across adam khoo website and downloaded a couple of excel files which he used to track his finances. I start using it and diligently update the financial statement spreedsheet. When I start to track i became conscious on my spending, and somehow my bank account was growing by the months. After about a years plus i started to get lazy and stop it totally. Before i know it, i was badly in debt. Until 2010 i started to update it again but laziness kick in again after a few days. Apart from tracking the expenses and saving. I came across a book by T Harv Eker, Secrets of the millionaire mind. I learnt another money management skills which I like it alot, called 6 Jars (how to apply it ? will speak of it briefly under the how), Both techniques I learnt and applied before but I stop. 2011 is the time to apply and live these money management skills
Why : If I dont care about my own finance, track and accountable for it, who will. Thus I have put this into the 21 days habit program. It's like running my personal finance as a business. What are the cost/expenses (food, transport, entertainment, medical, gift, grocery etc) and what are the revenue (basic salary, dividend, royalities, business, investment etc) ? what are the opportunities to create new revenues ? At the end of the day, profitability.
How :
1) Track personal expense daily(leave a comment here if you are interested on the spreadsheet), using the excel spreadsheet or if you have iphone, you can download expenses tracking app ie(ixpenseit)
http://www.ixpenseit.com/or iBearMoney (
http://ibearmoney.com/)
2) 6 Jar Management
Monthly when you salary is credited to your bank account.
10 % - Financial freedom Account (used only for investments and buying or creating passive income streams. Money is never spent, only invested. Also, have a Financial Freedom Jar where you deposit money each day ($1, $10, loose change)
10 % - Play account (Use this money to nurture yourself. Use it for extra-special things in your life. The only guideline is that you must spend the money every month. Use it each month in a way that makes you feel rich!)
10% - Long Term Saving (Put 10% into your LTSS whenever you receive money, such as your salary. The money inside LTSS can be used for major expenditure such as savings for your children’s education, buying a house for yourself, keeping aside contingency funds)
10% - Education account (Set aside money for your education (school, seminars,etc.) or your child's education.)
5% - Giving (Put 5% into your Give account whenever you receive money, such as your salary. You can use the money for donations to charities, use it to help someone in need. Giving is important. If you choose to give 10%, take the extra 5% from your NEC and change the % allocated for NEC from 55% to 50%)
55% - Necessities (Put 55% into your NEC whenever you receive money, such as your salary. You should use the funds inside your Necessities account to settle all your essential bills such as phone bills, electricity, clothings, eating, driving, travelling, hair etc. If you cannot survive on 55%, simplify your lifestyle. Instead of driving a car, perhaps you can take public transport, or drive a Honda instead of a BMW. Buy Converse jeans instead of Armani. There are people who cannot live on 55% NEC when they started the JARS system but over time, these same group of people are able to simplify their lives and live on 50% or lesser!)
Sam's Experience :
Been consistent on the expenses tracking so far, updating it daily. Started applying the 6 Jars on Nov Salary but still confuse if i should transfer the money out from the main account to individual bank account for the different Jars. For the Dec 10 Salary, using the percentage allocation, i will transfer money allocated for play, education, and necessities to another bank account as these money will likely to be consume by month end. Whatever balance, will be offset in next month transfer.
ie Dec - left with $400 balance
Jan breakdown of play, edu and necessities ie calculated to be $1000, so the transfer amount will be $1000-$400= $600 (the $400 will be credited back to financial freedom account)
3 Jan 2011, I was researching which organisation to contribute the 5% giving, didnt know that there's so many helpful organisation around in Singapore (wonder where they get the funding)
http://en.wikipedia.org/wiki/List_of_voluntary_welfare_organisations_in_Singapore
First, i thought of red cross(
http://www.redcross.org.sg) and second I thought of MINDS(
http://www.minds.org.sg) people who are intellectually disabled, I believe all who are able to think properly, have a choice but not these people. Third I thought of those old folks who are sick and nobody to take care of them (no idea which organisation support them).
