One of my Short Term Financial Goal

That is to start earning $4000 every month by 30 June 2011 (Excluding my investments.)

I bet you must be wondering what my income is right now. Honestly, it is quite far from my target. Are you ready to find out? Yes? No? Whatever… I am going to tell you anyway.

At the time of writing, my current income is around $1000. Laughing out Loud eh? Mind you, I am still a full-student and I do part time to earn that amount.

So how on earth am I going to make $4000 a month? The answer is simple, prepare to work hard and work smart! With my qualification and experience, I don’t think I am able to find a job that will pay that amount. My solution? Simple! Work for myself! There are advantages and disadvantages in working for yourself, read my other post on the Pros and Cons of Self-Employment.

Currently, I teach tuition and guitar as part time. The idea is to leverage my time by having more students in a class, (instead of one student per class which is what I am doing right now.) I can multiply how much I earn in one lesson even if I charge a lower fee.

Also, another idea is to start an online business which I will not reveal now. I hope that in this online business, I am able to generate passive income.

The reason why I want to quadruple my income (from $1000) is because I choose not to limit my vision and to dream big. Seriously, I really don’t know if I am able to achieve it, but I am going to trust God for whatever He has planned for me. Nevertheless, I am all geared up to work hard for my goal. Even if I couldn’t achieve it, I am contented – because I’ve tried my best.

Also, recently I read a book “Secrets of Millionaire Students” by Stuart Tan. There is two other co-writer and both of them are YOUNG. And from the book, I read that their highest income per month can hit up to 5 to 6 figure.

And I listened to a this audio CD given to me at Invest Fair 2010, from the CD, this guy, at the age of 16 years old, he can earn up to $15,000 in 3 days by setting up workshop in schools. And the guy is none other than Adam Khoo.

When I listen to all this stories, this really got me inspired. I asked myself, If they can do it, I do it as well!

Pros and Cons of Self-Employment

Are you considering in becoming self-employed or work for someone else? The table below weighs the pros and cons of being self-employed.

Pros	Cons
Earn beyond limits There is no fix way of doing things and you can bring ideas into practice. And usually you are paid higher than those who are doing the same thing as you. Only difference is they work for someone else and they were usually underpaid.	Not financially secure You don’t get paid every month and your first few ideas might not work. If that happens, there is no income. Preferably, you need to have two months of savings before becoming self-employed.
Own time, own target Do you want to only start working in the afternoon in your pajamas? Or do you want to go swimming in the middle of the day while others are working?	No social interaction Most likely you will be working alone. You will seldom talk about topic and discuss things regarding your work unlike in an office. Most of the people you interact are your friends and families.
No office politics If you are working alone, there is nobody to stab you at the back, unless your dog does that. But if you hire, you are the boss, who dare?	Can be tough Working on your own can be very tough at first. You may have to start from scratch and manage your business records, market your product everything else by yourselves. Unless you hire, which it cost money!
Stretch your creativity You need to be constantly looking for ideas and that stretches your mind!	You need to be very disciplined There will be no daddy or manager to supervise you. This can be a good and bad thing depending on your personality. But the main thing is you have to bear the responsibility.
Learn to take initiative There will be no daddy or manager to supervise you. This can be a good and bad thing depending on your personality. And having initiative is very important.	No coverage and benefits from company Unlike working for a company which you might be subsidized for medical bills.

Not everyone can be self-employed. It boils down ultimately to the person’s personality and situation. You need to ask yourselves, do you have family responsibilities? Do you have the money you need to get started? Or saved enough money to keep you afloat until your business runs smoothly? Do you have the character and the discipline? Do you have the skills?

No matter what you have decided, there is no right or wrong answer. As long as you are willing to work hard, work smart and fine tune your character, you are bound to succeed! 

How to Set and Achieve Goals

“If You Fail to Plan, You Plan to Fail”

People become what they think about most of the time. And the key to become successful is to set goals.

Some simple steps on setting goals:

1.       Write your Goals on a piece of paper and categorize them into short term goal and long term goal.

Use the three Ps to set your goals:
-Present Tense: Use present tense and set a specific date that you’re going to achieve your goal.
-Positive: Set positive goals. (E.g. “I weigh 45kg” instead of “I will lose weight 10kg”)
-Personal: Write down the goal for yourself. Use “I” when you set a goal.          

A good example is, “I earn $6,000 every month.”

2.       Use the S.M.A.R.T goal setting (Personally as a Christian, I use the S.M.A.R.T.E.R goal setting below) to access every goals you set.

Specific – Be as specific as possible.
Measurable – Targets should be Measurable.
Action Plan – Have your action plan layout.
Realistic – Is the goal realistic? Set goals that are attainable
Time Conscious – Set a time frame for your goal. When you see yourself achieving it?
Expectation Management – Manage you expectations
Revelation – Have you seek God and prayed?

Start planning now and do something about it every day. After a year or so, review your list of goals. I believe you will either be happy or sad. Happy because you have achieved it. Sad because you didn’t set more goals.

Education: A Consumption or Investment?

During my secondary school days, I always wonder why I have to learn geography, Pythagoras theorem and trigonometry. Are those really useful and relevant to my career? The funny thing is most of us will forget what we have learnt after graduation (like how I threw my books away the moment I graduate – I’m serious!)

Don’t get me wrong, obtaining more education is usually a good thing. But we are going to look into it in financial context. Education can be both a consumption and investment depending on what business or career you are in. Taking a dance course would be classified as “consumption,” unless you dance for a living or you’re in a dance business. Basically, consumption makes you a better rounded and perhaps a more interesting person but probably will not bring any economic value.

But if you are a photographer and you take photographs in order to put food on the table, taking up photography courses would be deemed as an “investment.” By taking up courses, you learn skills that can enhance your productivity and increase your economic value in the market.

So is geography, Pythagoras theorem and trigonometry important? The answer is no! Most likely you are not going to apply them in your job (unless you are a mathematician or a scientist…) So why bother going to through primary, secondary school?

The reason is because school is like a training ground which prepares us for the “outside” world. In schools, we learn to be a problem solver, we learn that if we sow hard work, we will reap rewards, and also learn to communicate with different kinds of people. All these are extremely important. It is a place for us to have the right mindset, moral value and equip us with the ability to further improve ourselves.

Also, we study for the sake of qualifications. We can see how little a person with a PSLE qualification earns as compared to how much someone with a Master Degree. The difference is HUGE! So why bother going through education? It is simply so that you can get a higher pay job.

If you are still studying or you intend to further your studies, you need to ask yourselves what is the purpose. Is it to improve your economic value or just to learn something that you are interested in? You need to ask yourselves whether you think it is an investment or consumption.

To me, I enjoyed learning about investments and creating wealth. It is something of my interest and it creates economic value. This kind of education is the best as it is both an investment and consumption. Kill two birds with one stone!

Financial literacy: How important is it?

The key to achieving wealth is financial knowledge!

Financial literacy is essential to everyone. It is a skill that can benefit you for a lifetime. It enables us to make sound and knowledgeable decisions regarding matter on finance. Without sufficient financial knowledge, you may make wrong choices for your investments, insurance and other stuffs like investment linked product (ILP). The other day, my friend was just telling me of this lady who bought an ILP for herself. The sad thing is her average return per annum is only 1%, how pathetic! (I am not going to reveal what ILP she bought and which insurance company) 

But if you are someone with financial knowledge, you are able to compare between different ILP and even explore the idea of buying term insurance and invest the rest yourselves. As a result of having financial knowledge, you are not limited to a few choices. Instead, you are able to weigh the pros and cons of the different choices to make the right judgement.

The problem with the society

The society we lived in right now (especially Asian countries) place little importance on financial knowledge. You don’t get to learn them in school and your parents seldom talk to you about money. Most of the things I‘ve learned from the education system is to prepare me for my future career and profession. And whenever I ask my parents about their salary, net worth and investments, they usually don’t reveal much. The only thing they will say is “Money not enough lah...”

To many people (mainly the older generation), their mindset is to have a good education, find a good paying job and work your way to retirement. I am not saying that is wrong, but it is definitely not enough for you to live a desired lifestyle and you barely will have enough to retire.

Let’s assume your salary is $2500 per month and you save $500 out of it every month.
After a year, you get $500 x 12 = $6000.
You intend to retire in 35 years, your total saving will be $6000 x 35 = $210 000.
If we factor in the bank interest rate of 0.125% p.a, by the end of 35 years, your total savings will only amount to around $264 579.

Honestly, ask yourselves these questions. Is $264 579 enough for retirement? Can you live the desired lifestyle you always wanted? For me, the answer is NO. That is why I am constantly seeking to enlarge my financial knowledge.

For a person with financial knowledge, he or she can choose the right investments to invest the money and let it grow and compound.

Taking the calculations above, total savings after 35 years = $210 000.
Let’s assume you get a return of 8% p.a on your investments, by the end of 35 years, that amount of money will become a whopping sum of $1,110 042!
Look at the huge differences!

I hope you are convinced that financial knowledge is important. We should never feel that we learned enough, but we should never stop learning. I hope that this blog can help you increase your financial knowledge. But remember, you cannot rely on others to help you achieve financial freedom. The only person that can help is YOU. Stop procrastinating, start now! Time is of the essence.