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Everything You Ever Really Needed To Know About Personal Finance

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A few days ago, I had lunch with an individual who is considering hiring me to give a multi-hour seminar to a business convention on personal finance. This person knows me from the local community and is a reader of The Simple Dollar and he felt that I might be the right person to give such a presentation.

During the lunch, out of the blue, he asked me to give a five minute nutshell version of what I would present to the group. I thought for a minute, pulled a pen out of my pocket, and asked him for five business cards. In those next five minutes, I summarized everything I know about personal finance in a pocket-friendly presentation.

I saved the business cards, scanned them in, and thus, for your enjoyment, is my presentation (with some extensive helper notes so you can know what I was actually saying while drawing these cards).

1. The Most Important Thing

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In the end, this is the fundamental rule of personal finance: spend less than you earn. It’s the one point that comes up time and time again in almost every personal finance book you read or talk that you hear. Why? Because it’s true.

There are two avenues to achieving this goal: spending less and earning more. By working on either (or both) of these areas, you can increase the gap between those two numbers – and that gap is your ticket to freedom. The harder you work on either spending less or earning more, the bigger that gap will become and the quicker that train to your dreams will arrive at the station.

2. Earn More!

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So how does one earn more? Many people will argue that there is no universal way for people to earn more money, and they’re right: some people are born entrepreneurs, others function much better in an office environment. Some people are endlessly creative, others are masters at completing long lists of tasks.

Once you dig past that, though, there are some common things that anyone can do, regardless of their financial state, to earn more money.

3. Get educated.

This doesn’t mean drop out and go back to school. It merely means to keep learning new things. If something interests you, read a book about it. Take evening classes to get certification in a certain area or get a masters’ degree. No matter what you’re doing, there’s some way you can learn more and improve yourself.

4. More income streams.

Always be on the lookout for ways to have money rolling into your pocket from a lot of different places. Maybe you’re a good writer and can sell a short story or an online ebook. Maybe you’ve got a little piece of land somewhere that you can lease to a farmer or a developer. Maybe you spend your free time managing a flower bed in the park – why not put a little wooden freewill donation box out there for people to drop a coin in? Maybe you have some extra cash laying around with which you can buy a long-term treasury note that will keep issuing you a check every six months. Having more income streams merely means that losing one of them (like your job) is less devastating in your life and it also means your overall income for now will go up.

5. Start a side business.

Instead of burning a few hours in front of the telly each evening, how about investing at least part of that time into starting a side business? You can try starting a blog with a few ads on it, or maybe you’re good with woodworking and can make deck furniture. Maybe you’re good at baking bread and can take loaves to the farmer’s market, or maybe you deeply enjoy gardening and can sell vegetables. There are lots of possibilities out there for starting a business that will supplement your current income and perhaps eventually grow into your main income.

6. Move towards your passions.

Whenever the opportunity presents itself, gravitate towards the things that really excite you, because passion is what will make you successful. For me, my passion is writing, so I’ve made an effort to gravitate towards it by working on The Simple Dollar in my spare time. For others, it could be anything – maybe it’s leading a team, or perhaps it’s writing beautiful computer code. Whatever really excites you and makes you want to do more and more and more and better and better and better, that’s what you need to move towards at all times.

7. Don’t burn bridges.

You never know when a relationship you’ve forged in your past might come in handy later on, even the ones you completely don’t expect. Thus, even if you feel wronged in a situation or want “revenge” on some people – or even if you just feel an urge to spread negative gossip – resist it. As you get older, you’ll find yourself time and time again bumping into people that you forged relationships with earlier on – if you burned those bridges, you’ll find that eventually you’ll have burnt that very bridge that you need to cross to get ahead. My advice? Never spread a negative word about anyone, because it never helps.

8. Keep in touch!

When you do build a bridge with someone, don’t let it get old and worn out – spend the time to keep in touch with that person. Shoot them an email or a phone call every once in a while just to see what they’re up to. When it’s clear they need help and you can easily provide it, alwaysprovide it. I found the book Never Eat Alone to be particularly powerful in this regard. I’m rather introverted, and it’s often a challenge for me to initiate and then keep communication going with someone, and this book provided tons of tips on how (and why) to keep contact with people.

9. Live Frugal!

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For a lot of people, frugality is a nine letter word for cheap. They think of people doing stuff like buying cartloads of generic products, using forty coupons in the checkout aisle, wearing patched clothing, driving a rusted-out old vehicle, and other such things that it’s easy to look down your nose at.

Here’s a secret, something that I’ve witnessed several times in my own life and read about many more: those frugal people that you look down your nose at often have a mountain of cash in the bank (not always, of course, but more often than you think). They’re not drowning in a mortgage, they’re not making payments on a five figure credit card debt. They’re not working to death on the weekends or drowning an ulcer in Pepto-Bismol. They’re living their life according to their own rules.

The best part is that we can all apply some of those same rules in our own life.Here’s what you can do to start reducing that spending.

10. Maximize every dollar.

Every time you spend money, you make a decision. You decide that whatever you’re giving that dollar for is worth it, and thus you make the exchange. The real key to spending less is to raise that definition of what a dollar is worth. You know those times when you buy something, but you realize you don’t really need it and you’re also not convinced that it’s a very good deal? Make the choice to not buy it, or buy a cheap version and see how much you actually use it. Don’t be afraid to shop around a bit.

Food is a great example of this. Quite often, people will eat out at places like Applebee’s and drop $20 or $30 on a meal that they could have made at home for $3. “But it saves time and is convenient,” you say? Just for fun, try making an equivalent meal at home sometime. You might be surprised to find out how easy it is and how much you’ll save.

11. Habits of all kinds are dangerous!

Most people have some sort of routine in their day where they buy a morning latte or a bagel, or they drink six cans of soda, or they eat out at the same place each day for lunch. What these routines add up to is a lot of money. Spending $5 every day in a workweek adds up to $1,300 over a year – that’s a mortgage payment for a lot of people. Spend some time looking at the stuff you do every day, especially the ones that require you to spend money, and ask yourself if they’re really necessary or could be replaced.

12. The ten second rule

Every time you go to make any purchase, even when you pay a bill, stop for ten seconds and ask yourself if this is really something you want to spend your money on. Do you really need this item? Do you really need to be paying $14.95 a month for unlimited text messages when you use maybe ten? Could you reduce that electricity bill by putting in a lot of CFLs? This one simple technique will often point you in the direction of spending less money.

13. Don’t make yourself miserable!

Most of the time, when you cut a bit of spending from your life, you’ll find that you never miss it. However, there are times when you find yourself really regretting it. If that’s the case, then it’s probably a worthwhile expense for you. Saving money doesn’t have to equate to misery, it just means that you cut down on the unnecessary.

14. … but don’t forget the big picture.

That, of course, doesn’t mean that you should justify every purchase with a basic “I want it and I have money in my account.” That shouldn’t ever be enough to motivate a purchase. I find that using a visual reminder in my wallet of what I’m financially working towards does a great job of keeping my mind on the big picture and helping me filter out what’s really needed and what’s just a fleeting desire.

15. Manage money!

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Whenever you increase your income or decrease your spending, you’ll find yourself with more cash at the end of the month. That cash is your ticket to financial freedom, and the more you can get each month, the better off you are. The trick, though, is to not spend it, but to do things that will build a stable future for you. Here’s the game plan.

16. Pay off all high interest debt, such as credit cards.

Anything with an interest rate over 9% needs to go as soon as possible. Use the extra money to make double or triple payments on these debts, focusing first on the one with the highest interest rate. When that one’s gone, keep going with each successively lower interest rate debt. This is akin to Dave Ramsey’s popular “debt snowball” technique.

17. Build an emergency fund.

An emergency fund is an amount of money you keep in a savings account that’s intended to be used in the event of a major crisis, such as a job loss, a medical emergency, major car damage, and so on. I usually suggest to people that they measure their emergency fund in terms of months’ worth of living expenses – you should have a month and a half worth of living expenses for each person you claim as a dependent. So, for me in a house with two children and my wife, I have a six month emergency fund. Need help saving or not sure which account to open that will maximize your savings? Research the Best Savings Account options we featured.

18. Max out retirement.

By this, I mean you should go to one of those retirement meetings at work, ask exactly how much you should be putting away to ensure that your living expenses are well-covered in retirement, and put that much away. This varies a lot depending on how much you have in right now, how much your employer matches, and so on, so you should talk to your retirement planner at work about the specifics.

19. College savings?

College savings are next. If you have kids, set up a 529 college savings plan for them and start automatically putting a certain amount into this account each month. The plan Iuse for my own children is College Savings Iowa, which is managed by Vanguard – I currently put in $100 a month for each child.

20. Pay off all debts.

If all of these are covered and you still have cash left over (which you will, given some time), the next step is to pay off all of your debts. Get rid of your car loans, your student loans, and your mortgage. This is actually the step I’m focusing on right now, as I have already taken care of steps one through four. For help finding the right card to transition your debt and keep interest rates low, check out the Best Balance Transfers Credit Cards page.

21. Invest!

You might also want to start investing at this point. My recommendation is to buy low-cost broad-based index funds because they don’t have many fees and grow very nicely over long periods of time. I personally invest with Vanguard directly through vanguard.com.

22. Control your own destiny!

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Most people see the goal of all of this as being rich. That’s why you see so many books about millionaires on bookstore shelves – being a millionaire is something many of us aspire to, right?

Here’s the secret: it’s not about being rich. Having a big net worth is just an indicator of what this whole process is really about.

It’s all about freedom. Freedom from debt. Freedom from supervisors telling us what to do. Freedom to spend the time to do things right. Freedom to try out new things and follow our interests. Freedom to sleep until eleven one day, then stay up until two in the morning working on what we’re passionate about.

That’s what most people really want – I know that’s certainly what I want. Having a big bank account just means that I’m not beholden to others. I can follow my passions and dreams wherever they take me. If my job is not satisfying to me, I’m no longer tied to that paycheck – I can just get up and walk away. I can do whatever makes me happy and avoid most of what makes me sad, without regrets or worries.

It’s a lot of hard work to climb that mountain, but the air up there is the sweetest thing that there is.

Want to know more?

If you liked the information on these cards, you should really dig into some of the better personal finance books to learn more. I’ve read a pile of these and made a list of the best ones. You should also take the time to dig into The Simple Dollar as well assome of the other excellent personal finance and personal development blogs out there – they do a far better job of humanizing and explaining money and personal development than many of the “big” corporate sites.

Most importantly, remember that you can do this. Two years ago, I was almost bankrupt and in deep despair because I didn’t believe this stuff, either. It took a lot of learning and a lot of honest soul-searching, but I began to realize what was really important and I turned the ship around. Trust me: you can do it, too.

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About the Author

This article was written by Michael Michuki of Vermon Seidel’s blog, dedicated to the quips and thoughts of Vermon Seidel. Michael is a talented artist and entrepreneur from Kikuyu town. He loves making art and content that inspires growth and levels up, his surroundings. He also loves solving problems and taking up challenges. He believes that trust and peoples connections are today’s currency.

Entrepreneurship

Women on Top in Tech – Laina Raveendran Greene, Co-Founder at Angels of Impact

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(Women on Top in Tech is a series about Women Founders, CEOs, and Leaders in technology. It aims to amplify and bring to the fore diversity in leadership in technology.)

Here is our interview with Laina Raveendran Greene, Founder of GETIT Inc. and Co-Founder of Angels of Impact, an impact network focused on women social entrepreneurs helping to alleviate poverty. She is an entrepreneur and social impact investor, whose passion is female empowerment, and enabling women to be key agents to help alleviate poverty in Asia.

What makes you do what you do?
As a minority female Singaporean from relatively humble beginnings, I have never taken anything for granted. I learnt early on that I have to work doubly hard to overcome the “glass ceilings” but if I persevere, I can succeed. That is why I chose to focus on helping women-led social enterprises as I know how hard things are for them and I hope to make things a little easier for them.

How did you rise in the industry you are in? 
I rose by being courageous enough to push against the “glass ceiling” and seizing opportunities open to me no matter where they were. Early on, I realized I would have better opportunities overseas, so I worked in many countries, including Switzerland, USA, and Indonesia and used these opportunities to learn and open new avenues for myself. I now come back to Singapore with many more networks and skill sets.

Why did you take on this role/start this startup especially since this is perhaps a stretch or challenge for you (or viewed as one since you are not the usual leadership demographics)?
Yes, as a minority Singaporean, it may appear that I am not the usual leadership demography in Singapore. In my own way, however, I think I have amassed my own international accolades and work experience such as serving as the first Secretary General for the Asia Pacific Internet Association, CEO of one of the first few tech startups in Singapore in the early 90s, being on the International Steering Committee of the Global Telecommunication Women Network, and most recently selected as one of the 2nd cohort of Edmond Hillary Fellows in New Zealand.

I am now moving to the next phase of using these networks and skills to help other women to social enterprises, which seem to be exactly what I want to do in my next phase of life (after more than 25 years of global work experience).

Do you have a mentor that you look up to in your industries or did you look for one or how did that work? 
It was harder in my younger days, as one of the few women in tech to find mentors but today I do.  Men were reluctant to mentor me for fear of rumors.

How did you make a match if you did, and how did you end up being mentored by him? 
I found my mentor when I was taking an executive program at Stanford. He was one of the keynote speakers and I went to talk to him. Intrigued by my background, when I asked if he would mentor me, he said yes. I meet with him at regular intervals and I always ensure I have put his ideas to test before reporting back to him. I feel that I value his time if I do actually listen and act on his advice.

Now as a leader how do you spot, develop, keep, grow and support your talent? 
The key qualities I look for is an eagerness to learn and humility to be open to new ideas. Also, when asked to be a mentor, I usually give homework and see how proactive they are. Only the ones who do their homework, take the advice and act on it, are the ones I actively mentor.

Do you consciously or unconsciously support diversity and why?
I consciously and unconsciously support diversity, as I see the importance of diversity on true innovation. You never get anything new, talking to like-minded people. It is always good to have different perspectives to create new ideas. I am also an active supporter having faced racial and gender discrimination in my life and want to ensure that others are given a better chance.

What is your take on what it takes to be a great leader in your industry and as a general rule of thumb? 
A great leader to me is one who has empathy and humility, and a genuine spirit of service. Today’s challenges such as climate change and social injustice, requires many players to apply their knowledge and skills to solve and have a sense of ownership in solving these issues

Advice for others?
The only advice I can think of is do what you are strongly passionate about. You need to persevere to succeed so it helps if you truly care about the endeavor you are working on.

If you’d like to get in touch with Laina Raveendran Greene, please feel free to reach out to her on LinkedIn: https://www.linkedin.com/in/laina/

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Callum Connects

Denise Morris Kipnis, Founder & Principal of ChangeFlow Consulting

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Denise Mossis Kipnis’ curiosity in people and the world, lead her to set up ChangeFlow Consulting.

What’s your story?
I’m driven by curiosity. Having been the only one in a room who looks like me for most of my life, I developed a curiosity about who stays, who leaves and who thrives in minority/majority situations including when and how connection and collaboration happen. I was a systems thinker long before I knew what that was, always asking why and so what; and seeing the pieces, the whole, and the places in between. So helping people and organisations move through the complexity of transformation feels natural to me.

What excites you most about your industry?
I see change and inclusion as two sides of the same thing; I don’t practice one without the other. Some people see change as death, as loss, as exhausting. And it can be. But I see in the work I do as an opportunity for something new or hidden to emerge. When an organisation understands that it is first a group of people, who themselves represent and belong to groups of people, and it begins to tackle what it would mean to understand and learn from all that talent, all that diversity, to have them all working for and not against the organisation, to truly unleash all that their people have to offer; that’s magic.

What’s your connection to Asia?
Change and inclusion are personal values as well as professional strengths. For me, living and working outside of the States was a bold experiment to see whether any of the stuff I’d learned about change and inclusion would work outside of the US. My husband and I targeted Asia specifically: it would be the greatest contrast, culturally speaking, for me; and a unique career springboard for him.

Favourite city in Asia for business and why?
Although I’ve practiced in other cities, I am biased towards Singapore. In some ways it’s what Los Angeles is to the rest of the United States, a microcosm of sorts. The regional/global nature of it means that so many different nationalities and cultures are represented. As a result of this mix, you never know what you might get. In some situations, cultural dynamics are obvious, sometimes subdued. The variability is compelling.

What’s the best piece of advice you ever received?
“Never ask anyone to do anything you wouldn’t do yourself.” Michael Rouan.

Who inspires you?
Often it’s a “what” not a “who.” I can get inspiration from a passage in a book or a situation in a movie, as well as a turn of a phrase or watching people interact. I often make the biggest connections between the various threads I’m working on when I’m sitting in someone else’s event.

What have you just learnt recently that blew you away?
I’m honestly not blown away by much. Instead, I’m struck how circular things can be: ideas often come back around with a slightly different twist and I watch the way it shakes things loose for people. I recently sat through a workshop on Self as Instrument, and despite being thoroughly versed already, I learned something. In preparing for a panel on design thinking, I unearthed a new language to describe things.

If you had your time again, what would you do differently?
You’ve caught me at a good time. I’m sitting in appreciation and gratitude for all my experiences, because I wouldn’t be who I was today if all that has happened, didn’t. And yet one thing comes to mind: It wasn’t until I redesigned my website two years ago (shout out to Brew Creative!) that I realised I hadn’t made explicit agreements with my past clients as to what I could share publicly about our engagement, or whether I could use their logos in my promotional materials. In my business, confidentiality is so important, and yet I need to be able to talk about the work as reputation and experience leads to the next success, and so on. It turned out a lot of the contacts I had known had left the organisations where the work was done, so they couldn’t help at that point. So the practice I’m carrying forward is to get those agreements up front, and to make sure my relationships in client systems are broad as well as deep.

How do you unwind?
Science fiction, puzzles, wine.

Favourite Asian destination for relaxation? Why?
Home. I don’t travel to relax, I travel to learn and explore.

Everyone in business should read this book:
Built to Change, by Ed Lawler and Chris Worley. To my knowledge, it’s the first pivot from advising organisations away from stability and toward dynamism, from strategic planning to strategizing as an action verb; to blow up the traditions and rigidity that impede organisations from developing change capability.

Shameless plug for your business:
We’re taught that there are two kinds of people: those who see forests, and those who see trees. There is a third type, my type, and we see the ecosystem. Worms, climate, birds, the spaces in between. This is the perspective organisations need to be successful in solving complex problems and thriving in change.
ChangeFlow uniquely blends four disciplines (two of which are multi-disciplinary in themselves): organisation development, culture and inclusion, change management and project management.

How can people connect with you?
Facebook: https://www.facebook.com/ChangeFlowConsulting/
LinkedIn: https://www.linkedin.com/in/dmorriskipnis/
LinkedIn Company page: https://www.linkedin.com/company/4862954/
Email: [email protected]
Website: http://www.changeflowconsulting.com

Twitter handle?
@ChangeFlow

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started, built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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