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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 – Daphne Ng, CEO of JEDTrade

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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.)

Daphne Ng is the CEO of JEDTrade, a blockchain technology company focused on trade, supply chain, and financial inclusion projects in ASEAN. She is also the Scretary-General at ACCESS and Exco. of Singapore Fintech Association

What makes you do what you do?
I was introduced to blockchain technology in 2016 after I left my corporate banking career after 10 years. It was my mentor who first got me interested in this technology, which I then went on to delve further into, on its potential applications in the lending and trade finance space – domains where I came from.

How did you rise in the industry you are in?
Being in the space for 2 years and actively involved in the ecosystem, I was able to bring on the projects, network and a good degree of thought leadership in this vertical. Early on in the startup journey, our team faced many challenges. And to me, the key to rising above failures are two essential factors – resilience and support. While resilience is innate, I received a lot of help be it in terms of connections or advice. ‘Nobody succeeds without help’ rings very true for me.

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)?
From the start, I focused on my domain expertise in trade finance and the application construct of how blockchain and DLT can be applied to these use cases. Also, my strategy from the start was to build a technology company made up of 80% tech and engineers, which is also our key competitive advantage today. At the end of the day, deliverables are about strategy and execution, which includes building and leading an ‘A’ team.

Do you have a mentor that you look up to in your industries or did you look for one or how did that work?
I have many mentors, which includes our company advisors (all of whom are well-known in this industry) and mostly informal mentors I meet via my connections, and on various occasions and circumstances. Creating opportunities also means putting myself in the right place, at the right time. And in my case, these were mostly organic and genuine friendships formed from the initial connection.

How did you make a match if you and how did you end up being mentored by him?
To me, a match in values is very important. It also takes humility to ask for help and be willing to listen to advice, which is important in order for mentorships to be successful – be it formal or informal.

Now as a leader how do you spot, develop, keep, grow and support your talent?
I love this question! I am passionate about building strong teams and helping my people grow. I abide by the 3Rs when identifying talents: resourcefulness, resilience and right values. And then I invest in the ‘potential’ and this means giving them room to lead, make decisions and take risks.

Do you consciously or unconsciously support diversity and why?
My support of diverse talents, skillsets and characters can be seen in the make-up of our core team – all helming specific roles and each bringing their own value to the table. We need the sum of all parts to build a great company.

What is your take on what it takes to be a great leader in your industry and as a general rule of thumb?
Great leaders emerge in times of failures and challenges, never abandoning the team, and always putting the team’s interests before her own. And I consciously live by these mottos every day.

Advice for others?
My advice to other entrepreneurs: be resolute and dare to be different. If you are going to follow others, then you will end up on the same path as them. No right or wrong; but I would rather chart my own path. This June, we are officially launching our blockchain project, Jupiter Chain (www.jupiterchain.tech), which have garnered much interest in the industry, even before we made it public. We believe this project is the epitome of marrying innovation with practical implementation, and we want to be the first to truly operationalize blockchain for our ecosystem projects in this region.


If you’d like to get in touch with Daphne Ng, please feel free to reach out to her on LinkedIn: https://www.linkedin.com/in/daphne-ng-%E9%BB%84%E7%91%9E%E7%8E%B2/

To learn more about JEDTrade, please click here.

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Callum Connects

Jace Koh, Founder of U Ventures

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Jace Koh believes cash flow is the lifeblood of your business. Understanding it will enhance your ability to run and manage your business.

What’s your story?
My name is Jace Koh and I am the Founder of U Ventures. I’ve always been inclined towards investment and entrepreneurship. I’ve played a hand in starting businesses across these industries – professional services, cloud integration, software and music. I believe that succeeding in business is tough, but that’s what makes the rewards even sweeter.

What excites you most about your industry?
Everything excites me. These are my beliefs:

  • Why is accounting important?
    The accounting department is the heart. Cash flow is like blood stream, it pumps blood to various parts of the body like cash flow is pumped to various departments and/or functions in a business. It is vital to the life and death of the business.
  • Is accounting boring?
    Accountants are artists too. They paint the numbers the way they want them to be.
  • What makes a good accountant?
    A good accountant can tell you a story about the business by looking at the numbers.
  • Why is budgeting and projection important?
    Accountants are like fortune tellers, they can predict the numbers and if you wish to understand your business and make informed decisions, feel free to speak to our friendly consultants to secure a meeting.

What’s your connection to Asia?
I was born and raised in Singapore, and here’s where I want to be.

Favourite city in Asia for business and why?
Singapore is my favourite city. We have great legal systems in place, good security and people with integrity. Most importantly, we have a government that fosters a good environment for doing business. I recently went for a cultural exchange programme in Hong Kong to learn more about their startups. I found out that the Hong Kong government generally only supports local business owners in terms of grants. They’ve recently been more lenient and changed the eligibility to include all businesses that have at least 50% local shareholding. But comparing that to Singapore, the government only requires a 30% local shareholding to obtain government support. In the early days of starting a business, all the support you can get is precious. It’s great that we have a government that understands that.

What’s the best piece of advice you ever received?
The best time ever to plant a tree was 10 years ago as the tree would have grown so big to provide you with shelter and all. When is the next best time to plant a tree? It is today. Because in 10 years time, the tree would have grown big enough to provide you shelter and all.

Who inspires you?
Jack Ma. His journey to success is one of the most inspiring as it proves that with determination and great foresight, even the poorest can turn their lives around. I personally relate to his story a lot, and this is my favourite quote from him, “If you don’t give up, you still have a chance. Giving up is the greatest failure.”

What have you just learnt recently that blew you away?
I’ve faced multiple rejections throughout my business journey, and recently came across a fact on Jack Ma about how he was once rejected for 32 different jobs. It resonated very deeply and taught me the importance of tenacity, especially during tough times.

If you had your time again, what would you do differently?
Nothing. I live a life with no regrets. Everything I do, regardless of whether it is right or wrong, happy or sad, and regardless of outcome, it’s a lesson with something to take away.

How do you unwind?
I love to pamper myself through retail therapy and going for spas. I also make a conscious effort to take time off work to have a break outside to unwind as well as to uncloud my mind. This moment of reflection from time to time helps me see more clearly on how I can improve myself.

Favourite Asian destination for relaxation? Why?
Taiwan! Good food with no language barriers and the people are great!

Everyone in business should read this book:
I don’t really read books. Mostly, I learn from my daily life and interactions with hundreds of other business owners. To me, people tell the most interesting stories.

Shameless plug for your business:
We’re not just corporate secretaries, we’re “business doctors.”
U Ventures is a Xero certified advisory firm that goes beyond traditional accounting services to provide solutions for your business. You can reach us on our website: http://uventures.com.sg/

How can people connect with you?
Converse to connect. You can reach me via email at [email protected] or alternatively, on LinkedIn here: https://www.linkedin.com/in/jacekoh/

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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