Secrets of the Rich People

Times are hard nowadays, everybody has been affected by the World Economic Crisis and everyone tries to find ways on how to save money and how to augment their income. In my quest for Financial Independence I have chanced upon a very interesting and enlightening book entitled Rich Dad and Poor Dad by a best-selling author Robert Kiyosaki. Here are some of the money lessons I have learned:

1. The Rich don’t work for money. They have money worked for them.
Most people work for money day in and day out to meet their needs for fear and greed. Fear for running out of money to meet their needs and greed to buy better things or enjoy a luxurious life. And usually this is the mindset of the poor and middle class regarding money and work. The rich, however work even for free sometimes but aim to master money and not money drive them. Rich people are more on the lookout for creative ways to generate more money with the least effort required.

2. Be financially literate.
An asset is something a person owns. A liability is something a person owes. We think of a beautiful house and a latest model of car as an asset but Kiyosaki clarifies them as liabilities, since they have to be paid for every month. He considers an “asset” any investment that put money back in his bank account. Kiyosaki’s advice: Invest in money-generating assets first, such as money market instruments or real estate which can be rented out or resold at a profit. Delay gratification.

3. Have your own business.
Kiyosaki’s solution of getting out of the rat race is to have your own business.

4. Know all you can about taxes and corporations.
Kiyosaki writes, if you put up your own business, it will be wise to have it incorporated. Because the income tax rate for corporations is lesser than individual income tax rates. Live a good life by charging car payments and insurance as corporate expense. Limited exposures to liability come with Corporation. If worse comes to worst, creditors can go after the company assets, not your personal one.

5. The rich invent money.
The rich take calculated risk. They can turn P1,000.00 into P100,000.00 legally. According to Kiyosaki, most people only know one solution: work hard, save and borrow. He had bought a house or apartment building without enough cash money. He would pay for the deposit, look for a buyer, and then tie up the deal. The buyer would then pay the original owner and he walk away with profit in his wallet.

6. Work to Learn.
When you look for a job, look for one where you will learn new skills. To Kiyosaki, the most important specialized skills are sales and marketing. As an example, if you work for a textile company. Observe the market. You’ll be ready when you put up your own business. Having your own business can give you endless possibilities.

So what do you think? Feel free to send me your thoughts.

How to Save Money

HOW TO SAVE MONEY

Part of being single is spending all the money in your paycheck after receiving it. And the aftermath of your too much spending left you reeling when you check your bank account again. Based on my experience it really pays to have money in your savings account. Who knows we might need it if emergencies caught on us. Here are some tips on how to save:

1. Start young.

Managing your own money can teach responsibility, why not start to invest in trust funds, time deposits, special or regular savings and Treasury notes as early as you are already earning. These bank options can make your money grow with interest rates given time as it matures.

2. Set goals.

Goal setting requires determination and discipline. if you want to save for your future then stick to it, avoid being fickle-minded about it. It also helps if your goal is specific. For example, say you want to save 5 thousand pesos every month or every payday not around 1 thousand to 5 thousand pesos. Goals should also be based on your priorities in life and should be time-bounded.

3. Curb spending.

No unnecessary spending please, that should be a motto for every saver. A money-wise person is always on price watch and knows the value of spending wisely. Keeping track of day to day expenses and then monthly expenses can be of help in saving.

4. Develop good spending habits.

When your being a shopaholic kicks in, stop and think before you act on your impulse to buy. Is the object of your desire, just wants but not needs? Would I die if I don’t buy this right away?

5. Go easy on credit cards.

Treat credit cards as cash because it’s easy to overspend using it. Better yet pay in cash rather than swipe cards so you can stick on your budget.

6. Do some cost-cutting.

You can cut lunch-outs and instead bring food (baon) to work. You can also spare carbonated drinks and opt for water which is a healthier option. There are many parts of your expenses wherein you can trim yet still not deprive you’re self of your needs.

Do you think you too can do this? Let me know if you can add on these tips.