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Monday, 24 June 2013

Aiming for the 1%, or even the 10%

So you want to be part of that upper class bracket of your society, or even settle for upper middle class.

It's not going to happen on its own, nor is it likely to happen if you keep relying on that lottery ticket every week to take away your financial woes.

For starters, you wouldn't be reading this if you were already where you wanted to be right?

So let's cut to the chase and see where the majority of the population make their mistakes.


Living one month at a time

I'll admit, I did this from the time I first started getting a stipend in university, up until the end of my first year working, which was 2006-2012. That's 6 years of money down the drain that I'm never going to get back.

I was one of the fortunate ones who had a scholarship while I attended medical school, which meant every month for 5 years, I got TTD$2400. For anyone foreign reading this, it costs about TTD$12 for a loaf of bread, so I had a pretty comfortable life as a student.

Now I knew nothing about saving, let alone investing, nor did I have any bills to pay, apart from gas and phone money.

Yet every month, I would down to my last few hundred dollars, having to borrow money from my mother at times.

Why? Frivolous, careless spending. Living beyond my means. I was a student. I had no right spending $300 on a pair of jeans, or $600 on a pair of sunglasses, or $800 on a watch.

Say I was careful with my money, spending only $800 a month on necessities and entertainment, which should have been more than enough. I would be left with $1600 a month.

That's $1600 a month for 60 months, or $96,000.

Now I didn't have $96,000 at the end of those 5 years. Nope! I had less than $500 to my name.

If it's one thing I learnt, it's try to live within your means.

Saving at least 10-20% of your take home salary at the end of the month, before you pay bills, loans etc. will go far in the next 20-30 years.


Invest Invest Invest

I think I've made my point clear. Not all of us can be financially savvy, least of all me.

Everyone knows that bank interest rates are a joke. Banks are just there to keep your money safe, nothing more, AND they charge you for it, even though they use your savings to invest and make their billions.

I wish though, that I did start investing at a young age. I mean, I was't going to get all up in the stock market's behind. I was just a student back then.

However if I did throw my money into a mutual fund, the average one gains about a 5% return per annum.

Let's see exactly how powerful compound interest is.

If I had invested my $1600 a month for 5 years at 5% per year, at the end of those 5 years I'd have a whopping $111,000. That's $15,000 richer for doing nothing but sitting on my rear and letting my money do what it does best.

Even if you're not sure how all of this works, find a friend who does. It's worth investing that money financially, than into a bottle of cheap rum. That way, you can get the expensive stuff years from now. Makes sense right?


Credit cards

Credit cards can quickly become your worst nightmare.

I for one, am really glad I didn't get a credit card until I started working. If I had, then those years in university of no savings would have turned into years of debt.

There's a simple solution. If you find that you have nothing left of your salary every month, don't get a credit card. You simply can't afford it.

How long are you going to keep paying the minimum?

Credit isn't free money, the interest from your credit card will make government taxes seem like a PiƱa Colada on a hot day.



Overpopulation

Many of you may laugh at this one, not take it seriously, or deem it offensive, but I call it as I see 'em.

The majority of people who live in poverty, or even those in the middle class can't make it any higher up the food chain for this simple reason.

Why would you have more mouths than you can afford to feed?

The other day I saw a lady on the news, she was begging for handouts because her tiny wooden house was destroyed and she had nowhere to keep her SIX children. For starters, how do you even begin to fit SIX children in there. Why would you have SIX children and nowhere to keep them? She had none of my pity.

It's not the 1600s where there's no contraception or access to abortion.

Contraception is widely available, even free in some countries including mine.

If abortion isn't legal in your country, it's far cheaper to travel abroad and have it done somewhere legally than having to raise a child!

Children are an expensive investment, one which you should think through thoroughly before going ahead with it.

It's better to wait the extra years and start a family later, when your income is closer to where you want it to be.




Education

I don't even know where to begin with this topic.

Many people out there who labour day after day, complaining about all the people in suits who make more than they do. A lot of them have no right complaining.

Don't try 'get rich quick' schemes and fail time after time.

With a university degree, there are a lot more higher paying job opportunities available to you than without.

That sounds a LOT easier than it actually is for many people. Students in my country are lucky that tertiary education is free, but in countries where it isn't, those who can't afford it work hard everyday, job after job, to make their way through university and get that dream job, with the dream salary of course.

For those of you who know that 1 in a million person who dropped out at high school level and made it big with their business. Do you really prefer those chances, with less than 5% of university graduates being unemployed, versus 3 times the unemployment rate in those of a high school education or less.



For all those who were offended, or insulted by this post, take it to the complaints department on the 5th floor.

I wrote this to help those who want to be better, and have a better life for themselves.

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