Don’t Let Money Manage You !
I have a very basic question that is sometimes hard to be answered honestly, do we live for money ? or we have money to keep living ? frankly thought could switch that off… isn’t it ? 🙂
Since the ancient time, discuss about money always be the hottest topics, as we know that some people have it, some people don’t, some people gets it easily and some people need to work hard and even dying for it, but most of that, no one ever complains having too much of it ;).. right ?
The old problem about money is about how to get more money, and when we already have it, there will be a new problem, which is we have to find the right way to spend it and take control of it so the money could become your “nice partner ” on your journey of life… hhhmm…. heavy topic? hehe…. you know.. I’m not an expert about personal finance management, that is why I write this article to remind me and share it with you, so we can learning more about financial self – control.
I took a book written by Mr. Johny Gunawan as the reference for this article, he is a senior finance consultant at MDI, he wrote an interesting book talking about How to be Master of Our Money.
In His book, firstly Mr. Gunawan (this name remind me of someone who has lots of money 🙂 , amin … ) will ask us to ask our self, why we want to learn more about personal finance? how will it impact you and people around you ? your motivation for controlling personal finance is extremely important, you may ask “why ?” , according to this book, getting your personal finance in control is not an easy “journey” , it will take a lot of discipline, self-control and hard work, and sometime you have to write the reason why as big as possible and put it somewhere in your house where you can see it clearly, so it will be a tool to help remind you why you are doing all these.
The concept actually very simple, the key of personal finance is about how much money left in your “basket” every month, it is the one that you need to be watching out for, the money will come and go, but the basket will always stay, so watching the basket is the key ! in order to watch and control the basket you have to watch and control both : income and expenses, in finance terminology the basket will be named “the cash flow”.
People think, as long as they can get more income than expenses, they will be fine, this is true to a certain extend, that is why everyone always watches the income but rarely watches the expenses, and to be honest.. I do the same way.. 🙂 , but Mr. Gunawan not totally agree with this thought, he said, to get control your cash flow you have to lists what are your income and expenses, be honest and be real. Be flexible, don’t have to exact and balanced, the idea is simple, in order to increase cash flow, you need to increase income or decrease expenses.
Herewith the Tips that Mr. Gunawan give us for controlling our finances :
1. Control your Lifestyle : you need to be in control, you don’t need to change you hand phone so fast just because your friend also change his, you don’t have to purchase branded goods and clothes all the time, you don’t have to buy overpriced in anything to enjoy your life, so you will be in control !
2. Plan your Purchase : never ever be forced into making a purchase, no matter the reason, as a paying customer you have the power ! when to buy, what to buy. if you don’t like it don’t buy it. Set aside budget for things that you want to buy, rather than buying it for installment, why don’t you pay “your installment” to your saving account first and then buy the thing you want? in this way, you still get to gain some interest along the way.
3. Track all your Expenses : you need to track you expenses and categorize them, so this way, you can analyze which item actually takes away most of your money, and maybe you can think of some creative ways to reduce it or control it even better.
4. Increase Income : basically there are 2 types of income : Active income & Passive income, Active income is income that you gain in exchange of your time, such income will only come if you are there, example : professional fees and small business owner with no system. Passive income is making money work for you, such as fixed deposit, mutual funds, property rentals, royalty, or having cash flow from business – based system like franchise business, ect.
5. Prepare Strong Foundation : before you build you finance getting vehicle, you need to manage your risk before yo go for your gain. have at least 3 months of your expenses in your saving account, why ? because when you are in the middle of investing in something, things might go not in your way and usually when you break your investment half way, the price you get from it might be not favorable at that time. Rule no.1 for investment : never lose money ! , Rule no.2 for investment : go back to rule No.1 😉
6. Smart Buying : Challenge your self to become a smarter buyer by asking your self ” what can I do with the same amount of money so that I can get some income and get the item that i need to buy in the same time ? wow… I know… it’s a hard thing to think about and done as well… because we to know the Return Of Investment from anything that we want to buy… hhmm…. but it is worth to try, think this way will give you more choices in managing your finance.
So.. those are Tips that I took from Mr. Gunawan’s book, I do realize those are not an easy things to do, but you may try all of that, it is worth, but first, make your self prepared to be in controlled, once you try and commit with your cash flow control, you will find eventually that you can be master of money, manage them and never let them to manage you.
Good Luck Dear 😉