Sunday 22 December 2013

Earn, Save, Protect, Invest

To become rich or to achieve early financial freedom, it does not depend only on how much you earn, but how much you save and how well you protect and invest your savings.

A Person X earns RM8,000 a month and spends RM7,000 a month.
A Person Y earns RM4,000 a month and spends RM2,500 a month.

Who will be richer? Person Y? Not necessarily it is Y. 

Though Y saves more money compared to X, but if X invest his/her money wiser, X may attain financial freedom faster. However, Y will definitely have an upper hand in the race towards financial freedom.

So, we have to: earn more money, save more money, protect the money adequately & invest the money wisely.

Earn more
  • study further in your field & work harder to improve your rank and salary
  • study in other fields to improve your qualification and salary
  • do part time jobs 
  • do full time/part time business - retail, online, network marketing etc
  • change to a better job that earns more
Save more
  • Save on unnecessary or luxury expenses (food, personal belongings, car, house etc)
  • Delayed gratification
  • Plan, record and monitor spending
  • Adequate life insurance coverage for household income earners
  • Adequate medical insurance coverage for every household members
  • Adequate insurance cover for important assets
  • A will to protect our assets
  • Invest in investment vehicles which can protect our money against inflation
  • The higher the return the better, according to our risk appetite

In theory, it is always easy to talk or write. In practical, it takes a lot of time, sacrifice, experience, knowledge, courage, discipline, patience, luck & money as well.

Nevertheless, it is unwise to jeopardize our health, dignity and family time just to become rich. Do not sleep 5 hours a day, eat Maggi mee every day or drive an unsafe old car to make or save more money.

Moderation is the key.