I have just experienced a tremendous shift in mindset when it comes to money management. I have always been the extremely risk-tolerant “investor” that would put all of my available funds into high risk assets (ahem, cryptocurrencies, high growth tech stocks) without having the necessary cash cushion to give me the holding power that I need. I was unhealthily obsessed with having my money for me instead of having it sitting in a fixed deposit or money market fund with a measly 4-5% rate of return.
I’ve been doing a lot of reading lately especially regarding personal finance and company building. Thanks to some of these books, I went through a deep round of introspection as to why I view money the way I do.
And boy, I had such a cancerous view towards money.
So why do I view money the way I do?
The biggest influencers of the way I view money is my father. My father grew up in a very poor family, started working as a waiter to help out with his family when he was a teenager, worked a steady job all his life and is the best money saver I know. My father was a simple man and he still is. He used to spend RM1 a day eating at the subsidized canteen in his office (crazy right?). His life ambition was to have all his children graduate from university.
Due to my father’s upbringing, he always prioritized security, which is why he rarely ventures into anything other than fixed deposits and the concept of “guaranteed income”. When I was a teenager up until my early working days, I have always disagreed (strongly) with my father for his conservative view towards money. Being completely honest, it pissed me off so much!
My money mindset comes from an negative source derived from resentment and hatred.
This resentment has unconsciously make me want to be everything my father was not, even if it means risking all of my available money on a stupidly high risk investment/gamble. To top it off, even with a healthy salary from Vape Club, I was not happy. I actually had less money in my bank before I started my own company! Now that I am aware of why I am like this, I recognize that I have a problem. If I had keep doing what I did, I believe I would die broke even if I had an extremely profitable business that pays me a very good salary every month.
Thanks to some learnings from the books I’ve read recently, I started to shift my mindset with a few hacks that made me happier, improved my relationship with my parents and of course, have a clearer plan on how to achieve financial freedom!
- Be grateful with what you have, but do not be content.– I personally do breathing exercises in the morning and think about 10 things that I am grateful for.- If you cannot be grateful with what you have now, there’s no way you deserve more than what you already have. Doing the same thing positively is always better than doing the same thing negatively.- Set high goals to achieve more while staying grateful.
- Develop a cash flow statement.
– Treat yourself like your own company.
– Have different bank accounts or money market funds, no matter how small the money is.
This is how I breakdown my monthly income nowadays
– Necessities Account (45%)
This is the account for food, lodging, bills, insurance and transportation to keep you going on a day to day basis.
– Financial Freedom Account (30%)
This account is for investments only, never to be touched or spent. For growing your wealth.
– BALLER Account (10%)
The objective of this fund is to have money to blow on anything you want without having to feel guilty about it.
I personally use this to travel and eat epic food. This fund could be used to buy clothes, eat amazing food, spa packages. Dry this up every quarter or every six months. Set up a money market fund for this.
– Long Term Savings (10%)
The objective of this fund is to save money for future expenses. For getting married, buying a car, a new couch, new TV, travel. Set up a money market fund for this.
– Giving account (5%)
The objective of this fund is to remember that no matter how poor you are or how little you earn, there will be people who need money more than you. Have the practice of giving to people in need and stay grateful. The plus side is, you get tax deductions for giving back. 🙂
- Automate your transactions into these accounts
Planning your personal finances should be easy. Make it easier by setting aside money right after your paycheck. If you get your salary on the 25th, set the sta
If you’re not a proficient money manager (yet), the easiest way to do this is to engage a fiduciary to help you manage and plan out your money. This is extremely important. The important difference between a fiduciary and a “financial consultant” from individual bank is that a fiduciary took an oath to provide the best financial advice to their clients and usually have access to financial instruments across many companies, whereas “financial consultants” from Public Bank for example will have a vested interest in selling you things that you do not need, and only have access to financial products from their own company. Fiduciaries also typically charge way lower fees compared to bank consultants. Check out these fiduciaries (IMax Financials, Whitman) Tweet me or DM me on Facebook if you need advice in this area.
Some of you might see this as limiting your behaviour around finances – I was just like all of you before I shifted my mindset thanks to Harv. T Eker’s book – Secrets Of The Millionaire Mind. If you’ve already read the book, you’ll know what I’m talking about. After implementing some action plans in the book, I found myself liberated from the heavy responsibility and stress of having to plan for my retirement.