Savings should be the 1st Expense of Our Income

Everyone wants to become a Millionaire but to become one, one has to accumulate it. We have to dream and dreams do come true.  To accomplish that dream we need to have a GOAL.  What we need is to be committed to the goal we have set. On a lighter note, my Mentor  once told me “Commitment is like being pregnant — either you are or you aren’t”. There is no middle path.

Discipline and commitment are the key factors if we have to be successful in our quest to save a million dollars. We need to save at the top. “Savings should be the 1^st expense of our Income”. You see, there are two groups of people — Group A and Group B. Group A saves first  and then spends and the Group B  spends first and then saves (if there is any savings left out) . We have seen Group B works for Group A.

Right from the start of the day we  all are  inundated with messages that encourage us to spend – News Paper / Shopping Mall / Radio / TV Advertisements  like — Save Dh500 by buying this camera at Shopping Festival — how can one  save money by spending on something that we probably didn’t need in the first place?

If we have to be successful Savings should be the 1^st expense of our Income”. We have to save at the top.

One of the most simple formula to become a Millionaire is to have a mind set of “Pay Yourself First”.

Let me ask you a question … if your Employer told you today that because of economic downturn we are forced to have a Salary cut of 10% from this very month … what will you do ??????  Assuming your salary of Dh10,000  from this month would be Dh9,000 would you be able to manage?  Most of us would find a way of managing as there was no other option as well.

Why can’t we save this 10% ?

We left our home countries after leaving behind our parents relatives and friends to  save for our future, earn more and to provide ourselves and our families with a better lifestyle. We do enjoy a better lifestyle here till the time we are here in UAE but many a time we forget the other reasons like going back to our home country  and don’t save. Majority of us will face a Huge financial difficulties  if we do not save for tomorrow.

To become Millionaire it is not what we earn is Important … however What we SAVE is of UTMOST importance. In the many years I have spent in the UAE I have come across many individuals who earn Dh50,000-60,000 a month and I know they will not save a million because their habits are not right. And I have met people who earn Dh10,000 and Dh12,000 a month and have saved good amounts of money because they pay themselves first.

Many of us would seriously like to know where does our Salary goes by the time months end. Isn’t it??

Let me take you through the journey where the salary goes.

Specially in UAE during a typical month.

The first 10 days - 30% of Monthly Income - you work for the landlord.

Next         7 days – 25% of monthly Income -  you work for your child’s school

Next          4days – 15% of Monthly Income     -  you work for grocery (LU Lu / Spinneys )

Next          4 days-  15% of Monthly Income - you work for your utility ( DEWA / SEWA) companies,

Next         4 days – 15% of Monthly Income – you work for the bank — to pay your car installments / debts

At the end of the month you’ll find you have worked the whole month for others and not yourself.

Pay yourself first. “Savings should be the 1^st Expense of your Income”

A key to a disciplined savings habit is also to live within your means.

We often come across individuals who spend 100 per cent of what they earn and some who spend 120 per cent or more than their income (Credit Cards do help them / special Offer do help them)

Credit cards, special offers and promotions, advertisements from banks and stores stating: Use this credit card and buy this 70” state of the art LED TV and get a 40” TV free. Or quite often at Gitex we see — buy the latest mobile and pay for it in 12 months. These offers entice us and very often make us spend on items we don’t need or plan to buy. How often have you gone into a shopping mall and come away buying everything else but the thing you went there to buy in the first place?

Buy One get one Free … Except the better half everything comes free.

Living within your means being aware of what you need and disciplined enough to not purchase the things you don’t — no matter how tempting the offer. Sure there are times when it makes financial sense to go for a good offer, but it should be for the things that are necessary or purchases we plan to make in the very near future.

Here are some tips on small things that we can implement to help us have more money to save:

Pack-a-lunch — fast food lunches are not only generally unhealthy, they also can be expensive over time. Make and pack your own lunch before you go to work.

Skip going out to a restaurant — have a candle light dinner at home with your wife or loved one. If you dine out frequently with friends get creative and reduce one outing to a fun evening at home.

Avoid getting trapped into a flashy lifestyle: As my friend would say — he’d be a millionaire by now, only if his neighbour didn’t keep buying newer and bigger things.

Give up smoking — in addition to the health benefits, you also save money.

Make a list before going shopping and stick to it.

Pay your bills on time and avoid late fees.

Making small little changes in our lifestyle can really help increase our savings by maybe 10 per cent. How often do we go to a restaurant and tip the waitress 10 per cent extra just because she was pretty?

There are many more such measures that can be put in place. All of us need to periodically examine aspects of our expenditure and evaluate its necessity. Yes, we have to enjoy life, I am not saying that we have to take away the joy out of our lives but we have to be responsible for our finances as well.

In the next parts we will look at how much you need to save on a monthly basis to achieve a million and also take a look at the real secret to going seven figures large; a miracle ingredient in your investment mix that Albert Einstein deemed “the eighth wonder of the world”. 

Winners - Humourous Speech - Club 7492 / Area 7 / Dist 20

         

Millionaire Mindset

Thomas Stanley and William Danko, in The Millionaire Next Door, explain that most wealthy people and self-made millionaires drive used cars, live in average neighborhoods, wear average priced clothes and watches and are very careful with their money.

In addition, very few of them buy boats, recreational vehicles, second homes, personal airplanes or   invest in expensive vacations. Stanley and Danko point out that there are “Those who look rich, and those   who are rich.” Your job is to be one of those people who are genuinely rich, rather than those who spend a lot of money but who have very little in the bank.

Develop a Rich Mindset

Truly rich people develop the habit of “getting rich slow” r than “getting rich quick.” To ensure this, they have two rules with respect to money. Rule number one: Don’t lose money. Rule number two: If ever you feel tempted, refer back to rule number one, “don’t lose money.”

During the cultivation of a millionaire mindset, one of the best financial habits you can develop is the habit of getting good financial advice before you do anything with your growing account. Ask around and find a financial advisor who  has already achieved financial independence by investing his or her personal money in the areas that he or she recommends to you. Your ability to choose excellent financial advisors can be the critical factor in making good investment decisions.

Develop the habit of investigating before you invest in anything. The rule is, “Spend as much time investigating the investment as you spend earning the money that you are thinking of investing.”

Fast financial decisions are usually poor financial decisions. Develop the habit of taking your time, of moving slowly, of finding out every detail of the business or investment before you ever think of writing a check. Never allow anyone to pressure you into an investment decision. Never allow yourself to feel that a financial investment decision is urgent and must be made immediately. A wealthy man I worked for once told me, “Investments are like buses; there will always be another one coming along.”

Sometimes, the best investments are the ones you never make at all. Make a habit of thoroughly understanding the investment before you ever think of parting with your hard earned money. If there is anything that you do not understand, or which seems too complicated for you, do not put your money in that area at all.

Wealthy People Never Trust to Luck

An important habit for financial success is the habit of insuring properly against any risk that you cannot write a check to cover. It is amazing how many people have spent years accumulating money and then lost it all because they did not have proper insurance policies in place. Develop the habit of using what I call “worst possible option” (WPO) thinking. Always ask yourself, “What is the worst possible thing that could happen in this situation?”

No one likes to spend money on insurance, but it is one of the smartest things that you can possibly do on your road to financial independence. By insuring properly, you will never be caught off guard by an unexpected accident or emergency. An additional benefit of being fully insured is that it gives you a feeling of calm confidence that allows you to think more clearly and be much more effective in everything else you do.

Wealthy People Cover Their Assets

As you begin to accumulate money, develop the habit of protecting your estate from unnecessary taxes and frivolous lawsuits. Invest in the services of a lawyer who specializes in wills and estate planning. Set up a family limited partnership, under the direction of a good lawyer, and transfer your assets into the partnership so that they cannot be seized in a lawsuit, or taxed away if something were to happen to you. As the old saying goes, “A stitch in time saves nine.” Small actions that you take in planning, investigating and insuring your assets can save you an enormous amount of money on your road to financial independence.

Do Your Homework

In addition to the habits discussed above, another important habit that wealthy people develop is the habit of carefully considering every expenditure before they make it. This involves getting as much information as possible on the various prices and costs involved in any financial decision. The power is always on the side of the person with the best information.

Develop the habit of negotiating more effectively to get higher prices when you sell and lower prices when you buy. A good negotiator can save or gain 10%, 20% and more on every financial transaction. Each dollar saved or gained is additional money that you can put away to accumulate and grow in your financial fortress account.

Develop the habit of asking for higher prices when you are selling and asking for lower prices when you buy.Ask for lower interest rates. Ask for better terms and conditions. Ask for immediate payment when you sell and ask for deferred payment when you buy. Ask repeatedly. Ask pleasantly. Ask courteously. Ask expectantly. Ask confidently. But don’t be afraid to ask. Ask for what you want, and if you don’t get it, ask for something else.

Achieve Financial Independence…Slowly

Most great fortunes are built slowly. They are based on the principle of compound interest, what Albert Einstein called, “The greatest power in the universe.” In full 99% of cases where people become wealthy, it is over a long period of time, and it is based on slow, incremental growth as the result of compound interest.

Every dollar that you save, properly invested and protected, has the ability to grow 5% – 10% each year. As your money grows, it compounds on itself, and grows even more. According to Stanley and Danko, it takes the average millionaire 22 years to accumulate a million dollars from the time he gets serious about his financial life. Mostwealthy people get rich slowly, by gradually increasing their earning ability, saving more and more from their income, and investing it carefully and intelligently so that it grows and compounds over the years. You must do the same.

More Than the Millionaire Mindset

Achieving financial independence as the result of developing Million Dollar Habits is a great goal in itself, but it is not the most important thing. It is the person that you have to become, in terms of courage, character, thoughtfulness, and persistence that is most important. As the result of becoming financially successful over a long period of time, you will feel truly happy and satisfied with yourself, and with every other part of your life. This is the most worthwhile goal of all.              

Source : Internet and Unknown ... Copied from some blog.

Legacy of LOVE

One Idiot - An IDFC Foundation Initiative

My New Year Financial Resolution - 2013

Primarily SAVE

Systematic

Accumulation (of your)

Valuable

Earnings

-          Save  …. What?       Health / Money / Good Will

-          Save for Whom?       Self / Family / Friends

-          Save but Why?         Protection from Unforeseen Circumstances ( Unexpected Expenses )  and   Foreseen      

e                                     Events (Expected Expenses ) of Life.

-          Save but When?       As soon as Possible. However ideally and theoretically from the 1^s Income , but         

                                       Practically immediately after reading this piece of information.   

-          Save but HOW?       Consult any Qualified and Experienced Financial Ad visor – Preferably 

                                       Certified Financial Planner.

       

      Bottom Line          " Savings should be the 1st Expense from Income " & 
                                        No One Regrets Savings "

Don't Invest In Equities!!!

Don't Invest In Equities!!!

“As it happens, retail investors are helping markets more by staying out than by investing in equities. So from a purely selfish point of view, we (current equity market participants) do not mind if you stay away from equities. Keep your money in low interest bearing savings accounts and this will help banks raise cheap funds.

Then, while you earn taxable 9% per year in fixed deposits and 4% in savings accounts, we will continue to buy HDFC Bank, IndusInd Bank, Yes Bank and the like, which are up 3.5 times, 11 times and 5.9 times respectively since December 2008. Also, remember to pay all your EMI installments on time so that retail loans made by private banks do not get into trouble and we can continue do well owing their stocks.

Indian retail investors are more or less completely out of equities and would rather buy gold instead. So keep buying gold so that we can do better than you by owning stocks in Titan Industries and other jewellery companies. You should not care that at all that while the gold you bought is up 2.8 times in four years, the stock of Titan Industries, which sell gold to you is up 6.9 times during the same period. If Rakesh Jhunjhunwala had bought physical gold instead of shares in Titan when he did, he would not be a billionaire today.

In fact, go ahead and buy real estate, taking mortgages from HDFC and LIC Housing Finance. How else we would have made 2.8 times and 5.7 times in these stocks in five years? And when you do buy these apartment and houses, do insist on using the best construction material- cement, sanitary ware and so on. It is only because you do not buy equities and spend on real things that we could make 192% on ACC and 4.5 times on Hindustan Sanitaryware since 2008. A house is not done until it’s painted, so remember to keep a budget for decorative paints from Asian Paints (stock is up 4.8 times in four years)

Why should you invest in equities when you can buy insurance products? This world is interesting precisely because we think differently from each other- while you are happy buying insurance, we are happy owning shares in companies that sell you insurance. Thanks to you, shares in Bajaj Finserve are up 6 times in value and shares in Max India are up 2 times in the past four years.

Follow your heart and we will follow you. If you like going to malls and spending time there, please do some shopping as well- some of us own shares in Phoenix Mills which is up 2.7 times since 2008. In fact, it may be times for you to upgrade your car. Why buy equities when you can spend the same money on a new car or motorcycle? Let us do the more boring job of continuing to own stocks in Maruti and Bajaj Auto which are up 2.9 and 10.8 times respectively since 2008. Why not add your name to the waiting list for an Enfield this year while we own shares in its manufacturers, Eicher Motors which is up 12 times since 2008?

Life isn’t just about making and investing money; it’s important to enjoy life’s little pleasures. So go and watch a movie at the multiplex and munch some popcorn while you’re there. Meanwhile, we’ll buy shares in PVR (up 3 times in 4 years).

You’d rather spend time in front of the telly? We’ll still love you- shares in Zee Telefilms and Sun are up 3 and 3.5 times because of loyal viewers such as you. Call for Pizza delivery at home. Jubliant Foodworks, which owns Domino’s, is up 5.4 times since its IPO in 2010.

When you’re in mood to be sinfully self-indulgent, don’t make any resolutions to give up smoking or drinking. You may not want to invest in equities but spare a thought for investors in these stocks. Your actions so far have helped these investors make 3.8 times in ITC, 10.3 times in United Breweries and 2.2 times in United Spirits in 4 years but they still look for your continued patronage of these businesses.

We wish you a very happy and healthy 2013. If, God forbid, you have to visit a hospital, remember that as stake holders in Apollo Hospitals (stock up 3.8 times) we will be thanking you from the bottom of our collective hearts. And if you do fall sick in 2013, take comfort in the fact that you are helping investors in stock of companies such as Dr.Reddy’s (stock up 4 times) and Cipla (stock up 2.3 times).

We invite you over to our side in 2013 but still love you for choosing instead to be loyal customers of the businesses we own. Now it’s up to you to decide who you would rather be – part owners of Indian companies or just their loyal customers.”

Source: Samir Arora - Helios Capital

Wealth Management & Financial Planning Software:
http://www.redvisiontech.com/Wealtheofficedemopresentation.pps

 — with Rajeev Gupta, Lovegeet Dhuria, Bhupendra Srivastava and 46 others.

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