Maximising your broadband subscription using dailymotion

daily
Originally uploaded by panzergrenadier

Have you heard of www.dailymotion.com? It is a website that similar to youtube except that you can find many american drama shows e.g. "Heroes" that were just aired in the US being uploaded by people. It is the Napster of videos and you are able to find many interesting shows include "Battlestar Galatica" drama series as well as "Heroes" and "House".

Since many of us pay for our broadband subscription, we might as well make full use of our bandwidth and save money from watching movies or renting DVDs. :-)

Financial freedom is about working, saving and investing. We can work on the income part and we can work on our expenses as well. Reducing expenses while maintaining a decent standard of living is one of the methods to move us one more step closer to our goal of financial freedom.

Enjoy your favourite show on Daily Motion and don't forget that you can rent 4 sets of DVDs per week from the National Library @ Esplanade for only $20.60 per year.

Be well and prosper.

Why do we want to achieve financial freedom?

P1010021
Originally uploaded by panzergrenadier

Many of you who are reading this blog strive to work hard, be thrify, save and invest in order to achieve financial freedom. But do you stop and think about why you want to achieve the ability not to work and be able to support yourself?

What!?!! Some of you might be thinking, don't be stupid, of course EVERYONE wants to be financially free..."so that we don't have to work"...

Not working... Isn't this your dream? Isn't this my dream? Isn't this all our dreams. But wait, what are we going to do if we do not have to work?

Ah... there lies the "eureka" moment, we are coming to the point where we are closer to identifying what we really want to do with our lives!

Why do we work
We work because we have to. We work because we need to support ourselves, our families, our car/house/lifestyle/expenses/vices etc. Some of us even work because we love to. Ultimately, our reasons are as varied as there are plants and animals in this world. The money we earn from work goes into supporting us and for us to survive. But beyond that, what drives us to exist, to breathe and to truly live?

Financial freedom is about choices
My dream of financial freedom where my investment assets generate sufficient returns to sustain a decent standard of living without working frees up myself to choose whether to work or not. Now I still do not have a choice. I want to have this choice. Many of you also want to have to choice. To chose to work...or not. It is this choice that is so powerful, so compelling and so enticing because we have many other things we'd rather do than work. For some of you, your work sucks, for others, your organisation sucks or your pay sucks, but whatever it is, the freedom of choice that comes with financial freedom is a powerful motivator for us to be financially free.

That power can be attained if we are focussed and concentrate on what is the one thing we want to do if we didn't have to work.

For myself, it is the ability to pursue my other interests in public speaking and volunteering. The chance to start a small business and to be my own boss.

What drives you
What is your interest, passion or that thing you would love to do if you didn't have to work?

Write it down and use it to motivate yourself to work hard, save up to build your income generating assets and to work towards financial freedom. A goal that benefits you and those around you as it brings you closer to financial freedom.

Don't forget to enjoy the journey of life though. Yes, be thrifty but at times if you want to spoil yourself a little, by all means, consider using the interest, dividend, extra return from your investment assets to reward yourself for being thrifty.

May you be on your way to financial freedom!

How to gain health and save money by cooking

Cooking is an under-rated skill in Singapore. If you believe in the concept of specialisation of labour, then you would think that it's more efficient for working professionals to concentrate on working and earning money and buy cooked food for our meals.

Well...yes and no.

While Singapore hawker fare is relatively plentiful and inexpensive, the true cost of not cooking is reflected in our health. In general, eating out can be more costly in the long-term because of the health implications.

Hawker food (and even restaurant standard) usually is:

• Not fresh
• High in sodium, oil, sauces
• High in saturated fats
• Bad bad bad for your health

So what's the alternative?

Learn to cook.

I used to be those who didn't know how to cook. Then I slowly picked up the hobby of cooking over weekends by learning to buy the ingredients such as meat (chicken, fish, pork) , vegetables, spices and sauces etc. Learning how to steam, stir-fry, boil simple dishes and soups.

Hey, isn't this a personal finance blog rather than a cooking blog? You're right, this topic is relevant to our personal finance because cooking can save you money as compared to restaurant meals. Recently I bought a whole chicken (1.1kg) for only $2.90! Wow... That's enough to feed me for 3-4 meals as I can chop the chicken into 3-4 portions, freeze most of it and cook each portion for a meal. Coupled with quick stir fry of spinach + shitake + dash of seasame oil, light and dark soy sauce, chopped garlic and onions and we have a simple nice meal all whipped up in less than 40 minutes.

The one thing that I realised from cooking my own meals is that it's very much healthier as you can control how much of salt, fats and oils you add to your dishes. In addition, the fresh onion and garlic are natural anti-bacterial agents which help to kill nasty germs in your body helping to boost your immunity.

Cooking is also a survival skill as you learn how to choose what you want to put into your mouth instead of relying on someone to cook leftovers and charge you $3-4 for that.

Be well and cook your own healthy meals towards financial freedom!

Is Multi-Level Marketing (MLM) the way to Financial Freedom?

You may have come across the term Multi-level Marketing or MLM. What exactly is MLM? According to wikipedia,

"Multi-level marketing businesses function by recruiting salespeople (also called Distributors, Independent Business Owners, IBOs, Franchise Owners, Sales Consultants, Beauty Consultants, Consultants, etc.) to sell a product and offer additional sales commissions based on the sales of people recruited into their downline, an organization of people that includes direct recruits, recruits' recruits, etc. This arrangement is similar to franchise arrangements where royalties are paid from the sales of individual franchise operations to the franchisor as well as to an area or region manager, but in some MLM programs, there can be seven or more levels of people receiving royalties from one person's sales."

The problem with MLMs is due to the fact that many MLMs are pyramid schemes or ponzi schemes, where one makes money from recruiting members to the scheme rather than commissions from selling the underlying product. Some examples of MLM include Amway, Herbal-life and so on.

One of the key questions that you should ask of any direct selling or MLM business model is what makes more money:

a) Selling the product
b) Recruiting people

If the system earns you more by doing b) then, it may sound dodgy.

Skepdic also has a good writeup on the dangers of MLM. Skepdic goes as far as to say that,

"The reason MLM schemes cannot succeed is because MLM marketing is, in essence, a legal pyramid scheme."

A close relative of mine was brain-washed by one of these MLMs in Singapore not too long ago. They used motivational seminar approach to get people pumped up about the whole business model and even pre-empted nay-sayers but telling her that her relatives, friends and colleagues would dissuade her from the MLM business and that they were ignorant, suspicious and jealous of her opportunities to success. Fortunately, she eventually realised how difficult it was to succeed in an MLM business and quit while losing only a couple of hundred dollars. It was an expensive lesson.

If you are considering MLM, think carefully and distinguish between genuine MLMs vs ponzi and pyramid schemes.

Be financially aware and prosper.

Achieving Your Financial Dream

You want to achieve financial freedom but have you ever visualised very clearly what exactly does that mean?

This is a picture of a row of houses that face a beautiful lake in Perth, Western Australia. It is a dream of mine to be able to own a house in that area with that magnificent view.

In order for me to achieve it, I need to work hard, save, invest and generate sufficient income (active and passive) that exceeds my expenses. It is one of the visual images that I use to excite me to be disciplined, take care of my health, preserve and grow my wealth and at the same time touch other people's lives through my public speaking and kidsREAD volunteering.

The various aspects of my life make me a more complete and fulfilled person. As I continue on this journey to financial freedom, I still take pleasure in helping people through public speaking and through teaching 7 to 8 year-olds english reading and literacy skills.

To be financially free, one needs to adopt an attitude of focus, discipline and abundance. All of us have 24 hours but I choose to devote considerable amount of my 24 hours to focussing on achieving financial freedom while at the same time not neglecting helping others us as my finances become better with each passing day, month and year.

To be financially free, one also counts on the wisdom, help and suggestions from those who have treaded the moral and straight path to financial freedom.

What is your financial freedom dream image and can you visualise it vividly, powerfully and clearly?

It is your ability to visualise that will help you towards that goal.

Visualise it now!

Be well and prosper.

The Five "C"s

Prior to the Asian Financial Crisis in 1997-1998, the Singapore economy was growing, people were getting wealthier, jobs were plentiful and many of us thought that the 5 Cs represented the tangible measures of success in Singapore Inc.


The 5 Cs were:

• Cash
• Credit Cards
• Car
• Country Club Membership
• Condominum

Fast forward to 2007, 10 years after the property, stock and job markets plunged for some time, we are again moving towards a time of rising property prices for mid to high end developments, full employment in "hot" sectors of the economy such as financial services and hospitality and the STI is at its historical highs durign recent days.

So what does that bode for us and how can we learn our lessons of using the 5Cs as a yardstick of success in Singapore?

You and all may have different attitudes towards the 5Cs, but we can be selective and look to those Cs that actually do help us achieve our financial freedom.

1. Cash
Let us examine the first C, i.e. Cash. Cash is still important to one's financial freedom as with cash in its liquid form, one can participate in the stock market and even property market bubble if one has sufficient amounts of it. It also allows us to move from one asset class to another depending on the time and situation. It is still core to being financially free, i.e. to amass positive cash flows that exceed our living expenses. The trick is to find good returns for cash in the current interest rate regime where bank deposits pay less than 1% on savings and fixed deposits hardly exceed 2% even on tenures of 12 months.

2. Credit Cards
Credit cards are still useful if we make them our tool instead of being enslaved by easy credit. It is a mode of payment and if you pay up within the credit period and never make use of the credit or cash advances usually charged at 24% per annum, you are doing okay. Even personal credit lines are a trap for the unwary. 12 to 16% per annum is lower than 24% but 0% by paying up within the 20-30 days is the most prudent.

3. Car
A car is a liability in my books. Decide for yourself if it is worth it. Car loans are also a form of credit and current car loan rates are higher than even mortage loan rates. So do be careful of what debt you are getting yourself into.

4. Country Club Membership
The era of the countryclub membership is over. Join a country club only if you use the facilities or do regular golfing and even then consider the value-for-money versions such as NUSS, NTU and Polytechnic Alumni Clubs. Many of the institutions of higher learning have their own Alumni Clubs which have a relatively lower joining fee and subscription. Consider these instead of spluring $50,000 to $200,000 on high end country club memberships.

5. Condominium
The condominium is a two-edged asset. If you had bought the private apartments that were targeted by developers for en-bloc sales, then congratulations on making a windfall gain. However, consider the need to shift to a less expensive neighbourhood as the property bubble makes it more expensive to buy a similar unit in a similar area. The property bubble does not distribute its benefits across all private housing. It's all about location, location and location and the central district 9,10 tend to be the ones that are moving up. Lower-end condomimiums such as Executive Condos and those in less choice locations have not moved as much as the high end property index. There are some many people in negative equity over such purchases. However, if your home is owner-occupied, and your job is reasonably stable, just keep up with the mortgage payments since you do need a roof over your head. However, those who have condominiums or private property for rent would benefit from the relatively tight rental market as the influx of immigrants to Singapore's growing economy is creating demand for rental units. Hence, rentals may be good even if valuations may not be. So for those of you who own rental units, should just reap the benefits whilst it lasts. Nobody knows if the China equity market would collapse and bring another round of Asian contagion that will burst our own equity market bubble.

Conclusion
Financial freedom still requires us to work hard, save and invest in assets (cash, condo) that will generate more passive income for us. Use credit cards as a payment mode and for discounts but be wary of the debt trap. Cars and country club memberships are a big no-no unless one looks for one that fits one's budget but there are lifestyle expenses and not assets at all.

Examine your own view on the 5Cs and be well and prosper!

Our Public Libraries - Unlimited DVDs Rentals for $20.60 per year

It is a open secret that our public libraries are a economical source of knowledge, entertainment and resources. Reading can be both a pleasurable activity as well as financially rewarding as one learns new information, skills and hobbies that can turn into a future career. Since public libaries are funded by taxpayers and provided free-of-charge to residents, why not take advantage of this public resource to save money on entertainment.

Magazines and Periodicals
The library stocks many of the periodicals that one finds on the newstand. Instead of paying that $5.00 or $6.00 for that FHM or HERWORLD magazine, why not borrow these from the library using your NRIC (if you are already a registered library member)? Granted, the latest magazines would likely be borrowed but you can get hold of the last couple of months. Periodicals such as Fortune, Time, Newsweek are all available from NLB libraries.

CDs, DVDs and Movies
The library@Esplanade provides DVDs that we can borrow relating to drama serials, movies and science-fiction series. Boxed set of Star Trek, Cheers, Seinfeld and even Space 1999 can be found at this library. There is a catch of course! The borrowing period is 1 week and you need to be a Premier library member and pay an additional $20.60 per year, or only $0.06 cents a day to enjoy this privilege. Compared to paying $3-5 per rental for 2-3 days from VideoEZY or your neighbourhood video rental shop, this is a bargain. I particularly enjoyed following the first 2 seasons of Deep Space Nine (Star Trek spin-off) which was not shown on Singapore TV and hence it was good to be able to watch such series.

Novels
The fiction section of the library stocks most of the popular fiction e.g. Tom Clancy, David Eddings, Nadine Godimer, James Michener, Charles Dickens, JK Rowling etc. If you are really desperate to reserve one of the popular fiction books that were just released, you can pay $1.55 to make a reservation online through NLB's website and request to collect the book from the public library nearest your home. Talk about convenience!

So for those who like me love to read and watch DVDs, make use of our public resource -- The Library and save your hard earned money for investments that will advance your goal of achieving financial freedom!

Be well and prosper.

Doodads aka "Big Expensive Toys, Gadgets and Generally Useless Stuff"

The term "Doodads" is used in the book "Rich Dad Poor Dad" to refer to expensive trinkets that you and I like to buy where we have a bit of spare cash. Who among us have never regretted buying that expensive Rolex or Omega, that Louis Vutton handbag, that Hermes scarf, that BMW 5 Series when we would have been happier with a complementary good that would function just as well?

In the local context, home proud Singaporeans love our $50,000 to $100,000 renovations to make our homes look perfect for that Life! lifestyle reporter's visit to feature those choice homes that we would love to show off! We love our big cars, fancy clothes and ostentatious displays of wealth.

Do not get me wrong, I make no judgements about people who have it and want to flaunt it. But how many of you out there really do have that income level to sustain yourself with those "doodads"? More importantly, how many among you out there feel satisfaction and happiness from possessing such items? If you feel that you deserve that bit of pampering and luxury good because you worked hard and earned it, by all means enjoy your wealth. But if you are among those who are leveraged to the hilt or about to embark on your life as a new employee, an NSF, or even a mid-career family man/women, consider what is your net worth if you had not bought such items.

Our lives are filled with "doodads" and one of the key to achieve financial freedom is to establish if these are really the assets that we think they are. For example, a car in Singapore is a horribly fast depreciating "asset". In 10 years, one only gets scrap value out of it. Even if you sell your car after a few years, you know that the value drops very fast in the first few years. Luxury goods are that... for luxury as they do not really satisfy the basic need but more a higher order need to feel that we have status and class. Different strokes for different folks. If you want to be one of the folks working steadily towards financial freedom, that we should be conscious of how "doodads" take away our hard earned money away from our savings and investment that will generate the future cash flows to grow our
retirement nest egg.

A young ex-colleague of mine owns 3 bicycles and one of them costs $8,000. To him it is his interest and passion, to me it is a classic "doodad" and I worry for him if he continues with his current lifestyle. Sure he can currently afford it as he is a single professional staying with his parents but once he needs to settle down and start a family, this "doodads" will slow down his accumulating of investible savings and restrict the choices he has to decide when and how he can retire from the rat race.

If you want to get out of the rat race and have sufficient cash flows from investments that exceed your living expenses, walk around shopping malls with a different mindset. "Doodads" and trinkets exist at every corner to ensnare us in this web of consumerism and materialism. Resist it and focus on what you want to achieve.

Financial freedom, one realistic step at a time.

Be well and prosper! ;-)

Maximising Your Dollar While Travelling!

Travelling costs money. The growth in global travel has helped drive travelling costs down but it is still an activity that requires you to use your hard earned money for you to travel to your favourite getaway, paradise and place of enjoyment!

Arguably the most expensive parts of the trip are the ticketing and accomodation.

The internet has many portals that provide cheap airtickets. Check out Zuji, MISA travel and also the online budget airlines. All these help you to search for the best fares and compare them.

Book your trips early. Airfares, especially budget airlines tend to charge close to full-service airlines near the date of travelling, so maximise the "B" in budget airlines by arranging your trip early.

Enjoy yourself and enjoy the savings too that you can spend on other things on your trip!

Be well and prosper.

The Simple Life: Managing Our Living Expenses

I frequent hardwarezone forums and get involved in discussions with the forummers there in the Money section over personal finance and it is interesting to see the questions being asked as it reflected how I too was still learning the ropes of personal finance and managing my hard-earned money.

One of the interesting issues that crops up now and then is financial freedom.

What really is financial freedom?

Different people look at it differently but if you have read some of my earlier posts, I see it as popularised by Robert Kiyosaki, passive income > total expenses. This is not a totally original concept, even Clason had expounded on such concepts in his book, "The Richest Man in Babylon".

My previous post talked about playing the Cash Flow game. I am not endorsing that game but it is one of the few games (the other I heard about is FQ but I have not got a chance to play it) that teaches about personal finance in a relatively fun way.

I played the Cash Flow game twice at Settler's Cafe @ Buona Vista and what the game demonstrated was that even with a low paying job, one could get out of the Rat Race by getting into small deals where finally financial freedom is achieved with passive income > total expenses.

This is a game and some aspects are not practicable but the interesting thing I learn was that we tend to be fixated over the income part of the financial freedom equation. E.g. I would be financially free if I hit $1.5 million TOTO on Thursday (hmmm... remind me to buy TOTO later during lunch..hahaha)

But let's re-examine the paradigm, i.e. if we keeps total expenses low, then we do not need a very high passive income to be financially free.

Hence, we tend to focus on how to get more passive income which is good. But how about focusing on the expense part?

• Can we live a simpler life?
• Can we cook at home on weekends to have nutritious, healthy and value-for-money meals?
• Can we walk, take bus/mrt/taxi instead of getting a car?
• If we need transport can we buy a panel van vs a car?
• Do we blow our bonuses on an overseas trip to Australia or just visit Vietnam instead?

I see financial freedom as an equation and we need to work on both the income and the expenses side. Our daily, weekly, monthly choices in earning, saving and spending makes a lot of difference our overall financial freedom!

Manage our living expenses and we may find ourselves reaching our financial freedom sooner than later!

Goods and Services Tax Offset Package: Return of Your Tax Dollars

The Ministry of Finance has announced the offset package that can be claimed via: ATM /Web / Hardcopy Forms.

The offset comprises not only the GST credit in cash but the following:

1. GST Credits
2. Senior Citizens’ Bonus
3. Top-ups to Post-Secondary Education Accounts
4. Utilities-Save, Service and Conservancy Charges and Rental Rebates
5. Property Tax Rebate
6. Assistance for Low-Income Families with Young Children
7. Assistance for Pensioners
8. Public Transport Fund
9. Assistance through Citizens’ Consultative Committees (CCCs), Self-Help Groups and VWOs
10. Additional Subsidies for Healthcare, Education and Service and Conservancy Charges

To most of us, we will benefit from some but not all of the rebates. As in any scheme where you need to opt-in, there will be leakage as some citizens especially who are less educated or whose address have changed without updating ICA may miss out on this.

Do go to the ATM/website by 25 June 2007 so that we can receive the monies by 1 July 2007. If you are using the hardcopy forms, you need to submit it by 15 June 2007 to receive your monies early. This is important because of time-value of money. Money received on 1 July 2007 can be deposited into time deposits/treasury bills to earn at least 2% return until 31 December 2007 deadline for submission of the claims for GST offset package.

Be smart and claim your entitlement now!

Investing in Ourselves: Adopting a Healthy Lifestyle

The one thing I benefitted from National Service in the military was greater awareness of health and fitness. The requirement to clear the annual individual physical proficiency test (IPPT) meant that I could not be too overweight or unfit as I had to pass my IPPT each year or face Remedial Training.

This forced exercise made me more aware of the benefits of regular jogging and not letting one's body become a tub of lard.

Looking at it positively, taking the time to do regular exercise is a form of investment. An investment in our own health reaps dividends in the form of less illnesses and less doctor's bills. It not only translates into medical cost savings but reduces our risk of contracting major chronic diseases such as hypertension, diabetes and stroke.

I try to exercise at least twice if not thrice a week and so far when I am regular in exercise, I sleep better and have a greater enjoyment of food because I can allow myself to indulge in ice-cream and sweet drinks occasionally as I have at least used up some of those calories.

As part of taking care of our finances, we should invest in our greatest asset-- ourselves, we work to earn the income that funds our investments for financial freedom. Wealth is meaningless if we lose our health to obtain it.

Examine your own life and consider setting aside some time to do brisk walking, swimming, cycling, whichever sports that you like to do... and start reaping the dividends from investing in yourself!

To your health (and wealth!)

Cashflow Game at Settlers Cafe

Those who have read Robert Kiyosaki's "Rich Dad Poor Dad" recall that Kiyosaki describes how one should get out of the rat race. He idea of financial freedom comes when one moves away from earning a living through working for others as an employee and gets into owning businesses and assets that generate passive income that makes money work for us instead of working for money.


Financial Freedom
True financial freedom is achieved when we manage to get sufficient passive income to cover our total living expenses. Kiyosaki also came up with the Cashflow game to illustrate that concept and like many curious folks, a group of my friends and I decided to give the game a try at Settlers' Cafe -- A Board Gaming Cafe.

There are a few Settlers' Cafe outlets and we tried out the one opposite Buona Vista Swimming Complex along a row of shophouses tiered along a slope. It is nestled in an old estate behing the bustling and happening Holland Village hangout.

Cashflow retails for about USD 195 and hence it was value-for-money to try the game at the cafe where the staff was also able to get us started on the game. As I had played this game before about a year ago. This was a refresher for me on the concepts of how one can get out of the rat race and think more about using our hard-earned money to generate positive cashflow accreting assets instead of spending money on clothes, music and lifestyle products.

What is Cashflow About?
The game basically involves players selecting a "career" with its accompanying income, expenditure, assets and liabilities. Then we start off by choosing a dream e.g. Joining the Peace Corps and having a life of volunteerism and then off-we go on the Rat Race.

The Rat Race
Everyone starts on the inner circle where each turn moves like Monopoly. We throw 2 dice and try to advance past payday to collect our positive cash flows. During each turn, we stand a chance of getting a big/small deal and also market events that can affect our assets, liabilities. There are also traps such as getting downsided in our jobs where we can lose 2 turns and have to cough up 1 round of our monthly expenditure.

The objective of the game is for us to acquire assets (property and stocks), businesses in order to generate sufficient passive income that exceeds our total expenditure. It sounds easy but to succeed in the game, one needs to be lucky in the throw of the dice not to land on Doodads (expenditures that we make which do not help us achieve financial freedom).

As we played the game, we realise that the only way for us to get out of the Rat Race really was to save money, buy businesses or assets yielding positive cashflows so that our passive income is build up to such a level that it exceeds our living expenses.

The nature of the game is such that even if you start off as a less glamourous career as a secretary, one could get out of the race race fairly quickly if one bought small deals that helped to add to one's passive income. Small capital gains from stocks and shares or sale of rental property also helped but really the focus was on getting those deals that help you build up passive income.

One also had the flexibility to pay down liabilities that contributed to the monthly expenses e.g. retail debt, car loans etc or one could sometimes go for big deals and borrow money even from other players to get more positive cashflow businesses or assets.

How the Game Went
In our game, almost all of us managed to get out of the Rat Race but at varying speeds. The lady who managed to get out the quickest and was the one who got into many small and big deals early on to purchase rental properties that were cashflow accretive. She started getting out of the Rat Race and into the Fast Track with $600,000 per cashflow day!

Fast Track
When you get out of the Rat Race, your income becomes 100x your passive income. In the fast track, one would win if we could land on our financial dream selected earlier or if we acquired sufficient opportunities to generated positive cashflows of $50,000. This would be winning the game! Sceptics among us would think this is a bit unrealistic but then this is a game and hence certain game rules do not apply in real life! ;-)

Learning Points
The takeaway from the game is really to be more aware of what financial freedom is about? I.e. what are the objectives of the game that mirrors life? For me, it was about financial goal setting and to be really precise and not fuzzy about exactly what constitutes financial freedom for me.

Also, it make me more aware of the need to build up passive incomes through assets as simple as time deposits and treasury bills. It also made me more keen to learn about managing my own money for growth at an acceptable risk level to myself. It also reinforced my general approach to living a simple life less cluttered with the trinkets, doodads and other luxuries that really do not matter in the longer term. Of course, one does not need to live as an ascetic and deprive oneself of life's pleasures but one becomes more aware of the trade-offs inherent in decisions we make when we choose to spend or save.

Those who are interested in playing the cashflow game should consider visiting Settler's Cafe and try it out. I found the second time playing it has been educational, entertaining and above all energising me to continue with this blog to share about personal financial management.

Being rich is not about how much money you have. But how much can you touch other's lives without being worried about your own financial independence.

Have a financially rewarding future!

Financial Literacy: Are We Teaching Enough?

Financial literacy is relatively uncommon in Singapore. When I speak with my friends, colleagues and surf forums populated by young people, I realise the level of financial literacy in Singapore is quite low. What do I mean by that?

In my formal education from primary 1 up to university, I never learned about personal finance. About how to plan for my finances, understanding about different types of investment instruments that would be useful to me personally. The most ironic thing is that I am an accountant by training and I should be the one who has picked up the most about financial knowledge. Err... Yes and No.

Yes --in the sense that the financial management modules in the university taught concepts that were useful as someone who would work in an organisation and manage their finances but not your own!

No --in the sense that 95% of the personal finance knowledge useful to me as an individual has come from reading books on personal finance and investments and NOT from my textbooks in school.

Many of us encountered questions about financial planning only when we got the first cold-call from a insurance agent or financial planner. That is not the best introduction to the world of personal finance as the financial planner has an interest to sell a product to you to make a commission. So is there really sufficient training in financial literacy?

I feel that there is insufficient financial literacy skills being taught in schools and that more unbiased consumer education should be made available. A quick search on the internet reveals that the MoneySENSE national financial education program was only launched in 2003! Only 4 years ago? For a country that prides itself as a financial hub, it appears that consumer education has taken a backseat for too long.

The MoneySENSE website quotes,

"The MoneySENSE programme covers 3 tiers of financial literacy:

• Tier I - Basic Money Management - which covers skills in budgeting and saving, and provides tips on the responsible use of credit;
  
• Tier II - Financial Planning - to equip Singaporeans with the skills and knowledge to plan for their long-term financial needs; and
  
• Tier III - Investment Know-How - which imparts knowledge about the different investment products and skills for investing."

That sounds interesting and those of us who are total newbies it would be worth our while to go there. The schedule for May includes the following:

"MoneySENSE Talks in April and May 2007

1) Topic: Financial Planning For Families
jointly organised by Singapore College of Insurance (SCI) and the Securities Investors Association, Singapore (SIAS)

- Mountbatten Community Centre, 12 May 2007, 2:30pm - 4:30pm (Mandarin)

- Chinese Development Assistant Council (CDAC), 26 May 2007, 3:00pm - 5:00pm (English)

To register, please call 6227 2683"

While MoneySENSE's initiatives are commendable. I am of the view that we should incalcuate in our children and youth sufficient financial literacy lifeskills to be able to navigate through this murky waters known as personal finance. The overload of information available requires an educational curriculum that gives a clear framework on how one views personal financial management

The Association of Banks in Singapore and MoneySENSE have tied up to come up with this program, "Savings - the Sensible Habit" to inculcate savings habit amongst primary school students. Squirrel savers program anyone? For those of you who were studying in primary school around the 70s and 80s will remember POSB's role in helping children save. Is this sufficient? Should we be doing more?

The internet has opened up more channels of information available to the e-savvy generation. I hope that more people avail themselves to the excellent online resources and also invest in educating themselves in personal finance as the rewards we reap are for the rest of our lives.

Be well and prosper.

A dollar saved is a dollar earned

One of the key insights that struck me from reading Robert Kiyosaki's "Rich Dad, Poor Dad" book was changing our paradigm of seeing if that $1 we earn becomes an asset or an expense.

His book does give some interesting perspectives on personal finance though I too, like many critics, do feel that he made his millions from selling his book rather than from his real estate exploits.

The concept is simple: Ask yourself this question - Everytime we earn $1 of our hard-earned pay check, do we channel that $1 into an expense by buying stuff or do we save and invest it in financial assets that generates future cash flows?

I have learnt that one of the keys to early financial security is to curb one's expenses and build up one's financial assets (or reduce one's financial liabilities) with that $1. I mentioned in my earlier post that we need to decide what is the standard of living we desire for ourselves and then set the limit on how much we should spend. All savings should then be channeled into building assets (or clearing liabilities).

What assets can we invest in? Starting from the humble Maybank iSavvy, we are already getting 2.08% on balances exceeding $5,000. Other unexciting but safe instruments such as Treasury Bills or Singapore Government Securities beckon offering rates better than savings accounts in most of the local banks. For the more sophisticated investor, one may wish to punt in the local or even overseas stock markets or park one's funds in a unit trust. There are of course, risks from taking the different investment types but suffice to say we need to get better returns than the pathetic savings rate available now.

Time to change our paradigms... $1 you earn.... What's it going to be? An asset or an expense.

You decide.