Rich Snail

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The Motley Fool recently published a poll asking: “Why do you want to be a millionaire?”. Over 10,000 people voted.

What to make of this poll?

The first thing which popped into my mind is that most choices are too specific. I believe this totally screwed the outcome of this poll.

• To make sure your kids kid will have everything you not have you need to be financially secure. So I understand why most people choose the second option as it comprise more opportunities.
• Do you know many who would recognize they would only be happy should they have more money? I don’t myself, they may say life would be easier with more money, but to say they are not happy because of it? Furthermore, if you are financially secure you can afford it.
• “So I can quit my job” is an easy one. It actually boils down to the same explanation as for the kids reason. If you are financially secure you can afford to quit your job. You should have a safety net worth 6 months at least ensuring that you have time to find a more rewarding job; Still, 12 percent is not a bad number. I’m actually quite surprised so many took this answer; maybe a spur of the moment while voting at work…
• I actually like the fact that people want to make a difference to the world. Yet they would only do it once they are a millionaire? Is changing the world linked to being a millionaire? I don’t think so. And I believe quite a few would agree with me. To some of those, money can even be the problem! Hopefully, we have CSR gaining popularity (think Acumen Fund)

In the end, the answer which stand out is as general as one can expect. It comprises a lot of things, and is as precise as a politician answering a question. It was destined to win. So what’s the point of this poll?

When you start looking over your personal finance situation, you usually have some objectives in mind. It can be a house own payment for a house, a new car, or a brand new Playstation 3. To fulfill them, you will need clear & definite goals. The SMART goal concept has been around since the 1960’s and has been used successfully by individuals and organizations to create effective goals. But what is a SMART goal and how could it help you?

The SMART Anacronym

1. Specific: Do you have a precise or specific outcome description with your objective?
2. Measurable: Do you have a reliable measurement system in place for your objective?
3. Achievable: Can you achieve your objective with a reasonable amount of effort?
4. Realistic: Do you have the necessary knowledge, authority and skill?
5. Time: Is there a finish and/or a start date clearly stated or defined?

Bad example: I want to be rich (duh! Who doesn’t!!)
Good example: I want to reach $150,000 net worth by 35 by investing $10,000 p.a.

What does it mean to you?

By setting yourself SMART goals you will ensure that you know where you want to go. More importantly, you will have higher chances of fulfilling your goal. How is it so? A SMART Goal lays a clear path for you to follow, and break it down to easy to chew pieces. It will enable you to set reachable milestones, which will help you realize you are making some progress toward your goal. Psychologically it will be a boost to your self-confidence. You know you are on a path to success, and you realize it every time you reach a new milestone.

For me, every new milestone deserves a reward. I usually treat myself to a nice piece of cake. You should always look forward to achieving your goals, and a piece of cake always makes the crossing of the finish line sweeter.

Interesting link to check from very different sources:
How to write SMART objectives - Rapidbi
The Road to Wealth is Paved with Goals - Get Rich Slowly
Create SMART Goals – Self Growth

I will continue on yesterday’s subject (Allowance & Budget) by developing my vision of a budget.

What is a budget

A budget is a summary of probable expenses and income for a given period. It gives you a foresight on what expenses you can expect and what you have to plan for. A well planned budget will create a surplus of money which will help you reimburse debt, save, and invest. A badly planned budget will leave you with a deficit of money, leading you to credit card debt (18% interest rate!!!) and bankruptcy.

Budget = Planning

You should see budgeting as the same as planning. I’m sure you do not leave to a party without knowing where it is (I hope not). A personal budget is the same; you need to know where you are going before you can reach there. It is extremely important to know where you are spending money, and how much you can spend.

The real question to ask yourself is the following one. Do you really know where your money goes specifically? Unfortunately, most people don’t.

Interesting link to check from very different sources:
Why Budget – Tulip Tree Press
How Budgeting Can Improve Your Life - Get Rich Slowly
Budget, creating a blueprint for smart spending – Citibank

First post, first writing for this blog. I’m a bit intimidated by the task ahead, so I will start with a short and sweet post.

Budget Memories

Over my teenage years, like most teenagers, I was receiving an allowance from my parents. It was not a large sum, and I was feeling I was deserving more – don’t we all? After some hesitation I decided to go and ask them to increase it. Their answer baffled me. They asked me to prepare a 3 month budget including all my expenses; that meant including the ones they were paying for. Only after would we negotiate my allowance. I didn’t believe it. Not only did I have to wait 3 more months to get more money, but I had to prepare a budget !?!?

To make a long story short, I complied with their request and did get my increase; not as much as I wanted though. But what I learned through this helped me a lot more than getting a higher allowance; by going through all the expenses I had over 3 months I realized how much money I could spend without even realizing it - sweets, video games, bus ticket and clothes were all accounted for. It opened my eyes. I still thank my parents today for this lesson.