My money story

Every one has a money story. Looking at mine, I find that there are a set of principles I adhere. It evolves over time. Here they are:

1. Your happiness about the amount of money you make should be based on the absolute level you set on yourself.

Every time you make money, it usually involves another party (other parties). Ask yourself whether you are happy with the amount and be done with it. Do not compare with others. For example, let’s say that you invested $100,000 in a business venture and you are making 15% return a year and you are happy with it since it is the best you could find at the moment. Then, you find out that the other 5 partners are making 25% return a year. A lot of people would be angry about the situation and feel totally ripped off. It is not a good idea. Instead you should ask yourself whether you could get better return at the same risk level. If not, leave your investment in the same venture and congratulate the others for the amazing return. If you could find a better return at the same risk level, then you should look for ways to get out of this venture.

Another example is about your salary. Just because someone else doing the same thing as you in a job is making more than you do does not justify your grudge against your co-worker or the company. This happened to me while I was working in Germany in a warehouse. So I asked this girl who was making 1 Deutsch Mark per hour more than me whether I could disclose her when I went to ask for a raise. In that case, she did not mind and I got a raise. Another girl who made less than me used my case, but did not get a raise. Nevertheless, she was still quite happy with how much she got paid. My suggestion in this situation is to go ask for a raise (do not disclose names if nobody has given you permission to do so) anyway, but evaluate your happiness based on your own situation at the moment only. If this happens to you often, then you should really ask yourself whether something in you that attracts people who take advantage of you.

2. You don’t have to recoup losses the same way you lose them.

Tim Ferriss wrote this on his blog (click here). I also copied and pasted here:

“I own a home in San Jose but moved almost 12 months ago. It’s been empty since, and I’m paying a large mortgage each month. The best part? I don’t care. But this wasn’t always the case. For many months, I felt demoralized as others pressured me to rent it, emphasizing how I was just flushing money away otherwise. Then I realized: you don’t have to make $ back the same way you lose it. If you lose $1,000 at the blackjack table, should you try and recoup it there? Of course not. I don’t want to deal with renters, even with a property management company. The solution: leave the house alone, use it on occasion, and just create incoming revenue elsewhere that would cover the cost of the mortgage through consulting, publishing, etc.”

3. Do not involve close friends and family members in your business ventures.

Friends and family members have different expectations from you and vice versa, involving them in business ventures could creative conflict of interests.

Sorry, I cannot elaborate more on this subject.

4. Do not lend money to friends or relatives

You are not a bank. It is not your responsibility to lend out money. This is something I have to learn hard way. However, if you can afford it, consider giving money to friends or relatives in distress.

5. Only spend the “fresh money”

I designate my money into two pools, old money and fresh money. Money that is mine for 3 months and older is considered “old money”, which is allocated for investment only. Fresh money is used for daily expenses and discretionary spending.

This is a principle evolved over time and is applicable now as I am more secure financially and have minimum need to save.

6. Give away money

Set aside 5 to 15% of your net income annually to give away to charities. Yes, you do get income tax credit and satisfaction in giving. Most importantly, it is part of exercises in maintaining your wealth. Wealth, like success, is not that easy to obtain, nor is it easy to maintain. Giving is an essential part of wealth and success. In addition, it is much better to give some money away to causes you believe in than to be taken away from you.

7. Abundance is easy.

Abundance is easy and available to everyone in a developed country. You simply spend less than you make. In the end of year, if I have a surplus, I have abundance.

People who make $40,000 a year and spend only $32,000 have more abundance than people who make $80,000 a year and spend $90,000.


C-Cassia