My Style of Earnings Management

While having a chat with a friend, he complimented me the way I manage my earnings. He said it is a brilliant idea that he wished he learned and done before... Here's what I said to my friend...

First, I created fund groupings...the NOW fund, the BUFFER fund and the INVESTMENT fund.

The NOW Fund

I set aside part of my earnings to cover up my expenses for the current period/month.
In which I further categorized into the ff.:

Pareto or 80/20 Principle Applied To Passive and Active Income

The Pareto or 80/20 Principle may also be applied to our Passive and Active Income.

Pareto or 80/20 Principle states that a small number or 20% of the causes are responsible for a large percentage or 80% of the effects.

It is suggested that we live within the 80% of our total income. Use this 80% to support all our basic needs such as food, shelter, clothing and all the necessary expenses to support our lifestyle and taxes.

We set aside the remaining 20% of our total income to fund in building our empire.

Tips!
This 20% may be invested in Treasury Bills or T-bills. T-Bills earn interest more than a bank offers. Maybe we roll them every 3 months or more.

Separating Needs from Wants

In today's economy, we must learn how to economize.

It is important that we define and separate our needs from our wants.

Needs are those supports our basic existence. While wants are those needs but bought/acquired extravagantly or expensively.

Example, say, we are hungry and we are in need of food, we can eat on budget of P100 per meal however we choose to savour foods costing us P1,000 per meal. Foods cooked at home are simple, yes! But it is also nutritious and coming from the labor of our loved ones who cooked for us.

Tips:
Before we spend what we earned, let's put in mind to set aside our savings first then expenses last. Simply put: Income less Savings = Expenses*


*Thanks to Mr. Colayco's idea

Manage Earnings! Divide Income by 3

Divide Earnings by 3?!

Yes!

Divide your income by 3.

Alot the first 1/3 for the expenses from the pay period you receive your income up to the day before you will receive your next pay.

The 2nd 1/3, set this aside and save it for the next 1 to 2 years basic expenses.

The last 1/3, set this aside, save and invest it to income generating assets/properties.

Maximization: Reduce Expense - Increase Income

Think of ways to cut or reduce expenses.

These ideas are...

• Choose a lifestyle

• Buy only when you need to, but buy the best you can afford

• Read all saving tips and follow good ones

One way to increase income is CONTINUE SAVING and INVEST YOUR SAVINGS to income-generating assets or properties.

Basics of Investments and Investing

Investments could be in paper-asset investing or real/estate investing.

Paper Asset Investments are...

• Government Bonds and Securities

• Corporate Bonds and Securities

• Bank Deposits

• Pension Plans

• Stock Market

• Pooled Investments/Mutual Funds

Real/Estate Investments are...

• Apartments

• Condominiums

• Real Properties/Estate Properties

Wise Money Borrowings

Remember it is not bad to borrow money.

Just that you have to study well your capability to pay the cost of your borrowings including the effective interest rates.

If you borrow, ensure you have the capacity to pay for them. Buy only for your needs and not just for a show off of what you bought to others.

Income Source: Internet Marketing

Internet Marketing is still young in the Philippines.

Very few do the marketing in the internet or in the world-wide-web.

Philippine companies still do not have marketing arms promoting in the world-wide-web.

Ask the marketing department of any company or any event organizers and be their internet marketer.

Announce and promote their events or whatever the companies wants you to promote in the forums and chat rooms.

Of course, before you do marketing in the internet, negotiate for your compensation first on how you are going to be paid.

Income Source: Blogging

Hey, bloggers!

Earn while blogging.

Create an account in bloggers.com and add Google Adsense banners in your blogs.

While you are sleeping, there are some insomniacs who kill time browsing the world-wide-web, once they spotted your blogspot in your bloggers.com account, Presto! Additional dollars are raining in your life.

First Things First: Know Your Financial Standing

Know these first...

• What are the assets and other financial resources you have now

• How much debts and other financial liabilities/obligations you have now

• How much is your networth now (Networth = Assets less Liabilities)

• How much earnings you are generating now

• How much are your spendings now

• How much you need to spend for the lifestyle you choose to live

Tips:
Prepare your master budget plan periodically.

Reflection: How We End Up With So Much Debt

How We End Up With So Much Debt?

Because of Unmanaged Credit Card Spendings.
How to get out?

• Sit down, talk with your family and discuss about family's financial standing.

• Use all the money you have in paying credit card debts but do not forget to keep enough for your basic needs.

• Tighten your belts, and avoid spending for the time being until you fully paid the credit card debt.

• Sell assets which are not so important to keep and use your proceeds to pay your credit card debt promptly.

• Negotiate with the credit card company. Surrender your credit card and request to reduce the payment.

• Do this and get out fast.

Every Master Was Once A Disaster

Every Master Was Once A Disaster
-T. Harv Eker

It is recession! Yes it is.

Probably, you lost your job or in the brink of losing your job.

Scary! Yes it is.

Look at the brighter side. No job. Meaning, it is our chance and explore the possibilities of becoming financially free.

Becoming rich is not as much about getting financially rich.

It is about growing and developing yourself.

Our outer world is the reflection of our inner world.

Our circumstances, events and conditions are the results of what is in our inner mind.

Our outside universe is the effects of our cause in our mental and spiritual universe.

Every Master Was Once A Disaster

Every Master Was Once A Disaster
-T. Harv Eker

It is recession! Yes it is.
Probably, you lost your job or in the brink of losing your job.

Scary! Yes it is.

Look at the brighter side. No job. Meaning, it is our chance and explore the possibilities of becoming financially free.

Becoming rich is not as much about getting financially rich.

It is about growing and developing yourself.

Our outer world is the reflection of our inner world.

Our circumstances, events and conditions are the results of what is in our inner mind.

Our outside universe is the effects of our cause in our mental and spiritual universe.