Each time money is consciously taken from a pocket or wallet and slipped into a piggy bank, a signal is sent from your hand to your brain that reinforces your internal identity as one who saves first and spends later
EVEN the Great Wall of China started as a single brick. In the same way, you can create significant wealth with the most modest of beginnings – a single note or even coin slipped into a commonplace piggy bank.
The real issue is, do you want it badly enough? Do you crave after financial success the same way Stallone’s Rocky wanted – no, needed – to become the heavyweight boxing champion of the world?
If you do, be thankful the effort required to reach your goal is substantially less than that expended by those ancient Chinese labourers or by that modern American screen icon.
As Johann Wolfgang Von Goethe wrote, “Are you in earnest? Seize this very minute. What you can do, or dream you can do, begin it. Begin it and the work will be completed.”
But beware; good intentions are not enough! There has to be steady, plodding commitment to a process. And in the process of carving out a life of financial bounty and vigour, the three words ”budget”, ”save” and ”invest” are central.
That’s why, when George S. Clason wrote his financial classic, The Richest Man in Babylon, he had his protagonist Arkad converse with a man who was vehemently opposed to the very idea of budgeting.
Arkad’s response: “The purpose of a budget is to help thy purse to fatten. It is to assist thee to have thy necessities and, insofar as attainable, thy other desires. It is to enable thee to realise thy most cherished desires by defending them from thy casual wishes. Like a bright light in a dark cave thy budget shows up the leaks from thy purse and enables thee to stop them and control thy expenditures for definite and gratifying purposes.”
Now, if you are wondering what a budget, written or printed on paper, has to do with a porcelain or plastic piggy bank, let me just tell you – a great deal!
The budget you fashion for yourself, to act ”like a bright light in a dark cave”, is the guiding document that will allow you to, if not maximise, at least optimise your monthly cash surplus. It can become your personal declaration of financial independence!
The surplus your budget helps create will, in turn, when channelled to appropriate avenues of saving, investing and debt eradicating, result in a gradual increase of your net worth.
Therefore, if it is put together correctly, your personal budget will become a potent ally in your bid for financial freedom. A strategically placed set of piggy banks at home and at work will serve two similarly aligned purposes.
First, the more mundane purpose of a piggy bank is to catch some of the monetary trickle that always seems to flow through the rips of our habits, budgets and pockets.
Second, each time money is consciously taken from a pocket or wallet and slipped into a piggy bank, a signal is sent from your hand to your brain that reinforces your internal identity as one who saves first and spends later.
That is why even someone as wealthy as best-selling Rich Dad, Poor Dad author Robert T. Kiyosaki advocates establishing three different piggy banks. In one of his numerous audio training programmes he talks about starting small and then challenging, effectively reprogramming, yourself by gradually upping the stakes!
Kiyosaki suggests earmarking the three piggy banks for savings, investments and tithes. While the standard definition of tithing refers to giving precisely 10 per cent of one’s income to God, charity or both, Kiyosaki is more concerned with the concept of giving than the exact percentage or target.
To put things in a wholly Malaysian context, what he advocates boils down to starting with maybe one ringgit per bank per day. That comes to about RM3 a day or less than RM100 a month. If after some time that seems too simple, then expand your thinking and stretch your depositing to maybe RM5 per piggy per day. Kiyosaki talks about continuing to raise the amounts until you find yourself having to figure out ways to expand your means just to maintain the upward momentum.
The process of constantly challenging ourselves causes us to metamorphose. , but enchanting, such as that, which leads to the emergence of a Monarch butterfly.
All we have talked about here is simple. But it is not simplistic. Those who choose to act in accordance with the principles outlined will flourish over the next 10, 30 or 50 years. But most will ignore these ideas because they do not seem complicated enough to contain true value, or because they require a long-term commitment to a process. It is your choice, which category you opt for.
I believe what modern Malaysians need most is not complexity, but clarity. American writer Shelley A. Lee once wrote, “We’re all inundated with information but starved for meaning.” That condition leads to countless quality-of-life-eroding mistakes, both on and off the financial playing field.
So, next week, we’ll take a cold and hard, yet hopefully simple and meaningful, look at planner and client shortcomings that lead to the meltdown of even the best configured financial plan.
l Rajen Devadason is a certified financial planner and chief executive officer of financial planning firm RD WealthCreation Sdn Bhd, which specialises in retirement planning for 30- to 45-year-olds. He invites feedback at email@example.com