For some reason… a lot of people came to me for financial advise although I’m not a financial adviser or something…. haha I’m getting lazy to repeat, repeat n repeat again… so let’s blog it.

The very first thing that I will ask them, “Do you understand how you value money?” Most of the time, its all about money and this lead to your Financial Quotient. Trust me when I mention that, there are some “stubborn” who disagree with me saying not everything is about money, that’s why I say “Most of the time” so let’s not argue with that k ;)

Next I’m sure you met a lot of people that tell you about their big dreams, they want to retired young, they want to be millionaires etc, etc n etc. This leads to my second questions to them, “Is $100K a lot?” Majority of them replied me “What I can do with $100K? Given in the current economic situation you barely can do anything with $100K.” Now the best part… Do you have $100K now? NOPE they answered. Well I’ve been whispering to myself, isn’t their dreams contradicting with what they are saying? If I get the equation right, With $100k = barely can do anything with it, Without $100K = don’t even think about it :p.

Now back to my initial question i.e “Do you understand how you value money?” Let’s put it this way, if you strike a $100K lottery, what are the first few “Most Wanted” in your wish list? Guess what, most of them give me the “eeerrr” sound. The problem with people now is they are unsure what they want even if they have the money! If you are one of them, I have a simple advice to offer you. All you need to do is to be more “sensitive/alert” to yourself. Whenever you crossover a particular thing that caught your interest or attention, notice if you will start thinking it twice, for the third time and so on, notice if you will start fantasize about it, notice how long does your fantasy lasted? If your fantasy keep growing and growing or in other words you will not get bored of it… this might be your “Most Wanted”.

Let me give you real life example: Whenever the GF and I was driving and this cute yet cool little car pass by, the GF definitely will shout “Mini Copper!!!” then follow by “Vroom Vroom” as if she was driving it. Then we will start to discuss about the various colors that we saw and as always, the discussion ended with a Mini Cooper S, red in color and 2 white strips in front of the bonnet. The desire goes stronger each time and the GF doesn’t get bored about it.

Isn't that a hotty!

Now, what’s the whole point here? If you understand your desires, your “Most Wanted”, your dreams, call it whatever you want…you need to translate these into figures (money). Now bring back the $100K again, you may plan to yourself a house ($50K), upgrade yourself a more comfortable car ($30K), OR for those are single, upgrade to married ($30K) ;) and maybe have a spare cash ($20K) in case for emergency. I believe this is quite a common path in the journey of our life. So understanding your desires actually leads you to understanding how money is value for you!

Moving forward, let me intro you my “Rules of Three”. The “RO3” is accidentally created when I’m setting up my medium term goals. Assuming that I’m planning to get a house ($50K) for my future wife, a wedding ($30K) and some spare cash ($20K), let’s translates it into Three years financial goals.

First Year ($20K)
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$20K = $2K x 10 months.

Notice I just use 10 months for a full year as I’m giving myself extra 2 months buffer for unforeseen expenses (Doodads), E.g. car broke down, insurance renewal, anniversary presents and etc.

Now in order for us to saved $2K each month, our income should be at least Three times of the amount saved. Some of you might think why must it be Three times? If you ever buy a car or a house, your monthly income must be at least Three times of the monthly installment. Reason is simple, 1/3 is for your fixed debts, 1/3 for you living expenses, 1/3 is for your free cash on hand.

Hence your Income
$2K x Three = $6K

Second Year ($30K)
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Well we definitely need some improve compared to previous year. So lets raise it to $30K

$30K = $3K x 10 months

Hence your Income
$3K x Three = $9K

Third Year ($50K)
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$50K = $5K x 10 months

Hence your Income
$5K x Three = $15K

So that’s my “RO3”. It’s just based on a simple calculation model. Now the income required to achieve $100K in 3 years is it measurable? If you answer is YES, I’m glad for you and your millions will be on the way. For those that is NO, don’t be discourage, lower down the figure to suits your current situation. As time goes by improvise and change your strategy.

Lastly, I would like to emphasize, that the art of financial quotient is no "Rocket Science" but a habit. If you can’t squeeze 1 cent out of a dollar, forget about hundred, thousands, even millions.

“Excellence then, is not an act, but a habit." - Aristotle

Cheers!!!