Father Sez

The three mistakes we have talked about so far are :- 

-         Not paying myself first

-         Not forming or joining a correct peer group and

-         Not having a written budget 

Another mistake that I have made and beseech you not to make is “not managing our career”. 

I got my first job,with one of the then big 5 accounting firms, almost immediately after graduating with a Bachelor’s Degree in Physics. It was as an articled clerk. Most of my fellow colleagues then were school leavers.  

This was “my first formal job” and I had no thoughts about being paid well below what was a graduate’s starting pay. (Thank God for this.) The firm gave us study leave for the accounting exams, and I qualified as a CPA within the given 4 years. By then my salary had also risen to be slightly above the graduate entry levels.  

At this point of time, I should have thought deeply about the choices available and how I should maximize the earnings from my career.  

I didn’t. 

Instead I just joined the first company that made me an offer. (They called me.) It was a bank and I spent only 5 months there. The job which involved reporting to our Central Bank and filling up rows and columns of figures was about the most boring job I have ever done in my life. The only good thing was that I met my future wife here.   

Based on a friend’s suggestion, I joined another company where I stayed for 6 years. Basically after that my career consisted of joining companies at the invitation of friends. Each move resulted in higher take home pays, greater responsibilities and opportunities to travel etc.

There was a brief period where I resigned hoping to do something on my own. This was done with no planning and was a disaster. Luckily another job came along. 

I should have “managed my career better.” 

The best blog resource I have seen on this is Free Money Finance’s series on careers. (He proclaims our career as our biggest asset and it is not surprising that he has a whopping 270 posts under the category of “careers”.) 

Let me compare what I have done against FMF’s great post on managing our career.  

Two aspects of a career should be evaluated.

o       Quantitative measurement of salary and employee benefits.

I did not pay enough attention to employee benefits. Benefits like subsidized housing loans, training schemes, and share option schemes would have a mighty big difference financially, even if the take home pay had been lower.

o       The second is a set of qualitative measurements which are even more important. These consist of new skills learnt, social connections we make and harmonization with the rest of our life and goals. I have only gone for those short 1-2 day courses as part of continuing education. Most of the new skills learnt were on the job and reading up on my own.

Whilst almost all my jobs allowed me great contacts, I have never learnt how to strengthen my network.

o       A third issue that I would add is evaluating the employer as one who truly seeks to attract and retain talent.

We are a developing country. Many of the companies in the corporate sector paid only lip service to the fashionable tagline of “people are our biggest asset.”

I have had some “good”, “not so good” and some “not good at all” experiences in this area.

What I should have done

a)     I should have learnt how to write a proper “winning” resume that would have highlighted what I had and could offer to a prospective employer.

b)     I should have identified, screened and shortlisted my potential employers with my list of “must haves”, “good to haves” and “wants”. Then I should have designed my plan for getting my desired position, and worked on it.

c)      I should have learnt about the usefulness of networks and put in a lot more time and effort on this aspect of my life.

d)     I should have considered and evaluated employee benefits a lot more carefully.

e)     With my career properly addressed, I should have crafted proper plans for moving on to the next stages of my life. 

Don’t repeat my mistake, please

Our career is certainly one of our biggest assets.

We spend a lot of time on our careers, often sacrificing once in a lifetime family events like our kids graduating from preschool, their school concerts etc.  

Proper planning and management should be accorded to maximize both financial and non-financial gains from this investment.  

Properly managed, our career may well take care of all our financial requirements, including retirement.

The lessons that I so wish I had learnt and mastered much earlier in my life are :- 

-         paying myself first and

-         forming or joining a correct peer group.

I have now set myself on a crusade, mostly through this blog, to ensure that my children learn these two lessons much earlier in their lives. 

There have been other mistakes. Lots of them. Perhaps writing about them may help others. The costlier ones will be covered here, in no particular order. 

Mistake – Not having a written budget 

I have never been “broke” since I started working, Thank God. This has not been due to adroit financial management, but thankfully, as a direct result of my background. I come from a poor family. And the early difficult years have been embedded deeply into my psyche.  

Though I have always spent less than I earned, there was no system to it. There were no investments systematic or otherwise.  

I started saving I think, around the time, my second girl was born. Not saving what I should, rather an amount that I thought I could “afford”. I have never done a spending budget, personal or family until recently. 

I now see and have started enjoying the advantages of having a budget 

We may think we know where our money is going, but believe me, we are only fooling ourselves. Though payments like mortgage payments, insurances etc., can be tracked, it is the expenses in the “others” category that end up draining us.    

By drawing up a budget, our expenses can be broken up into several categories and tracked category by category. This way, the management is less complicated and drainers can be identified and tackled.   

For example, my family now knows the amount we spend on phone bills. It is unduly high and is being reduced now. 

Club subscriptions that we have paid for years while hardly using them have been cancelled. 

Petrol bills have been cut down by converting the car into a NGV. 

And so on. 

The danger of not having a budget is that you don’t quite realize where the money is going and blame the wrong people or look at the wrong reasons.   

I used to have some quite messy quarrels with my wife over this. Only after the budget was drawn up and discussed have we both realized where our biggest drainers were. 

We had debt levels that were too high. This led us to seek cheaper financing sources that did not work out. So now we are disposing off our investment property.

I do believe that the actions taken since drawing up our budget will have a lot more positive impact on my family’s financial well being than the steps taken in the last 3 years! 

As an additional bonus, now there is so much better alignment between my wife and me, and in fact, the children in managing our finances. 

Don’t repeat my mistake, please draw up your budget. Monitor your spending. Even if it is only for keeping you informed, do it. 

And if it is “how to budget” or more “why must budget” information that you need, please read this excellent and most timely post by Free Money Finance.  

Patrick at Cash Money Life wrote that our greatest asset is an intangible, i.e. our ability to generate income. I am in complete agreement with this view. 

In fact, almost all the methods of valuation of businesses are tied, in one way or another, to the ability of the business to generate income.  Even if we do have an asset that generates income by the busloads, it was “our ability to generate income” that resulted in us owning the asset in the first place. 

Pinyo over at Moolanomy has also given his views on how to protect this “greatest asset” of ours. 

How then should we nurture this asset so as to reap its fullest dividends?

Our ability to generate income is largely dependent on :- 

Our educational levels 

This is pretty much self explanatory. Having said that, we have to take proactive steps to ensure that our education is in tune with current day market requirements. This does not just apply to those of us in careers, but also to our ability to generate income from investments, trading, arbitraging etc. The informal part refers to knowledge gathered from books, blogs, trade shows etc. 

And of course, our continuing education. Many Internet entrepreneurs are products of this.

Our Past Experiences 

Our past experiences will have a direct impact on our ability to generate income. Almost all higher level jobs require “experience”.  And we all value the advice of experienced experts in the fields of investing, money management, real estate etc., over the inexperienced ones.  

Mistakes made and the lessons earned hone our skills and ability to generate income. 

Our network of Friends and Family 

Our ability to generate income would be almost directly proportionate to the strength, depth and coverage of our network. A person who has a network of close and trustworthy friends in the banking, real estate, stock broking and investment banking fields would most probably have a far better success rate in investing than one who starts out alone.  

Our travels 

Travel broadens the mind. Even though globalization has made the world a smaller place, not all parts of the world are the same. For example, certain parts of Asia may be comparable to that of the UK, say, 25 years ago. So if someone from the UK visits that particular part of Asia, he / she may think about how the UK has progressed and bring those changes to Asia.  

Let us think MacDonalds in Kuala Lumpur, Starbucks in Jakarta, etc. 

To nurture our greatest asset, we have to nurture these four areas continuously.

Where should we focus our reviews 

When we draw up this list for our personal individual situation and seek to identify a unique opportunity, we should remember the following.   Business opportunities are created when we have a service or product that :- 

a)    makes people money, 

b)    saves people money, 

c)     makes people feel more secure, physically or emotionally,  

d)    makes people feel better, physically or emotionally,  

e)    saves people time.

I am sure, there are others, but these broad areas should be good enough. When you put these two together, we should be able to see that a job or a career need not be our only option.  

Whether we take a job and work on the other options part time is not the issue. The fact is that the door is now open wider, and we should be in a better position to, at least see, how we can generate more income.

For me, this exercise has given me ideas on two book projects.

We must all have had our share of run-ins with rude, obnoxious and plain pain in the &*@ people. These run-ins spoil our moods, and sometimes, extend to spoiling our days. And sometimes, we end up paying it forward by being rude and obnoxious to others.

I was one of these rude, obnoxious and plain pain in the &*@ people. I have had friends telling me that sooner or later somebody was going to give me a tight slap. And God knows how many people I must have left with nothing but vile thoughts about me.  

Thankfully it did not require a tight slap to make me come to my senses. 

The change came about when I started writing a book on my experiences. This book was meant as a guide to my children. As I was writing, I realized that I was not the kind of person I wanted my children to be.

And I changed, slowly and steadily.  

One of the more significant changes is in my dealings with people. Now I am a lot cooler and kinder, even though I do say so myself.  

I have to thank my 3 rules for this. 

Rule 1 - Don’t judge anyone by our standards.  

We call a person crazy or silly when he or she does something we consider crazy. Who are we to decide what is crazy and what is not crazy? What is crazy to us may not be so crazy to others. And what may not be so crazy to us may be absolutely bonkers to others. 

We are always free to disagree, but we should not judge.  

Rule 2 –     If we are unhappy with a person’s behavior or   manners, just tell ourselves, that his behavior is a reflection of the sum total of his upbringing, education and experience. We do not have to come down to his level. 

May seem to be a long rule, but it works. 

If we walk into a store and see the attendant reading the newspaper and ignoring us, this is the rule to apply.

We do not have to feel unhappy, slighted or anything along these lines. We can walk away and find another store or apply Rule 3. 

Rule 3 -      I shall treat everyone the way I would want them to treat my children. 

I have 5 children. Like any other parent, and I am sure, like my parents before me, I worry about how they would be treated by the “world”. Their employers, their friends, their future spouses, their colleagues and all the countless other people they will come into contact with as they go about their daily lives. 

I want my children to be treated with kindness and with fairness. I want them to be given guidance and if they make mistakes, corrected in a way that will leave them feeling good. 

And I shall treat everyone I deal with in this same manner. 

These are my 3 rules.  

I try my best not to enter into any argument. After all, no one will really care who is right. If I am drawn into some discussion which may not end well, I just smile and say that on matters like these, I am no expert, and walk away or change the subject.  

So far they have worked for me. And the world now seems to be made up of perfectly reasonable people.

We all have our own systems for time management.

Some of us have checklists, some use diaries, some use electronic whatchamacallits, some just balance everything in their heads. 

I used to make use of diaries but now I use an Excel calendar, and a daily list. I find this system to be so much more efficient. My system is built up like this: 

a)  Year Template 

I have built an Excel calendar for a year. I call this “Year by Week Template”. 

This is done with a column each for Monday – Sunday, hence representing a week. Since they are in Excel, the columns can be as long as I want them to be.  

The weeks in turn are replicated 52 times to represent a year. 

The dates are all connected by formulas. Since I do not know the date of the first Monday of each year, I leave the date blank. The date for Tuesday is linked to Monday by the formula : +(previous cell) + 1. This formula is copied till Sunday, and the Monday of the next week linked to the Sunday of the week before, etc.  

I have 52 of these. It’s actually quite easy to do, since after doing one week, we copy down and it becomes 2 weeks. These two weeks can be copied into 4 weeks, and then 8 weeks etc. 

And when we key in the date for the 1^st Monday, the dates for the rest of the year get filled up. 

b) Filling up the Big Rocks 

This “Year by Week Template” is filled up with the “big rocks”, i.e. dates of the children’s birthdays, our wedding anniversary, other key dates like insurance expiries etc.c)   Starting 2008 by Week 

Sometime around October or November 07, I saved the “Year by Week Template” as “2008 by Week”. So now I still have the “Year by Week Template” and another copy named as the “2008 by Week”. 

I key in the date for the 1^st Monday for the year, and the Excel formula fills up the rest of the dates automatically. For 2008, 31^st December 07 is taken as the 1^st Monday of the year. 

d) Now the 2008 Rocks 

I note the school holidays and other special events, if any, in this 2008 by Week file. This file now becomes my diary for the year. 

e)  Weekly Planning 

Some time is set aside on each Friday to plan the week ahead. Things to do are noted in the respective day of the coming week.  Each week, I also go through the plans that have been made to achieve the goals set for the year. Anything that needs to be done during the particular week is updated in the weekly schedule. 

Each week I print this weekly schedule and use it as my base for my daily planning. Some items need to be repeated, weekly or monthly. For example, balancing of bank accounts etc. These are just copied and pasted in the week or month ahead.  

f)    Daily Planning 

I prepare the daily list for any day on the evening before. Since it is basically a copy of the particular day from the weekly list, this exercise takes less than 5 minutes.  

The daily list is handwritten and I cross out things as they get done. If I need to follow up on something, say a couple of weeks later, it is immediately updated in the particular date of the 2008 by Week file. Things not done just get carried forward to the next day. I do make an effort to settle the “biggest rocks” for the day. 

g)  Long Range Reminders 

We all have long range items, like expiries of driving licenses, passports etc. These are listed in a special section in the 2008 by Week and get carried forward yearly as the case may be. 

I have used this system since 2004, and I have hardly tweaked it, since then. Perhaps those better versed with technology may have easier systems.

But this has worked for me.

As many other aspiring billionaires, I have read and been fascinated by the many books that espouse theories on making money on properties. 

However my wife and I have never really tried “property investing”.  

A good family friend, Kalai, has tried and made money. He has been a “fixer upper” and made decent money on 2 properties. He has bought and sold properties. He has been a property agent and sold a number of properties. He has also a dud on his hands now. His stories have always fascinated me.  

I accept that property is a major asset class and learning about investing in them can only be a plus in our journey to financial freedom. 

So when a local financial and property “guru”, Milan Doshi, announced his upcoming class, I was interested got up my daughter and nephew to sign up. 

The course promises a number of things, related to improving our financial IQ and learning about RE investment. 

Of course, neither my wife nor I expect our daughter (the second, the first is studying in Wales) to return from the course with Donald Trump’s skills.