Posts Tagged ‘personal money management’

Money Leeches in the Family?

If you have not yet read Part 2 of this article, please click here to read it now

In the last article, I talked about being aware and effectively stopping your Money Leeches!  Should a Money Leech appear who is NOT Immediate family, I recommend that you only offer P50 and not a Centavo more. Although it may seem very harsh, this is the first real step in getting your money to stay with you. Also remember, if you think you can’t do it, think about the welfare of your immediate family. Money leeches are not your burden, they are not your problem. Instead, think of them as “Money Management Tests”. If you are able to stop your leeches, you pass the test and you immediately get to the next level. Fail the test, then you will stay stuck where you are.

But what if the “Money Leech” is from immediate family? Like a brother or a sister or a parent, what then?

First, let me define what an “immediate family money Leech” is. — This is the brother or sister or parent that will habitually ask you for money. Most of the time, they even feel entitled to it because of the blood relationship they have with you. You know the type right?

Well, this is where it gets very sensitive for a lot of people. Everybody has a different opinion on this, but this is my clear cut view on it. Not all members of your immediate family have the same weight. You must prioritize who within your immediate family to be generous to first.

In my life, this is my prioritization: My first priority is to my wife and children, then my parents and then my siblings. And with that in mind, I give 90% of my money to my wife and children first, then the next 5% goes to me and the remaining 5% goes to a special fund just in case an immediate family needs it.

Side note: If you give 90% of your money to your wife / husband and children, make sure that it is not siphoned off by a relative of your wife/husband because they too may have a money leech or leeches. This is a concern of many married people as well. –Sit down and talk to your wife / husband about this if this is indeed the case with you. Your objective is to teach your spouse about money leeches and have a unified front against them.

Now, should there be a money leech in my immediate family the maximum amount of cash I or my wife gives is only the 5% of whatever we have at the time. Now depending on how much money you have right now, that can be very little or that can be very big, the point is, even if it is immediate family (outside of my wife and children) our cash generosity is budgeted, controlled and managed.

Another side note: If you are single, I do not suggest offering 90% to your immediate family unless you plan to never marry, still budget it to 5 to 10% because of 2 reasons: 1.) If you give more than that, you might not have a money leech now, but if they get used to it, you would have created a money leech down the road; And 2.) You need money for when you get married someday. If there was a major regret I had in my life, it was that, I didn’t plan financially when the time to marry the love of my life came along. Even though it worked out in the end, I could have planned so much better.

Make no mistake; my life’s wealth is meant for my immediate family. Everything I make and have is meant to be shared with them, and to give them a better life BUT if I have a Money Leech problem and do not budget, and control it. The Money Leech will most definitely bleed me dry financially as well, especially if it is family –and let me add, if you are married, a money leech in the immediate family, if not managed will DESTROY your marriage. Trust me; I’ve seen it happen to those very dear to me. This is why I urge you to understand what I am sharing. If nothing else, I want all of you to have a great and happy marriage.

Be Generous in the Right Way

Now some of you who have read up to this point might be having a violent reaction right now saying “I can’t just abandon my brother, sister, parents and just give them 5% if they desperately need the money??? If I do, I am not being a good son/daughter/ brother/sister, I am a Filipino, they are my blood, I must give!”

Okay, calm down before you decide that I am a heartless scrooge.

Remember that we are just talking about Money Leeches in the immediate family who “habitually” ask for money and even feel entitled to it. If they are not “leeching” you dry and they desperately need help and you can afford to do so then give what you can. But I suggest that you only do so once because if you give more than that, you are creating a money leech down the road.

I am a very generous person by nature. The problem that I had before was that I was generous in the wrong way.  Being overly generous with money, especially if you do not know how to manage it, is extremely dangerous and is a clear recipe for money running away from you instead of towards you.

So instead, what I learned to do, and what I want you to learn to do as well is to be extremely generous in the right way, and that is to be generous in “kind”. To explain this further, I will give you 2 assignments today.

Assignment 1: Read my past article entitled “Business Reciprocity”. Click Here To Read That Article. Then Comment on either that article or this one. Complain to me about the problems you have in completing the assignments. Believe me, I will read every single one — even yours and I promise that I will not ban you or even get mad at you when you do. It is all part of the process.

Assignment 2: Set a budget for your Family Leeches and stick to it. Create a script on how you will say it to them. You can email it to me if you want. Email to: markso@zerocapitalclub.com

Good luck and see you in the next article!

Author Box:

Mark So is a fervent businessman, Investor and educator.  He is the Chairman and CEO of Businessmaker Academy—a business, finance and corporate training center.  He is the founder and Chief Forex Trainer of Forex Club Asia, A Trading club of Forex Traders across Asia. He is also the Founder and Chief Trainer of the Philippine Franchise Institute which specializes in training and growing existing Franchise businesses.  A sought after speaker for business, investing, You may email your comments and questions to: mhso@businessmaker-academy.com or call the office at 6874445 / 6873416 / 6874645 for a schedule of his seminars

Getting Rid Of Money Leeches

 

If you have not yet read Part 1 of this article, please click here  READ PART 1 NOW

Okay, let’s continue where we left off and go a little deeper on being more financially prepared so that wealth starts flowing towards you instead of away from you.

Our lesson today is about being aware and effectively stopping your Money Leeches!

Money Leeches as I’d like to call them are the People, or “Cosmically uncanny” situations that just happen to show up at the very exact moment you come into some money. Sound familiar? Think back…Do you remember the time that you got that P5,000 bonus from your job, or a sideline or unexpected business from a client?

Who called you or showed up at your doorstep needing urgent help or “who just happened to drop by” that very same week needing exactly P5,000?

Did your car, refrigerator, cell phone, or something else break down needing some urgent repairs totaling more or less P5,000?

Did you just happen to go to the mall that weekend, which incidentally was having a 50% off Sale on all items and bought something that you would never ever use for more or less P5,000?

I’m pretty sure you are smiling right now because you know exactly what I’m talking about don’t you? Yup, whoever he or she is, whatever “situation” arose the last time you came into money, you have just identified your money leeches.

I know because I used to have lots of them. And I thought that that was the story of my life. And because I thought that way, the next time I got into some money, the Money leeches would come! It became a reality for me, so much so that all the money I made almost always went to some “Urgent” or “Useless” expense.

The problem is that most of these money leeches are usually family members or close friends. Or when situations arise, like your appliance breaking down or a cellphone being stolen or any similar incident is that you feel that it was by divine providence and that it was beyond your control and you just have to give in.

Let me say right now, they can be stopped and it can be controlled. But it will take a major attitude and cultural change in you. It will require a lot of effort and a very “thick” face but if you apply what I will share, you will immediately achieve a Major breakthrough in our “wealth transfer project.”

First, stop thinking that having money leeches is normal. It is not. You have to change your attitude right now, here’s your first assignment that will help you do just that.

1.)    On a blank piece of paper I want you to hand write the following: >>Make sure that it is “Hand written” not type written:

“Having Money Leeches will kill me financially, I am now aware, I will defend myself and get rid of them now! ___________. (print your first name on the blank space then sign your name on top of it)

2.)    Scan that piece of paper or take a digital picture of it.

3.)    Email it to me as soon as you can. Please note that if you email it to me, you are allowing me to post it on my blog should I choose to do so.

4.)    Prominently place that piece of paper in your wallet so that you can see it every time you open it.

The exercise above is meant to “kick start” your brain to acting and thinking about defending yourself against these money leeches. And yes, it is true, If you do not fix it right now, you will die financially.

Next, identify the people who are NOT immediate family members who constantly ask for money from you. Note, these are the people who are NOT your wife, your children, your brother, your sister oryour 2 parents.

Here’s what you tell the people who are NOT immediate family the next time they ask for money:

Situation: My _______ just got hospitalized, Can I borrow P5,000? (Or whatever amount)

Response: “I’m so sorry to hear that, I hope _______ is alright. I wish I could give you P5,000 but I can only afford to give P50 right now hope you understand.

Regardless of the situation or any amount that a Non-immediate family wants to “borrow” from you, only offer P50! There will be 3 possible reactions: reaction 1: insulted, and will never want to ask money from you again. Reaction 2: they are grateful and they take it. Reaction 3: They negotiate. Regardless of their reaction only be willing to give P50 and not a centavo more.

It might seem heartless to you but it has to be done if you really want to get rid of the money leeches. Remember, this is to be used ONLY for non-immediate family. They are not your burden, they are not your problem. The priority you should always be your Immediate family. What if, God forbid, something should happen to any one of your children? Your wife?  Your Husband? Your sister? Your brother? Your Parents? And you don’t have money because you gave your money to someone else. Now that would be a real tragedy. If you can’t do this for yourself, then do this for your immediate family, reserve your generosity for them. But be smart about how you go about it. In the next article, I will talk about how to financially protect your immediate family and yourself from Money Leeches within your immediate family.

Lastly here is your 2nd assignment, give me feedback. Post a comment about this article or part 1: What I am interested in is not praises (although that would be nice too), instead, complain to me about the problems you have in completing the assignments. Yes, you read it right, post a comment below on why you don’t think this or any of the assignments I have given you will ever work for you. Believe me, I will read every single one — even yours and I promise that I will not ban you or even get mad at you when you do. It is all part of the process.

Good luck and see you in the next article!

Author Box:

Mark So is a fervent businessman, Investor and educator.  He is the Chairman and CEO of Businessmaker Academy—a business, finance and corporate training center.  He is the founder and Chief Forex Trainer of Forex Club Asia, A Trading club of Forex Traders across Asia. He is also the Founder and Chief Trainer of the Philippine Franchise Institute which specializes in training and growing existing Franchise businesses.  A sought after speaker for business, investing, You may email your comments and questions to:   mhso@businessmaker-academy.com or call the office at 6874445 / 6873416 / 6874645 for a schedule of his seminars

Last March 23, 2010 I spoke at the Manila Bulletin Job Fair at the Glorieta Activity Center in Makati and in that talk I mentioned how job seekers can stretch their cash while searching for a job. I had a great time that day and I hope that my simple advice will go a long way for those still searching for that career.

In this article, I want to expound on this topic to include not just job seekers but literally everyone who is having a hard time in managing their money. I call this article Money Management Simplified because there are really just a few things you need to know if you really want to manage your money well. Like my experience in the job fair, it is my hope that this article will finally help you in getting to where you want to go faster with just a few key action points to do right now.

First, start with a blank sheet of paper and in the middle, write down how much money you have at this very moment. If you are married, I suggest you do this exercise with your spouse and combine both of your money right now.  Your piece of paper should look like this:

Good, now, I want you to write on top of that number, how much money (and your spouse if applicable) you take home every month. (Take home money is the actual money that comes in every month, whether from a job, a business, an investment, etc.). Your piece of paper should now look something like this:

Okay, now, I want you to write below, your total expenses per month, again, if you are married (and with kids), if you have loan payments, add everything up then right down how much expenses you have every month. Your piece of paper should now look something like this:

Great job! Now, the reason why I asked you to write down these three things is because this will be the simplified framework of how you will manage your money from now on. I want you to imagine that you are a cup of water, your “money right now” is the water level in the cup, your “take home money” is the money “pouring” in to you. Look at the drawing below:

Now, you are a very special cup of water because you have “holes” in your bottom, these holes represent your expenses. So here’s the complete picture below:

So, let’s analyze a bit,

Scenario 1: if my “take home per month” is smaller than my “expenses per month” then my money right now will eventually become zero or in other words, you become “bankrupt”. Yikes!, we don’t want that right. To show you what I mean, let’s go back now to what I asked you to write on that piece of paper.

Ex.

P15,000

P25,000

P30,000

Now here’s the simple money management formula that you will have to do to know if you are managing your money well

Take home/month + Money right now – Expenses / month = a Negative number; or a Positive Number.

In the example above, the formula will produce a Negative number and this is what happens to your money when this happens:

1st month:

P15,000

+ P25,000

– P30,000

= P10,000

(This is how much money you have left in your bank after the first month)

2nd month:

P15,000

+P10,000

–P30,000

= -P5,000

(You now don’t have money and you will need to get a loan just to cover your basic expenses. Not good.)

Scenario 2: But what if my “take home per month” is equal to my expenses per month then my money right now will remain at the same level. That’s good, but if you want to have more money, that’s not good enough.

Ex.

P30,000

P25,000

P30,000

In this example, the formula will produce a Positive number that remains the same month in month out and this is what happens to your money when this happens:

1st month:

P30,000

+ P25,000

– P30,000

= P25,000 still

(This is how much money you have left in your bank after the first month)

2nd month:

P30,000

+P25,000

–P30,000

= P25,000 still

(Your money remains intact. This is a better result, but not good if you want to have more money.)

Scenario 3: So what if my “take home per month is more than my expenses per month? Then my money right now will start to increase. This scenario is where you want to be. This is where you start to become financially smarter.

Ex.

P40,000

P25,000

P30,000

In this example, the formula will produce a Positive number and this is what happens to your money when this happens:

1st month:

P40,000

+ P25,000

– P30,000

= P35,000

(You now gained P10,000 more after the first month)

2nd month:

P40,000

+P35,000

–P30,000

= P45,000

(You gained another P10,000 This is where you want to be, this should now be your goal.)

Click here for Part 2 where I will explain how to get from scenario 1 to scenario 3. By the way, this method of money management is what me and my wife practice day in day out. This is called the “Simple Cashflow Method” which I have simplified even more to get as many of you started in managing your money properly.

Author box:

Mark So is a fervent businessman, forex trader and educator.  He is the Chairman and CEO of Businessmaker Academy—a business, finance and corporate training center.  He is also the Chief Forex Trainer of Forex Club Manila. Mr. So Graduated and is a licensed ECE, however his passion has always been in this order – 1.) Love for his wife and family, 2.) Making Money; and 3.) Teaching others how to make money as well. To read more of Mark’s interesting and life enriching articles you can go to his blog at http://www.markso.wordpress.com You may also email your comments and questions to:   markso@zerocapitalclub.com