Tuesday, January 11, 2011

How to improve your financial position?

Chinese new year is coming again... time for bonus and spending (buy new this, new that....etc)

What should you do to improve your financial position?

In accounting, financial position = "how much you own" (i.e. Asset) less "how much you owe" (i.e. Liability)

Every month, when you receive your hard-earn income (for most people it is "Salary") - your Asset will increase. However, if your "consume" your asset .... your asset will reduce, it is simple right?

What do you do to improve your financial position?
Increase your income and reduce your "consumption" of asset.

Recommended ways to handle your bonus (wish you have a big one) are:-

  1. Put 50% into a long term saving fund (and forget about it)
  2. Consume 30% to reward yourself and your family for your hardwork.
  3. Save the rest 20% for investment (e.g. get a good course on your favorite subject)
For those who are in "DEBT"..... the best way to improve your financial position will be:-
  1. Stop bleeding - consume less
  2. Increase your asset - work harder and smarter to generate more income (forget about lifestyle for a moment, else you will for SURE suffer more in long term)
  3. Learn and educate yourself in money skill (sad..... the single most important skill that never taught in school)