A lot of people doesn’t always aware that everything changes fast in hidden, as someone says the only one thing that never change is the changing itself. So, in this article I want to remind again four main occupations that unsafe for all of us.

Those occupations are:

1. Employee

Whether we are just an ordinary staff in small company or competent director of big company, our job is not secure for us. Someday, economic recession can hit our serviced small company and need to cut their budget or even bankrupt. If we just ordinary staff with average performance, we may get into the list of fired employees, and we will lost our job. Or maybe we are a very competent director and economy is getting well, then our company has a merge with other bigger company with other very competent and strong backup director candidate from other merged company, I guess that we must ready to quit our director position.

2. Self Employed

Let’s say about owning one small fast food outlet, with sufficient visitor every day, in the corner of busy road. Then one day, for instance, one 100 meters prohibited parking beacon is placed right in front of our outlet. People who used to visit our outlet are hard to get parked, and we lost our visitor that means lost our income. Another example is a professional doctor, some unintentionally malpractice can be happened, and for sure we lost our job and income.

3. Rich Entrepreneur

Don’t we remember Charles Schwab, Arthur Cotton, Leon Frazier, or other rich persons who got bankrupt because of a lot of reason? They have some golden period of glory, but have to die in poverty.

4. Investor

There are a lot of very smart investors in NYSE, but got stress and bankrupt during recent US stock market crisis. Nobody can expect such crisis, that’s a “Black Swan” (I use terminology popularized by Nassim Nicholas Taleb for unexpected big phenomenon with big effects), and none of investor is safe from this occurrence.

Wauw, in fact those four occupations have encompassed all occupation in the world! Means, there’s no really safe occupation in this world.

So why some rich people still rich after deep recession while others are bankrupt, or why one “nobody” is able to become a rich people just in several years.

The answer is simple:
1. They always prepare for the worst thing in their life, business, or career.
2. They always try to learn something new every day, make some innovation and leading.
3. They do good assets allocation.
4. They have multiple streams of income.

This receipt will make us survive in the heaviest situation, and growing pass through the continuous changing in our life.

Tags: occupation

Let say our calculation resulted $500 monthly saving, but from our current monthly income, seems that we will only be able to save $100 for our retirement. Don’t let this $100 cancel our intention to the retirement, but just easily start with $100. It will be better instead of surrender then we don’t even do any saving and all will be disappear.

Since saving purpose for retirement age is long-term habit we have to do, the handling of this money a little bit differs from other purpose. I try to give some clues how to handle this kind of saving :

1. Just start with choose well reputable bank with long experiences as a place to save our money, even though they offer lower interest rate. During uncertain long-term economic situation, a lot of small to medium bank will face difficulties once upon a time, and I think we don’t expect to get into hurry, queued at bank’s teller with other thousand of people, just to get our money back. Long established big reputable banks usually have passed several similar time, and time has proved their ability to overcome hard situation.
2. If we have found the bank, open one saving account under our name. This will become a special and particular saving account for retirement purpose, separated from others. Don’t to apply for any ATM card which can make us to withdraw the money easily, but just keep the saving book. Save our $100 every month, then forget our money as if we don’t have any saving at all !
3. Do similar thing every month at the beginning of the month (remember, don’t do it at the end of the month or we will oftenly find that we have nothing to save). If in the future the amount of money we can save is increased (let say become $150), then increase our saving amount, and also forget it for long period.
4. Slow but sure, we will have significant amount of forgotten money, and bank pays some interest to us. After several years, let check our saving balance and judge whether the amount already sufficient to be converted to time deposit or not. If the amount is sufficient, then convert them to time deposit with monthly roll over (please use monthly roll over instead of semester of yearly roll over, even though under lower interest rate).
5. We will have one time deposit certificate and one saving book then. Nicely forget our certificate, by place it in our safety box. Start again to save in our saving account from zero balance amount.
6. Please do it as a habit instead of an obligation for us. Do it for years with discipline, increase monthly saving amount step by step. After more than 10 years, we will have several certificates and one saving book.
7. If the amount already quite huge, and I expect our age already 45 or 50 years, try to find one good mutual fund, fix income mutual fund is better, and invest our money amount. Let the fund manager manage our money, and just forget it for 10 years. Meanwhile, keep continue our habit to save any amount in our saving account, still; convert them into time deposit when the amount already sufficient.
8. At the beginning of our pension age, we will have one saving account, several certificates of time deposit, and also mutual fund certificate. It’s a time to use them for our remained whole life. Post them all back to our saving account, and I believe we already had significant money amount for enjoyable retirement age.

This kind of scheme shall be implemented in flexible ways, and for sure we will need financial calculator to review time by time how many amount we have to set aside for securing our pension age.

So, forget our money, and enjoy our retirement age then !

Tags: retirement, saving

A lot of game is able to do, but the most easy and simple way is to inure them with management of their pocket money. Usually, we give them some money to spend every day. Why don’t we start to let them manage their money for some longer period of time ?

I am doing such thing with my child.

I have one 8 years old son, and I am dealing for long term financial game with him. Usually, his mother gives him Rp 3.000,- daily pocket money (similar with around $0.3, sufficient amount for our 8 years old kid pocket money in our country). Starting from his 3th grade of his elementary school, we give him pocket money in weekly basis instead of daily basis. The Rp 15.000,- money (5 school days times Rp 3.000,- daily pocket money) is given at the beginning of each week. We give him a freedom to manage and spend his money by himself, and just give him important point that he may not spend more than Rp 15.000,- a week.

We suggest him not to spend all of his weekly money, but set aside some money for weekly saving, which will be saved in his own moneybox. Every weekend, when he sets aside some money, he has to note his saving on one particular book, so he will exactly know the amount of his money in the moneybox. This recording shall be done by time for any saving and withdrawing from his moneybox.

The game is, for the money saved every weekend, my wife will give him additional 10% extra money of his saving amount. So, bigger saving will lead to bigger weekly bonus.

How if during specific week his pocket money doesn’t sufficient (let say, the amount already zero on thursday) ? Of course, he can take another money from his moneybox, but as a consequence, his money amount will be reduced and he will not get any extra money at the weekend.

We are doing it continuously week by week until the end of school year period (end of May). At the end of may, we will count together the amount of his money, and I will give him yearly bonus which is 10 times of his money amount.

I also give him extreme example, in case he doesn’t spend even any penny of his pocket money, his money (including yearly bonus from me) can reach around Rp 9 millions (US$ 900). He will be able to spend all money for his school vacation, buy some toys, clothes, or anything he likes.

This kind of game seems quite interesting for my son, and he always be able to save some money every weekend. The most important thing for us, he enjoys this game !

From this game, I expect several things :

1. He will be familiar to manage his own weekly money instead of hope some daily money which will be spend out all during the day. Naturally, it will build his insight about money management, important part of his future live when he has some income and shall make periodic household budgeting along his mature period.
2. This game will make him familiar with financial goals. In this game, he has short term (weekly) goal and long term (yearly) goal. All of the goal is measurable to him. Implementing this game will make him familiar with financial planning activity.
3. Recording of saving and withdrawing will make him familiar with accountable budgeting. He will be use to note all of his spending and income, and as the future result, he can manage his own money in an organized way.
4. He can learn about “money make money” rule of thumb. In this game, larger money he can save can generate larger bonus. Similar rule also happened in our real life, when time value of money is happening, our bigger money will cause bigger passive income from some investment.

Of course, in this game I never and will never push him to save as much as possible from his pocket money, but I prefer to let it done by natural way. As long as this game still enjoyable for him, it will be good learning of personal finances, since we are trying to build his way of thinking about money, instead of the amount of money itself.

I believe, implementing some financial games to our children, and do it in natural way, will give a lot of good impact and benefit for their future lives instead of giving them a lot of money, since the art of money management is not built by amount of the money, but more by their pattern of thinking about money.

Tags: Financial Education, household budgeting, Personal Finance Management