Monday, 9 November 2009

The need to expand your means

(Biz tool Kids)
MANY investment literature pieces advise that we save more and reduce our lifestyle if we want to be rich. While this is good and commendable, my mentor Robert Kiyosaki says it differently.
To be wealthy, you can still save and invest more while not living below your means. You do this by expanding your means.
By expanding your means, you can still save and invest, while living your dreams. This brings us to two vital concepts: Budget Deficit and Budget Surplus.
A budget simply is a plan for the coordination of resources and expenditure. Your budget as a plan can make you become poor or middle class or it can make you rich and wealthy.
Most people operate their lives on a budget deficit rather than surplus. Instead of working to create a budget surplus, many people work to live below their means, which often means creating a deficit.

Budget Deficit: It is excess of spending over income, for a government, corporation or individual. Spending more than you make is the cause of a budget deficit. The reason many people operate on a deficit is because it’s so much easier to spend money than to make it. When faced with a crippling budget deficit, most people choose to cut back on their spending. Instead of cutting back on spending, the smart thing to do is to increase income. This is hard for many businesses and individuals because increasing income seems hard.

Budget Surplus: It is excess of income over spending for a government, corporation or individual over a particular period of time. Many people are living below their means because they don’t have excess income over spending. But if the guy who earns N20,000 a month, gets a side business that fetches him another N10,000, his income has gradually increased to N30,000. His spending can also increase. If this same guy manages to increase his passive income to N20,000 or N30,000 a month, that would place his total monthly earnings between N40- and N50,000. However, the mistake people make when they experience budget surplus or increase in income is that they increase spending and debt and reduce investment. Now, in order to maximise your budget surplus, you need to consider the following:

• Treat your budget surplus as an expense. In your expense, make savings, tithing (or charity) and investing your first priority. For instance, if you make more money, then put the excess into income-yielding assets, tithes (or charity) and savings while maintaining your current level of obligations. You know why? By the time you maintain this process for a long time, your assets would have multiplied so much to produce streams of income that can deliver much more money and quality of life to you.

• Treat your expense statement as a crystal ball. What you spend your money on will define your financial future. If you want to have budget surplus and for a long time, watch what you spend your money on, make sure they enhance your financial and lifestyle objectives.

• Get assets that can pay for your liabilities. I am not asking you to live cheap. I don’t live cheap either. But what my mentor tells me and I want you too to embrace is: whenever you want a necessary or luxurious liability, get assets that can give you the income to acquire that liability. For instance, my mentor wanted a Bentley car worth $200,000. So he called up his broker, who converted his gold and silver shares into $200,000 cash for him and invested it for eight months to generate $450,000 out of which $200,000 was used to buy the Bentley, $50,000 was used to offset taxes on the capital gains and the Commission paid to the broker, while he still had his cash of $200,000. Now, how do we make that happen in Nigeria? It’s going to be hardwork. This is why you have to grow your financial intelligence by coming up with a side business or investment that you are comfortable with and that can help you meet your financial objectives. There is nothing wrong with enjoying liabilities as long as you continue to pay yourself first and purchase them through the income generated by your assets.

• Spend to get rich. When the going gets tough, most people cut back on spending. This is one reason many people fail to acquire and maintain wealth. For instance, in the world of business, when a company’s sales begin to drop, accountants cut back on spending on advertising and promotion. With less advertising and promotion, sales further drop and the problem gets worse. One sign of financial intelligence is knowing, when to spend and when to cut back. When you know you need to make more money, you need to spend more time, money and energy increasing your income.
If you will sincerely work at creating a budget surplus, your life will become richer. That is what budgeting is about – using what you have, even if it is no money, to make you better, stronger and richer.

Olotu is the CEO/Lead Consultant, DEAIM Innovative Resources Ltd.,

What do I live for?

WHY am I here? This seems to be the question that has consumed the minds and thoughts of so many people who are curious about the reason for their existence. The truth is we are all here for a purpose, and only you can unravel the potentials inside you.

Challenges are bound to come. Consciously and unconsciously, people become disenchanted by the myriad of problems they are going through. Even the bad things happening to you know may be signposts to the problem you are created to solve. Remember that Nigeria’s most successful footballer, Nwankwo Kanu, started the Kanu Heart Foundation after he had heart problem.

Don’t be discouraged. There are times people you count on will fail you. There will be times when friends will not be there for you. There will be times you will feel like you can’t make it again. In the midst of your challenges, understand that there is a reason you are here.

You are alive to make the world a better place. Many people started this year with you. Some of them are now dead. But you are still alive for a purpose. When your father had a carnal knowledge of your mother, out of about a million spermatozoa, you ran faster, and fertilised an egg, and came out of the womb after about nine months — for a reason! The fact that you were born is also a proof of the fact that you are important, or else you wouldn’t be here in the first place. You are a dream come true and you can make your dreams come true. You are a bundle of talents waiting to be unraveled.

You are alive to dream big. A sage once counseled that “The future belongs to those who believe in the beauty of their dreams.” A dream means what you hope to achieve in the future. You are here to dream dreams, and make those dreams a reality.

Dream out-side the box. If you do what others have done, you will be successful, but if you can do what nobody has done, you will make history.

History makers are dreamers. When Barack Obama dared to vie as a presidential candidate, some thought he wouldn’t achieve the feat. But he believed in his dream and against all odds, Obama became the first African-American to become the president of the United States of America. He made history by dreaming big.

You are alive to come up with ideas. In this information age, ideas rule the world. A young woman was in a bus one ‘hot’ afternoon. She was traveling but was uncomfortable because she was thirsty. She thought of the possibility of packaging water in nylon so that people can buy water even they are in the car. Before long, she started a pure water-producing factory and became a millionaire with that idea.

Ideas are powerful. All you need to be a celebrity or a millionaire is one sound idea. If you want to leave your footprint on the sand of time, learn to come up with, and build your ideas. You can fly high in life if you can come up with an idea that solves a problem for others.

You are alive to discover the real you. I understand how it feels like when someone is living in the shadows of another person’s life. You will find yourself unfulfilled. At the end of the day it is not the money you make that will make you fulfilled in life, but following your heart’s desires.

Pay attention to what your heart yearns for. One school of thought says that “the greatest problem we have is that we think that God is outside ourselves.” When you begin to earn from your yearning, you will meet fulfillment along the way. “When we do what we love, offering our gifts and talents, without causing harm to anyone, we are working at the highest level of service for ourselves, those around us, and our planet.”

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