A lot of Filipinos are fond of a game called basketball played in 4 quarters. Officials accumulate all points from start to the last quarter, and the team with the highest points wins.
I was a great fan of Robert Kiyosaki series of books from Rich Dad Poor Dad to the later ones released called Unfair Advantage since 2004. In one of those books the author broken down an average person's lifetime into quarters and likened a person's financial life with a game that has to be won.
Unlike the game of basketball where all quarters must be played to determine a winner, the game of life called the rat race according to Kiyosaki, may be won in any of the quarters. It doesn't even have to reach the end of the first quarter. He outlined the strategies mainly using cashflow to win the game.
While Kiyosaki's ideas are brilliant considering most people's training in personal finance, a strategy on how to manage a person's resources for his own advantage wasn't really outlined in his teachings. This is what financial planners call it: asset allocation a.k.a. don't put all your eggs in one basket.
Following the concept of asset allocation, assets are to be distributed into several asset classes in order to reduce overall exposure to risk. Asset allocation covers several items including retirement planning which ranks somewhere at the top of the hierarchy.
I could die out of boredom from these 4th quarter preparations, but hey, I’d rather be bored doing what I want to do in my terms than worry like most people do. Uncertainty does spice up life at some point but not this. When you know you can do something today of this great opportunity of being young and productive, then just stop thinking about your self for a while.
A lot of folks out there would rather choose denial and probably would never find out what they’re really missing out on. I’d rather worry now than later when I start losing my powers lol. Only broke people think this is a responsibility of the government or their employer, or someone else but themselves.
But what if you know how much you're going to spend your whole lifetime? The surest way is to plan for it because the income you’re generating is not something comparable to what the oil sheiks are producing.
It is the answer to the question of how much you should be saving and investing in your productive years in order to effectively cover your self and your chosen ones in the 4th quarter minus all headaches.
I know much of these headaches and believe it or not I’m continuously associating financial ignorance and poverty with pain and more PAIN just to keep myself away from complacency and over-spirituality. Believe me, God has nothing to do with your financial ignorance.
So imagine if we try plotting it in the following timeline:
I'm quite fascinated with a couple of financial calculators from android play store lately. Very exciting! You put in the rates and wallah! You may search for iQuick savings calculator and Just Retire android apps and just play with it if you want to see how the numbers work for you in the future.
And here's the problem: everyone knows at some point we're going to age and loose our capacity to work and earn some income. And by that time we should be responsible enough already (were not young anymore!) to cover ourselves and enjoy life even more, and perhaps handover something worth sharing into the next generation?
We all know this is NOT the case for most people. And the result:
- zero or not enough resources,
- completely dependent from others, often their OWN children,
- and worse, competing resources with their OWN grandchildren!
- unnecessary worries instead of enjoying the supposed golden years, etc.
How cool is that?
At least in my standards this is terribly IRRESPONSIBLE in uppercase. Just looking at what you can spend spend spend in the short-term means you are educating the next generation to learn from your stupidity and inconsideration.
Needless to say these dudes must grow up quicker and faster because you have acted like a child your whole life, never thinking about the needs of your future self. And now they get to carry unnecessary burden. Believe me these cute little guys never asked and will never ask for something like that especially from their OWN parents.
Solution?
The math is very very very simple. It’s called compound interest from your regular savings. How to save is entirely a different story here because it has to do with your behavior and relationship with money: how you create value and get paid, how and where to spend it, and where you launch and grow what you have paid your self (savings).
The following timeline should illustrate a pretty decent happy outcome.
For me this is just a backup plan I call the “slow plan”. In order to buy and secure the future in the time of global economies, global downturns, and shifting fortunes, we need at least two plans: a cashflow plan to finance small business and the slow plan shown above.
So what's the future in store for you? Are you going to be the champ you are destined to be comes 4th quarter? The answer is: it’s up to you.
