So what I did was, I drew some charts based on my understand on some of the principles that he mentioned in his book. It is about being in employment, being self employed, business owner and of course, being an investor. As I have mentioned so many times in my previous postings, what I wrote here is purely based on my understanding and of course, I welcome any feedbacks from your goodselves...
Alrite then, let's take a look at being in employment.
Upon graduating (I hope everyone graduates but that is not the case in the real world), you are so upbeat about looking for a job. YOu search and search and starts submitting your CVs and so forth. After countless of interviews and some travelling, you managed to secure a JOB that you think that matches you. YOu're happy as it seems that your hard work is paying off. After the first month, you get your first pay check and you felt good. Then, it went on and on doing the same stuff till you get bored. You then search for another JOB that you think that can make you happier. So back to the same cycle. Sending CVs, Resumes and the lots. After a number of interviews, you again managed to secure a JOB at a better place and maybe perhaps a better pay.
By then, you may perhaps has purchased a car and you're living on your own renting somewhere in the city. After a few years, you get married and still being employed at the same place. You now have climbed the corporate ladder and you now sits at the managerial level. Being in the managerial level is always great but it comes with great responsibilities. You perhaps now spend lesser time at home but greater time doing work for your company. You now handles a number of employees under you and answer directly to the top management. If your downliner screws up, the top level management will scream at your head. Of course, office politics seems the norms these days and somehow and someone will certainly want your chair. (it's a dog eats dog world kan?) Receiving bonus at the end of the year is always great and for all your work that you have done, you think receiving 3 months bonus is good!!
Before you know it, you realised during your 40th birthday, you start thinking of doin something for your kids. I mean, their educations, their needs and wants, their weddings, etc...etc...Then you realised that with your current paycheck, it is just not possible to save your money. Everything that you earned, you used it to pay off your loans be it cars and houses and maybe personal loans. To make the matter worse, the company that you're working with is not doing well. One by one staff leave the company and the company seems to struggle to pay salaries. At first, the you get your paycheck once in 2 months and then it gets worse, once in 3 months and you decide you had enough. Again, at the age 40, you're back at where you started when you were younger. Sending CVs and Resumes. With all your experience, you expect to be highly paid. Corporations nowadays seems to one thing in mind. Maximum Profits with Minimum COsts. Hence, you will certainly costs them higher and things are not looking so bright. So what do you do? During this period, I'm pretty sure that majority of us has loans to pay and some mouths to be fed.
Ok, another simple scenario, upon graduating, you decided to stick with the same company or organization till the day you retires. Of course, once you retire, you will get some sort of memorablia from the organization. Perhaps a RM1000 worth of watch for all your 25-30 years of good service. Perhaps, you'll get yourself a golden handshake where the company says thank you and bye bye. What do you do after that? Again, by this time, you're already in your mid 50's. You still have to pay for your child's third level educations and what nots....
Let's take a look at the simple chart below:
Let me explain a wee bit on this simple chart.
I assume that you start working at the age 20 somethings where you first paycheck is about RM2k. Then you go to your 30s where you'll get a higher paycheck, perhaps about RM4k. Then into your 40s, another higher paycheck where I assumed to be about RM8k. Perhaps, upon reaching this age group, you'll hit a ''plateau''. Then we'll go into the golden years where you'll get a 5 figures salary (wow!!)Another couple of years then you retires.
What happens after you retires? What will be your income? Or your income suddenly becomes nil? Of course you'll have your EPF savings but will it be enough for you to continue to enjoy your lifestyles?
Anyhoos, that's the basic cycle of being in employment. Wake up, go to work, sleep. The same thing again until you retires. Life must be wonderful eh? Actually, I'm partly on those peeps that are currenty in this 'group'. I think most people are!
I'll do a write up on being self-employed later but for now, think about what I just wrote earlier. I guess, It is cool and alright to be in employment. You have more or less a secured pay and you know at the end of every month that you are gonna get paid. However, there are of course limitations that you can do with your monthly paychecks. Things like investments, educations, insurance, unit trusts, etc, etc...these things need money. And you have only so much that you can do. Think about it. How would a young graduate with a salary of RM2000 a month afford to invest in investments be it properties, unit trusts or whatever else? Taking into account his loan repayment on his car, rentals, phone bills, electricity bills, etc..etc...I guess, it's difficult eh?
Life can hit your hard sometimes and to be frank when reality kicks in, it will smack your face really, REALLY hard before you even notice it. It is sometimes difficult to put some sense in someone else's head about the reality of life but I think, what I just wrote earlier is for us to think really hard what we wanna do with our personal life. Of course, it is always great if you already knew what you want and you already have the necessary knowledge to assist you in getting there.
Of course, it would help if you have start saving when you're young. I wrote somewhere in my previous blogs, you'll need at least a saving of 30% of your monthly incomes. It may sound harsh but it is something that I believe everyone should do.
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