Tag: Fiji

How can I make smarter money goals?

Words are like a set of blocks we can use to build structures.

I find this analogy useful in constructing goals – in particular, financial goals.

Having a set of well-defined goals is important. A goal that is too open or ambiguous cannot possibly be ‘SMART’ – that is, Specific, Measurable, Achievable, and Realistic within a particular Timeframe. Think of each one of these elements as a building block.

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What is the connection between health and wealth?

We all have our own ‘choice’ words to describe work-related stress, but Japanese has one of the most severe.

When I started my career, I always thought they’d have to carry me out of my office ‘in a pine box’ (as my grandmother’s charming expression would have it!). I thought I’d love it so much, I wouldn’t want to retire until I was 80+.

It didn’t take me that many years to realise that those visions might come a lot sooner than I expected if I didn’t stop working.

Over the past week, I suffered a mild cold, and for the first time, discovered that my main concern was  getting well, rather than masking the symptoms sufficiently for me to perform my work duties.

We all want to be healthy, wealthy and wise – and to some extent, these three things may be related – making wise choices can improve our health and wealth, being healthy can help us to increase our wealth and education, and being wealthy often makes obtaining health care and education much easier. But aside from rhyming, what do health and wealth have in common?

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How diversified is your income?

Perhaps you’ve heard the idiom ‘don’t put all your eggs in one basket‘?

This phrase pretty much sums up the concept of ‘diversification’.

Diversification‘ is a risk management strategy, usually applied to investment portfolios. Investing all of your money in Coca-Cola shares would be an example of poor diversification, while having a portfolio that consists of some investment property, 15-20 different companies’ shares across a variety of different sectors, a bit in cash, and some bonds and international stocks would be considered much more diversified.

But have you though about the concept of ‘diversification’ in relation to your income?

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How can I maintain my money mojo?

Saving for a huge goal – like a home deposit, or financial independence – or trying to pay off a large debt, like a mortgage or student loans – can seem impossibly enormous at times. All too often I hear people throw up their hands in defeat – ‘I’ll never pay it off anyway, so why bother?’

Quite apart from the psychological benefits of having smaller, more manageable debt even if no debt isn’t an option, there’s one very important reason – interest.

Anita Bell wrote a fantastic book called Your Mortgage: And how to pay it off in five years or less. For the new edition, she changed the title, and I think I can see why. Many people I recommended this book to were initially reluctant, believing they’d never pay their mortgage off in 5 years or less, so why try?

So maybe you can’t pay your home loan off in 5 years. But wouldn’t it be great to pay it off in 15? 25? On an average mortgage, this could save you hundreds of thousands of dollars in interest.

Even if you start out excited and motivated though, it can be difficult to keep this up.

There are a variety of tips and tricks I’ve come across over the years for maintaining my motivation when it comes to savings. I’m a very goal-oriented person, so these may work better for some people than for others, so just give the ones that appeal to you a go:

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How much should I save?

The national personal household savings rate has recently increased from 7.6% to 8.1%. Still, it’s a far cry from the all-time high of 20.6% in 1973.

We often hear 10% floated around as a savings goal to target. But Jacob Lund Fisker, of Early Retirement Extreme, has a unique perspective on savings.

If you save 10% of your income each year, meaning you spend 90%. At the end of 9 years, you will have amassed the equivalent of 1 whole years’ expenditure.

Effectively, you can buy your own long service leave through this plan.  Imagine a year off work, all expenses paid, every 9 years!

Let’s take it to the next step though.

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How much is enough to be financially independent?

In the last two posts, I asked how much is enough, and what it means to be financially independent.

Now that you know how much you need, and where you sit on the financial independence scale, let’s combine the two: how much is enough to be financially independent? Continue reading “How much is enough to be financially independent?”

Are you financially independent?

Most of us think we’re financially independent when we’re no longer relying on our parents for income. But as employees, we’re still relying on our employers – to stay in business, to keep us employed, to pay us on time.

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How much is enough?

‘How much is enough?’ is something we ask ourselves in relation to lots of things – how much money do we need? How much free time? How much should we eat or drink? These are the sorts of questions I ponder a lot, so it was with great excitement that I encountered Arun Abey and Andrew Ford’s book How Much is Enough.

One of the first reflection questions in the book is ‘How much money is enough? Why? And how do you know?’

This is a question I could not have answered when I first started reading the book over five years ago, but now is one I feel I can do some justice to – ironically, thanks to yet another book.

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Is it time to quit?

Recently, I filled in the shortest form that I ever saw over the course of my career. A single page. And yet it was more difficult to complete than any of the 30+ page forms I’ve filled out before. It was a resignation form. Quitting doesn’t come to many of us easily. No one wants to be a ‘quitter’. But does having quit something necessarily make you a quitter?

The final chapter of Steven Levitt and Stephen Dubner’s excellent book Think Like A Freak, following on from their (Super)Freakanomics fame, is aptly titled ‘The upside of quitting’. They identify three important forces that bias us against quitting:

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