Modern Age of Enslavement By Angeline Ng Mei Lin

Agony is the description for the physical, mental and emotional pain that affects us at any point of our life in managing our finances. The lack of money plus the compounding debts incurred in our daily survival is enough to draw sanity out from any individual. This is where the financial quotient (F.Q.) will differentiate between the enslaved and the free. Financial Intelligence are never taught on syllabus in school. All of us have been there in our life; either we are broke or indebted!

F.Q. is very important because it is a personal finance education. A form of delay gratification so we can enjoy our fruits of labour later. Nowadays, we might as well throw F.Q. out of the window because our daily lives are bombarded with commercials, free subscription of credit lines and planned promotions to stir our urge for impulse spending. So how do we manage our own finance so we are not caught in the current economic turmoil that washed to our shores? The thought of managing own finance is enough to create nightmare to some. We have to go back to the basic to find the solution to our problem.

Followings are the general solutions :

* 10% of the income goes to personal savings. Saving for oneself is imperative to our journey to success. The amount saved is for future investment. The pot of money can be channel into mutual funds, equity, properties and self education.
* 20% of the income is to manage existing debts not taking into account of our future expenses. Any future expenses will fall under the household expenditure. The public in general view all debts are detrimental to our financial standing. Here I beg to differ because we need to use the cost comparative analysis to justify for our debts. Example: If Jane incurred a debt of $10,000/= (loan) with a monthly repayment of $500 over a period time so that she can have the monthly income of $650, I would categorized the debt is a good debt because its an investment. Jane will be able to repay the debt monthly with an excess of $150 (Income-Repayment : $650-$500). When the loan is settled, Jane had just created an additional stream of income. The additional income is then regenerated to future investment.
* 70% of the income is manage the household expenditure. Why 70% and not less, the journey to climb out from the pit is not done overnight. Bear in mind, debts incurred in our life is done gradually over a period of time.


Two main reasons why we should maintain the household expenses at 70% of our income:

1. We do not give up and walk away from our primary goals out of frustration.
2. We do not want to compromise our basic needs for our family by cutting down expenses for weekend outings.

Having the general guideline works only if we change is our mindset to believe that we can achieve what we set to do. We must have the discipline and determination in walking towards our financial freedom. Taking responsibility for our action is a crucial for making the change in our life. Sadly, we are being enslaved because we allowed ourselves to be in this position.

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Angeline Ng Mei Lin - EzineArticles Expert Author