Mar 4, 2009

The SPIDER Rules: A Middle-Aged Dad's Guide to Personal Finance.


I am neither an accountant nor I claim to be a financial guru but I can certainly tell what makes sense if you're a middle-aged dad like me raising a family and securing our financial future. I have learned that there are only six simple rules (aka S.P.I.D.ER. Rules) for one to ensure future financial security. These rules spans time, income class or educational attainment. The degree of financial success depends on how much effort you give into all of these.


Rule 1: Save

The act of saving is the first basic step toward future financial security. As a rule, one should save 10-15% of one's gross monthly income - I save 17% monthly and I still live quite comfortably. Man's appetite for personal conveniences (lifestyle) is insatiable yet can only be controlled by one limited resource - money. To limit and simplify my lifestyle, my savings get automatically deducted from my paycheck and I live with what i have left. Simple yet effective.


Rule 2: Protect

Since I am a family man of two children, I have to protect my savings and family from unforeseen circumstances of death or debilitating diseases. I chose a no-frill permanent life insurance just enough to cover me for these unexpected events. My life insurance serve also as a savings plan with a 10% per annum interest.


Rule 3: Invest

Investing is an act of contributing money to make money. Savings alone is not enough to secure one's future - you have to multiply it.I started mine in mutual funds then, when I accumulated enough, it will be invested on businesses that provide a much greater return.


Rule 4: Debt Management

It is moronic for me to say that debt is bad because it never is. It turns bad only when it becomes unmanaged to a point where one can no longer pay for it. Here is my rule when getting a loan: only borrow money to make money. Buying a car for family use will not put money in your pocket and buying your dream house won't either. Manage your debt and put it in a controllable level.


Rule 5: Educate

As with any activity like a camping trip or a basketball game, it needs careful planning. Good planning starts when we are financially educated and really doing what we learned. I started by reading books from R. Kiyosaki and D. Bach and browse for more on the web. Learn as much as you can. Let education be your map to your future.


Rule 6: Revenue Streams

Even though I'm a part business owner of our health care company, I am salaried just like any employee in the office, but the pay is much higher. Having learned not to be complacent, I find creative and new ways to make money. And, Whatever I earn goes to the bank or some other investments. Everyone has special skills and anyone can profit from them. Be it in cooking, web design, and writing; you can turn them into profit and who knows, any of these special skills may become a huge income generating business for you and your family.


Stumble Upon Toolbar

No comments: