Earning vs Saving

Everybody have the steady earning but not everybody have the steady saving. What is the real correlation between these two? Which one is more important? Why is that important? Why saving is important whereby people always discuss about inflation which current value will not be the same in the next five years? Better leverage our money for investment rather than just saving. There would be so many arguments about saving which is not really advisable relative to current fluctuation in economy. Before we go further, we always must remember that, "it's good to be rich but it's better not to be poor".

How many of us have started saving with steady saving every month from the beginning of his/her career life? Be frank, I admit that when first started my career life there are so many wishlists to be bought from the first drawn salary. As time flies, we might aware that savings is crucial to back-up us during any uncertainties. Some says, emergency fund must be six (6) months salary or one (1) year salary in case of any uncertainties. Why people always mention relative figure not absolute figure? Any idea on relative figure and absolute figure?

Relative figure is something subjective where it comes from the salary for specific person and absolute figure is a fixed salary, i.e. RM 2,000, RM 5,000, RM 10,000, RM 20,000, RM 30,000, etc. If a person having salary of RM 3,000, he/she having sufficient amount fund during emergency which is more than six (6) months salary and his/her living style is designed based on RM 3,000/month expenses. Whereby for those getting salary RM 20,000 or higher would not help much as the committed amount is only valid maximum two (2) months which is far lesser than minimum requirement, six (6) months salary.

Hence, it's not about how much we put aside for saving but how consistent and portion are we put aside for saving. For those never had consistent saving might start with very minimum saving which is as low as 10% and slowly increase by annual basis. Is it possible? Obviously it is possible if proper financial planning is in place by discipline ourselves on expenses which is indirectly reflect to our living style. So, back to how good the saving based on relative figure, i.e. which one is considered having better saving from two different individual with two different salary bracket;  if a person with salary of RM 3,000 can put aside RM 600 for saving and a person with salary of RM 10,000 can put aside RM 1,000? For me the person with salary of RM 3,000 and saving of RM 600 is wiser than the one with salary of RM 10,000 and saving of RM 1,000. Why? Don't look at the absolute figure but on relative figure, 20% versus 10%.

Slowly develop our discipline in managing our financial strategy in order to achieve financial freedom even while working as a employee. From the steady saving comes the steady investment because slowly the knowledge and experience being polished simultaneously.

Real Investment

Investment should be something giving us back some values; it could be monetary values, experience, knowledge, etc. Investment itself may sound simple but when comes to execution level, it must be done very strategically so that risk can be quantified. Nothing in this world is safe and genuine especially money related matters. Hence, really need  detail analysis in order to materialize it. The fundamental on investment must be very strong so that can stand for any uncertainties, at least we are ready with way forward to face the disaster or namely financial crisis.

In order to invest in any potential profitable investments, we must know the pro and con of the industry. How to know it? How to gauge the risk of the industry? What to gauge? Where to gauge it? When to gauge it? All the checklist could be different based on different industry; namely stock, real estate, direct selling, gold, etc. 

People may ask how to get or to know all the checklists prior to start investment so that we are able to mitigate potential risk before, while, and after investing regardless any industry. For me as simple as reading ABCs because in our level while reading this article considered expert in reading but not same for kids who just started to know the alphabets. Once we know the alphabets, we must know the words so that can write it properly and so on so forth. Similarly, before we start investing in any potentially profitable investment, we must conduct some evaluation via some researches. Research here is not by pursuing doctorate in that investment area but reading subject matter related books, articles, magazines, etc. Some may suggest to go for seminars or talks even with no fundamental knowledge on that area investment area. For me I would say that you may go for the talks (one to three hours) which is normally free as introduction before they (organizer) organize the actual course, we may get some key points for us to do some detail study before attending the paid course. 

Buying books authored by the speaker(s) would be a good strategy before attending any paid course so that you have some idea on issues that we may have foreseen in the books. Besides to have some ideas, it's better to read because our database (memory) will store all the information read longer than via listening. Definition for research itself could be subjective based on the materials or approaches you will be using and we have to ensure the research should really feasible before take action in investing. Or else, some disasters will come even without actual financial disaster.

Hence, spare some time, money, efforts, and/or anything that can lead to financial knowledge enhancement so that we know the right path when start our investment. So, start your investment with knowledge first before anything else.