Finance

The Four Quadrants

About ten years ago, I came across a book “Cashflow Quadrant: Rich Dad’s Guide to Financial Freedom” by Robert Kiyosaki. Those who are interested in finance and investment, most likely have come across the author’s work at some point in time.

Mr Kiyosaki has written a good number of books, but this particular one stands out. Basically it describes which financial path we are on at a given time in our life. The book was basically a sequel to his previous book “Rick Dad Poor Dad”.

The four quadrants are (E)mployee, (S)elf-employed, (B)usiness owner, and (I)nvestor.

(E)mployee

This is where the majority of people spend most of their working life in.
E is also where Mr Kiyosaki’s ‘Poor Dad’ is. In this quadrant, one is basically set to work for someone else. One would go to school/college/university to get educated, then use whatever one has learnt for the benefit of the employer.
The crave for certainty and security is the main reason for them to remain in this quadrant.

(S)elf-employed

This group of people are somewhat opposite to the E group, in that security and certainty are not the main concern. Instead, they start thinking outside the box and take things into their own hands.
The S group could be on to something bigger, since they are no longer restrained by the worry of security, or self-limiting emotions. In terms of success, the sky is the limit, you may say. But not really. Why?
Explanation to follow in the next quadrant.

 

(B)usiness

Now that a self-employed person is taking control of his/her destiny, success is pretty much self-determined. So it should be only limited by the imagination, right?
In theory, yes. But in reality, it’s a little complicated.
A person only has 24 hours a day. As much as one can work, there is only so much one can accomplish in a day.

So in order to break free from these constraints, we need delegation and teamwork, which are the ‘success-multiplier’. Business can be viewed as a collection of systems representing an idea or vision, in which its core functions and competencies are delegated, where a team of people work to grow the business, and the founder of the business may not be needed to sustain the business.

 

 

(I)nvestor

This quadrant is a transformation quadrant in that money earned from the other quadrants are converted into wealth. Ultimately, Mr Kiyosaki said, anyone who wishes to be rich needs to move into this quadrant to get the money snowball rolling. It is in this quadrant that the sweat and blood of those who worked continue to work for them. The sweat and blood are the assets that generate return 24/7.

 

From One Quadrant To Another

People have different experiences in their life, different expectations, different outlook in life and so on. So most will start out in one quadrant and move to different quadrants throughout their life. Some will remain in one quadrant for life, while others will be in more than one quadrant.
To achieve lasting financial freedom, it would be hard not to end up in the ‘I’ quadrant whether partially or completely.
In my case, I am firmly in the ‘E’ quadrant, and I am also in the ‘I’ quadrant since, I have investments in financial assets (pension, registered accounts).
I am always looking for a side hustle to boost income, i.e. looking to step into the ‘E quadrant as well.
What about you readers? What situation are you in? Are you more in one quadrant than another?

 

 

 

 

 

 

 

Shopping

How to Raise a ‘Non-Materialistic’ Child

Once, I brought my then 4 years old daughter shopping with a friend. My friend was surprised that she never asked to buy anything despite loving to try out the toys at the shop.

We heard from parents having to struggle with their kids screaming for things they saw on the shelves. We also know that some parents would choose to go shopping without their kids to avoid the drama.

Here is how we might have had done differently from other parents

Have them go shopping with you often

Since she was a baby, we brought her along whenever and wherever we go shopping. Introducing and naming items on the shelf from groceries to toys is a good way to teach them vocabulary (Yes, even when they are still babies!)
Some of you may say this would overwhelm the child but children can absorb a lot of information thrown at them, even though they may not remember or understand every bit of it.
Inevitably, living in a consumer world, a child will grow up being constantly exposed to so many products and persistent marketing effort, it is a good idea to educate them earlier that whatever that’s on the shelves is not all necessities.
From her observation, we hope that she can understand that we buy the necessities when we go shopping such as grocery. Toy section will be a play area where she can try things out (most toys nowadays have a test button or feature) but not taking them home at the end of the day.
Sometimes we buy clothes for her only when they are on sale, when her clothing is either well-worn or she has outgrown it.

Limited gifting

We all love gifts, and sometimes we are tempted to buy stuff for our children because we love them so much, or use the kids as an excuse to buy the stuff.
It is part of the culture here that parents hold birthday parties for their kids since they were babies. Every year they are showered with gifts for birthdays, not including the gifts from grand parents and uncles/aunties in between their birthdays!
When we were kids, we were given cash in a red package (for luck) as our birthday gifts, and our mum will tell us to put the money in the (piggy) bank first, before even thinking of spending it.
So that’s how we grew up with the habit to pay ourselves first. There were not many toys available at that time, and the few toys we had lasted for a long time. Some we even keep till today!

How do we teach our kids about creativity? How do we raise our kids so that they do not end up being a materialistic person? Every year we have a birthday celebration for her with just mummy and daddy. No birthday gift until she turned four. Her grandparents still continue the old tradition of giving cash as gift and that goes into the four jar (spend, save, give and invest) that we started with her at the age of four. And her first birthday gift was simply a box of stickers.

Her fifth birthday was a Lambie (a character from Doc McStuffins) stuff toy that we promised her five months before her birthday.


However, by the time she got her gift, she didn’t like it as much as before. That was a lesson for her and us as parents. For her is that as a kid, her preference for toys changes from time to time, and she would realize that having a toy may not make her happy all the time. The lesson for us is to never ask for what she wants too far ahead of her birthday. We also discuss with her that only if the thing she wants for birthday is on sale that she would have it.

 

Playgroup

Attending community playgroup, which is often free of charge, is a good way to encourage your kids about sharing as well as understanding what kind of toys your kid likes the most. As mentioned before, a kid’s preference of toys changes every few months. Places for playgroup usually has a variety of toys for the kids to play, it also encourages them not to become too attached to toys, as at the end of the day they do not get to bring the toys home.
After two years attending playgroup, we noticed our daughter loves the Rocking Horse the most, and we found an exact same, used one, and it lasted till today.

As she grows up we would point out to her that there are only so many toys one can play in a day, and also which toys she has that has the most value, like it’s okay to buy the toys if it does not just sit at home gathering dust, and ends up becoming another home decor.

The young volunteer

We would bring her along, if possible, whenever we go volunteering. For example, when we were volunteering at Winnipeg Harvest, we explained to her that there are people living in poverty, with little food to eat everyday, and it is up to us who are fortunate enough to give back a little to society in whichever way required.

On New Year’s day, we would encourage her to spend some of the money in her savings jar on foods for the food bank.
The volunteer job mentioned included sorting canned and fresh food. You would not expect a kid to sit still all the time to work, so we would just let her work on her own pace and explained to her about team work.

Recycling and Made-by-Myself

Items such as milk jugs, water bottles, caps, toilet paper rolls, etc. can be used as artwork materials. Indirectly it also teaches about recycling, and saving the very environment in which they will inherit.
We built houses for Snoopy out of milk jugs. It encourages creativity, using her ideas and input as much as possible. Whenever we saw something on the shelf that she is interested, she would ask how we can make it at home. She would come up with ideas and we will help develop from there:

The Story of Stuff by Annie Leonard explains how stuff affects our environment, communities and health. It is a good book to read together with your kids.

She is now a six years’ old, and would often refuse our intention to buy new clothing or toys if she doesn’t need it. However, the test of her determination and wit would come when she starts her grade school. With the influence from her peers, there will no doubt be temptation for certain items but we make sure the things that she wants help her develop useful skills and improve her fitness. Examples are scooter, roller blades, bow and arrow set and possibly for her next birthday gift, a skateboard.

 

Finance

Standing on the shoulders of Giants

As a kid, I was not really taught anything about finance or money management, but my mum put this idea of saving in me when I was around ten. Interest rate for savings during the 80’s was as high as 10%. She opened a children’s savings account for me and put a few dollars in it just to get started. When the interest was calculated at the end of a period, I was elated to see that the balance on my account had increased.
Fortunately, through the ups and downs in life, that habit of saving stays with me. But saving up, however hard and seemingly impossible, is just half the story.
There have been numerous sites on how to be financially savvy. How to make your money work hard and harder. But I did not really pay much attention to it, until a couple of years ago, when Mr Money Mustache was featured on the newspaper Globe and Mail . That’s when it dawned on me about the concept of FIRE (Financial Independent Retire Early).
To be honest, considering the age that we are in, and how much we have got so far, it’s hard to imagine we can achieve RE, although there is still hope for the FI part 😉
There’s still a whole lot of catching up to do. Kinda like a ship sailing towards the shore, we could only see white fluffy clouds at the horizon, unlike Mr Money Mustache, Financial Samurai, jlcollinsnh, Millennial Revolution, Mr Tako Escapes , Go Curry Cracker, and many, many more of the FIRE crowd, who have long reached the shore and dancing around the bonfire of joy and freedom!! 🙂
Regardless, we appreciate a lot what the FIRE crowd has done in helping us to search for that light of salvation, of direction to self-fulfillment, to give me a kick in the b*tt to wake me up to a kind of life that seems illusive even in the best of times.

Finance

Burning gas, burning cash


“Congratulations Mike*. You have passed the trades exam and are now fully qualified as a technical specialist!”
“Thanks, now I can get the pay raise!”
“Ya, but with all the deductions, the net amount is just around $10 more a day”
“So $300 a month… that’s enough for a car payment…”
I was stunned. I could not believe what I heard from my good friend. I was also saddened by the fact that my friend actually thought of taking out a loan to purchase a fast-depreciating asset!
Seems like everybody nowadays is thinking of buying a newer car. Another colleague of mine has taken out a loan to buy a BMW. Another one is contemplating a loan to buy a Jaguar(!) The marketing department of the auto manufacturers or dealers must be doing a darn good job.
It’s not like this is their first time buying a car, they each already have a car or more, and a pretty new car too.
When I asked the friend why was he thinking of getting a new car? He said that with 3 growing kids, they are fighting for space. But he already has a big SUV (Toyota Venza), which was bought three years ago. There really is no sensible reason to get a newer car.

(Back of a 2010 Venza)

When I was a kid, my parents had a two-door Honda Civic compact and I had to share the back seat with my sister.

(https://static.cargurus.com/images/site/2008/03/11/21/11/1981_honda_civic-pic-60094-1600×1200.jpeg)

Abraham Maslow, the American psychologist who was best known for creating Maslow’s hierarchy of needs (https://en.wikipedia.org/wiki/Abraham_Maslow), which describes the stages of growth in humans. Maslow used the terms “physiological”, “safety”, “belonging” and “love”, “esteem”, “self-actualization”, and “self-transcendence” to describe the pattern that human motivations generally move through.
However, at least in the developed, or so-called ‘First World’, nations, the power of marketing has flattened this pyramid of hierarchy. So the different stages become mixed with each other.

(https://www.simplypsychology.org/maslow.html)

With the blurring of these stage boundaries, what was used to be in the “esteem” stage, has been pushed down to the “safety” stage. In other word, the ‘wants’ have now become the ‘needs’. This does not bode well for typical consumers, who will inevitably by saddled with more debt. They are pawning  their future, and that of their children, for present short-term gratifications or to fulfill some emotional needs.
Among the more financial savvy, Financial Samurai says that we should not spend no more than 10% of our gross income on wheels. This is a good rule of thumb. Sure, we might not get the car of our dream, so if we want better car choices, get out there and earn more 🙂 …. whether getting a better-paying job, or side jobs. Yes it can be tough. So either we have it tough now, or we have it later. All that debt will come back and haunt us if we let it grow out of sight.

* Name has been changed for privacy of all concerned.

Home Science

Simple cookie recipe (‘Hangpalang’ cookies)

What do you do with a leftover butter (less than ½ cup) and would like to do some baking with your child. Not enough to make a cake, plus my daughter would be running away whenever I use electric mixer because of the noise. So I looked through some cookies recipe: some are too complicated, some require too many ingredients, some are not too healthy . So I came up with the simplest recipe with the least effort but still turns out yummy. And no blender is needed.

Utensils: big salad glass bowl, wooden spatula for mixing, parchment paper, baking tray, measuring cup & spoon.

1. Mix all ingredients thoroughly in the glass bowl

2. Shape dough into round thin shapes and place on parchment paper

3. Bake it until light golden brown

4. Best served with a hot chocolate drink!

5. Crunchy on the inside…yummy!

The Recipe

Ingredient:
– ½ cup (or less) butter
– 1/3 cup brown sugar
– pinch of salt
– ¼ teaspoon baking soda
– ½ teaspoon baking powder
– 1 egg
– 3 tablespoon of each sesame seed, sunflower seed, pumpkin seed (or any nuts or rolled oat) and 2 tablespoon of crunched cereal
– 2 tablespoon of orange juice (optional)
– ¾ cup whole wheat flour

Instructions:
1. Mix butter, sugar, salt, baking soda, baking powder in the glass bowl with wooden spatula;
2. Add egg, all seeds (or nuts or rolled oats), crunched cereal, orange juice and mix until well combine;
3. Add in flour and stir well;
4. Cover and refrigerate the dough for several hours, or overnight;
5. When you are ready to bake, preheat oven to 375 ºF, put parchment paper on to the tray;
6. Scoop about ½ tablespoon dough each time and shape the dough by pressing with your fingers to make round thin cookie shapes. Place each one on the parchment paper about 1cm apart;
7. Bake cookies for 12-14 minutes or until they are light golden brown with a bit darker around the edges.
8. Take them out of the oven and leave for a minute or two before transferring to a wire cooling rack or any well-ventilated tray;
9. Store them in an air-tight container after cooling if you are not eating them right away.

Tips :
– Use butter knife to slice the butter into smaller pieces while mixing all the ingredients together;
– Shape the dough immediately after being taken out from refrigerator so the dough won’t become sticky;
– The thinner the cookies, the more crunchy they are;
– Rinse utensils under running hot water to wash away the sticky dough before washing them with detergent.

Shopping

Values and Rewards

Reward points, air miles, cash backs, etc… Customer loyalty is a big thing for businesses nowadays, and various incentive schemes have been created to promote it. The rewards are often valuable in that they allow a consumer to cut down the purchase cost directly, or to ‘store’ the saving for a later date.
However, we need to be aware of the value of each point.

For example, Real Canadian Superstore has a value of one cent for each of its PC plus reward point.
At one time, a selected variety of its Quaker cereal products was priced at $2.47, and you would also get 250 PC points. So 250 points equal 25 cents.
But you don’t actually ‘save’ 25 cents at the time. You just accumulate it and maybe redeem it later after you have accumulated enough points. The points are just an enticement to keep buying stuff from the Superstore or any of the Loblaw-owned companies.
So was the cereal a good buy? If you like the product and want it now, it is a decent deal. But if you could wait, every now and then the product was priced at $1.97 or even lower. That would be a much better deal even with no reward point offered.
The bottom line is ideally you want to save some real cash now, not to convert your cash into a virtual form of saving that can only be redeemed at a later date. So even if the above-mentioned product was offered a 500-point reward, the deal does not offer a better value than if the product was offered at $1.97 with no reward point.

Finance

Hello & welcome!

This is our very first post. We have embarked many, many moons ago on an adventure: to save, and save a lot

Life revolves around finances…

From the moment we are born, to the moment we leave this world, money is involved. Unless we live our whole life in the middle of the great Amazon forest, in which case you most likely won’t even be reading this blog 😉

And that’s one reason we work throughout our lives, hopefully have enough left over to save, and eventually have a decent, worry-free life in the twilight years. For some of us, the journey through life may hit a roadblock or two along the way, and further affects our ability to retire.

I must say we have a pretty fortunate journey so far *knock on wood*. I am grateful for what we have achieved so far.