Redefining Your Salary

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A few weeks back, I had a talk with the graduating accountancy student of my school Xavier University. Basically I was tasked to share on how to manage your income since in a few months after their graduation or after their board exam, they would be joining the workforce. With that, it is appropriate that as early as now, they would have a lesson or two on how to manage their income.

I duly think such presentation would be a perfect fit to anyone who is working. That is why, let me share the items I taught to the soon to be yuppies.

The bulk of the presentation is simply redefining salary. So here’s how:

S – Save

When we talk about saving, the best way is always to save directly from income rather than save what’s left after our expenses. Remember the formula, Income – Savings = Expenses.

Aside from that, it is also appropriate that you get to define just how much percentage would be allocated for savings. You can follow the 50/30/20 rule in which 50% would be for expenses, 30% would be savings and 20% for investments. Or you can redefine the percentage in accordance to your salary. But simply have that percentage as your guide so you will know how much you would be saving in the process.

A – Aim High

When I say aim high, make sure to have a goal in mind and also a millionaire’s mind. It can really have a big impact on your life. Most millionaires nowadays and successful individuals definitely have a goal. Some would say, retire early, be financially free at the age of 40, be a millionaire by 30 and so much more. With that goal, it will drive you to work harder because there’s something you want to achieve in the long run.

L – Live below your means

There is always that notion when our salary increase, so must be our lifestyle. That is why, even if we have bigger salary, in the end we still cannot save because of what we call as lifestyle inflation. That is why, it is important to always live below your means. Take for instance the great Warren Buffet in which even if he is a billionaire, his life before is still the one that he follows.

A – Assess Your Finances

It is always best that one would track his or her finances in the process. At least, you can be able to identify where your money is going and where most of your money is allocated. Always have a budget. Write it down so you can be able to control your money. Remember it is better that you control your money rather than money controlling you.

R – Right Away

Invest and save now! Time is your ally with regards to investment. Do not wait for your next salary to begin or do not wait until you reach a certain age. The younger you are, the bigger the yield, the greater would be the returns.

Y – Yearn For More

As an employee do not stop generating income based on your salary. Look for other means where you can be able to earn more. You may check out Kiyosaki’s cash flow quadrant. Be self-employed, create a business and invest.

Remembering these letters can greatly impact on how we handle our salary. After all, it is one of our primary sources of income to date. So let’s make the most out of it and let’s maximize it.

P.S. To those doing the 52 Week Money Challenge and 52 Week Money Challenge Version 2, it is Week 10 already! Did you deposit the next amount yet?

P.P.S Want to know more about investing, savings, stock market and more, check out my reference here. You can download free ebooks and resources too.