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We can all benefit from some guidance along life’s way, so keep reading till the end…

Everyone in the world faces money problems. In that regard, all 7.7 billion human beings on Earth today fall into two groups.

I am NOT referring to the binary divisions we often refer to such as male and female, old and young or introvert or extrovert. Instead, I’m referring to the two groups of money problems (or ‘challenges’, if you prefer to put a more positive spin on the “slings and arrows of outrageous fortune” that Shakespeare so adroitly penned in Hamlet Act 3, Scene 1) which we all face. Those financial woes are:

1.Problems we face because we have too little money; and

2.Problems that arise insidiously because we have too much money!

Most of us fall in the first category; relatively few of us into the second.

Regardless of which grouping you inhabit today, you will find it immensely profitable to have a list of 20 steps — or habits, disciplines and principles, if you prefer – to help forge a better lifelong relationship with your finances.

My 20 steps are not exhaustive; they can’t be because I don’t know everything there is to know about money management! But they are rather extensive because I have drawn them from an in-depth examination of my multitudinous personal money mistakes and also from lessons I’ve derived from observing and working with clients of my small financial planning practice which focuses on crafting and then managing their retirement funding portfolios.


Now, let’s dive straight into my 20 steps:

1. Stay humble and teachable — don’t assume you know everything about personal finance just because you’re an expert in whatever field you toil in;

2. Set written goals about what you wish to achieve in life — doing so will set you apart from most other people and might even propel you into the higher echelons of society;

3. Record your net worth statement — list all your assets and your liabilities on paper or an Excel spreadsheet so you know the value of what you own and what you owe;

4. Examine your assets — scrutinise their structure and composition to see if they mainly appreciate or depreciate in value over time;

5. Examine your liabilities — calculate your APR or annualised percentage rate of each loan and intelligently focus on paying them off;

6. Use a notebook to record ALL your expenses for a month — the results will shock you;

7. Build a budget from the information you glean from step 6 — keep it realistic and not too ambitious. Aim for small incremental monthly improvements;

8. Record your cash flow statement — list all cash (inflow) sources and all cash (outflow) expenses;

9. Focus on beefing up your monthly cash flow surplus — this equals your total monthly cash inflow minus your corresponding cash outflow;

10. Steadily raise your active income from your salary or self-run business — you’ll be most successful doing so if you incrementally commit to working harder and smarter;

11. Invest in yourself — spend at least 3 per cent of your monthly income on developing your brain by buying books and attending conferences (which you happily pay for yourself) that pertain to your area of professional expertise;

12. Focus on providing sterling service — always go the second and third mile, at work, at home and in life;

13. Prioritise your cash flow allocation wisely — give to God, if you’re so inclined; then save and invest for yourself; then give to charity; and finally spend what’s left;

14. Exercise delayed gratification — choose as often as possible to give up all bad things and even some good things today so as to afford great things tomorrow;

15. Prepare for longevity risk — globally, humanity is living longer. This means we will, on average, have to work for more years than we expect, and along the way save and invest more aggressively, if we hope to enjoy a long golden retirement;

16. Stop to smell the roses — enjoy life. Opt to spend your money more readily on experiences you will cherish and remember for a long time than on short-lived junk that depreciates to zero in no time;

17. Build an EBF — fund your Emergency Buffer Fund or reserve account or cushion account. Accumulate up to three to 12 months’ expenses, depending on your circumstances, personal paranoia, and justifiable fears about the future;

18. Build up your personal Wealth Accumulation Portfolio — fill it with savings and investment vehicles that compound and steadily spin out passive income in the form of interest, dividends, distributions and rental;

19. Aim for Financial Freedom — you will raise your odds of achieving it if you make it a written long-term goal and then steer your financial habits (see steps 1-18 above) to eventually generate more passive income each month than you need to pay all normal expenses; and

20. Don’t neglect the vital Wealth Protection and Wealth Distribution dimensions of financial planning — so buy sufficient and appropriate life insurance and general insurance; write a will to distribute your assets upon your passing; and possibly even establish a trust if you get to the point of encountering problems associated with having too much money!

© 2019 Rajen Devadason

Rajen Devadason, CFP, is a Licensed Financial Planner, professional speaker and author. Read his free articles at; he may be connected with on LinkedIn at, or via [email protected] You may follow him on Twitter @RajenDevadason

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