November 12, 2007

The Basics of Cash Flow

I am not fond of forwarded email messages because most of them are chain mails, dire warnings on just about any food or product and those with that scary face that pops out. Some are inspirational…telling you to quit fooling around and stop reading forwarded emails and get back to work but then you’ve already consumed an hour out of your productive time reading those inspirational messages J Out of all those emails that I manage to read, this one made the most sense. It made me think about my spending habits. This is from Francisco Colayco, the Robert Kiyosaki of the Phils. Haven’t heard of him or Kiyosaki? Neither have I hahaha but do read on:

THE BASICS OF CASH FLOW

There are those who e-mailed me asking about the
basics of cash flow. I'm really sorry that I assumed everybody already
understands it. Anyway, by demand ... here it goes...
May isang bata... joke lang. The basic is. What pattern do you see if you will get a P100.00 bill and monitor where and how it is transferred from 1 possessor to the other?
How does it flow? The pattern for a typical Pinoy is.
You earn from your work, you spend it on food, gadgets, clothing and other basic needs. Before you reach the next payday, paubos na yung pera mo. But that's ok payday is just a few days ahead and it doesn't matter if I run out of money, I am expecting money again any time soon.
This cycle goes on and on and you make some sidelines or create other ways to earn but it seems that money was never enough. (I am tempted to explain further pero usapan... basics lang). So you can't leave the job that you have because a week without work would affect the cash flow you have to support your family and needs. As much as you wanted to accept another job, the gap would make you pay less for a couple of days, which makes you a slave to your boss.
At least, you have a job to support your needs.
So to illustrate.. .Cash is flowing inside your pocket. Years have gone by doing your monotonous routine. Question... what if you get fired? Or you were forced to retire because there are new and younger people ready to take your place. What would you do? As an OFW, Makati Executive, Top Salesman, Engineer, Attorney, Teacher, etc... What if it all ends? The sweet cash that enters your pocket every 15 th and 30th suddenly comes to a halt.
There are two things you can buy with your money... An asset and a liability. To describe each... An asset brings money inside your pocket; a liability takes money out of your pocket. Another way to see, it is that an asset if you buy one, will bring the money you spent for it back to you 2 or 3 folds. A liability, when you buy it will not give your money back at all.
Sa ilocano... idjay ti kwa... djak maawatan... (joke lang po, seryoso na kayo
eh...) Sa madaling salita... kapag asset, maibabalik ang pera , pag liability,
goodbye sa pera... Ang problema kay JUAN DE LA CRUZ, habang may trabaho
ipon ng ipon at bili ng bili ng liability! I have seen OFWs get back to
the country with gold chains at kung pwede lang limang shades ang isuot ng
sabay-sabay gagawin nya eh... dvd, component, jackets, clothes, inuman, pulutan,
party, pabango... hindi na makalakad sa dami ng bitbit...
At s'yempre mga empleyado natin dito sa bansa na lingo-lingo bago cell phone at mags ng kotse.. hindi na nga magkasya ang damit sa aparador, tapos pag umaga sasabihin... . wala na akong maisuot.
Guys, esep-esep... what you bought... will it bring money back to you? I know what you have in mind... you have to enjoy what you worked hard for. That's right, but think of something that will last... think of your future.
I have seen the worst of people who were abogado de kampanilya,
executive secretaries of top rank business men, people who worked for big
companies, earned a fortune and got a big retirement pay by the millions...
Now.... Wala na.
Why? Because of their cash flow... went in... went out.
I need not to mention basketball players, actors, singers, etc... Check
what is their career path... next after acting, singing and playing... POLITICS.
Kasi, 'yung million na kinita nila, puro liability ang binili.
Going back...
all the liability they bought, ibinenta ng mura! I'm wearing a gold chain now,
which I got from a seaman... he bought it for P35,000 and sold it for 8,000 to
me. Hindi po asset ang alahas! Bakit? Totoo na tumataas ang value n'ya
pero kapag gutom ka na, kahit palugi ibebenta mo! (wala bang aaray?) Cell
phones... dvd players etc. pati bahay at kotse... that's the cash flow of most
OFWs...
The question is ... " WHAT IF THE INCOME STOPS?" Sa Pinoy,
ganito: anak... mag-aral kang maigi, at pag tanda namin... ikaw na bahala sa
amin ha.... Hindi po ba maling-mali. ..
You have to establish
something today that will take care of your future. Teka, teka... eh ano
ang dapat gawin para hindi mangyari yan? You must create a source of
income that will continually make money flow inside your pocket. Start a
business! While you are working as an executive or an OFW, or a professional. ..
START A BUSINESS and MASTER that business till you get out of that company. Para kapag tumigil ang income mo sa kanila... may susuporta pa din sa iyo hanggang
pag-tanda mo!
Now don't tell me to invest my money on pensions and plans...
NO WAY ! Narinig n'yo na siguro yung .... Naku ayaw ko na magbanggit.. .. 'yung
mga nagbayad at hindi nakapag-claim. .. sila pa ang dinimanda at nag-piyansa! !!
HUWAG MO I-ASA ANG PAGTANDA MO SA IBA! GUMAWA KA NG SARILI MONG BALON NG
PERA! KAHIT MALIIT PA 'YAN, SARILI MO AT HINDI KA AASA SA IBANG TAO...
Imagine yourself when you reach an older age... (aruy ko,,, baka yung iba sa
inyo about that age... tabi tabi po...Ako po sa mga nagtatanong. .. I'm 37 years
old. Naabutan ko pa si Michael Jackson at hinele po ako ng nanay ko sa mga kanta
ng hagibis...). You have money that the company gave you as your retirement
pay... what will you do?
You can consume the money till your old... eh kung hindi umabot? Masamang damo ka pala... at hindi ka kaagad kinuha ni Lord.
Eh pang age 65 lang yung naipon mo na budget.
Or maybe, you can start a business and use the money for capital... Kapatid... 9 out of 10 businesses, FAILED... yung isang magsa-succeed, gagayahin pa ng kapitbahay mo instead na mag-franchise sa 'yo... think! At age 50, you are struggling trying to make a business work! What if it fails?!
Eh ano nga ba ang sagot?
The answer is, stop buying liabilities and instead buy assets now. I don't care
if it is a banana-Q store, balot, ice candy or a sari-sari store, etc... start
now! Because, your experience here will teach you what to do in the
future. It's so hard to struggle in business when you are 60 yrs old.
You have to create a source of income separated from the source of income
from your work. That when the time comes that you have to stop working, you will
have your own source of money! Create assets, start a business that will be
there to support you and your family. I AM NOT TELLING YOU TO QUIT YOUR JOB! I'm telling you to start a business while you're working and stop spending your
money on liabilities and start putting them on assets!
Ang pera kapag pinambili mo ng LIABILITY... hindi na babalik... ang ASSET... BABALIK.
Teka... masama ba bumili ng mga magagandang gamit? Hindi! Siguraduhin mo lang na ang pambili mo nun ay galing sa asset mo. The business has to be prioritized!
Mawalan ka man ng trabaho, may negosyo kang palalaguin.
If before, nabubuhay ka naman ng iisa sapatos mo, huwag mo baguhin 'yun... dati, nagdyi-jeep ka lang... 'wag ka na munang mag-FX...
Create assets and lessen liabilities.
Invest and learn now... mag-negosyo! Eh anong negosyo? Any, as long as
you think it is work and doable! I am still looking for partners for my HOME
MASSAGE SERVICE! SPA MAGIC! And my business CAR MAGIC is still franchising. .. (joke lang ... baka sabihin nyo nag pro-promote lang ako eh...But I AM PROUD TO SAY THAT ALL MY BUSINESSES ARE ORIGINAL AND ALL ARE GRAND ASSETS!
I started all my businesses with a very small capital. If I used that money to buy a
gadget, new shoes or any liability... baka wala lahat ng negosyo ko at wala na
akong makain ngayon.
Again, I hope that this BASIC CASH FLOW article
helps.... I wish all of us become financially free!

4 retrospection:

George said...
This comment has been removed by the author.
George said...
This comment has been removed by the author.
George said...

Financial Intelligence should really be taught at school...make that at home!
Guy Kyosaki anyone?
@floraine: i did 3 revisions already bwahaha

Raine said...

@george: yeah i noticed it too :-)gay kyosaki? LOLS