Summary – Working backward to ensure financial survival

The most common problem with us is that we believe with all our heart that the key to living is to live in the present. I’m not against the idea since I too believe that is the only way to live. But the problem starts when we were so occupied with the present, we prefer to think that the future always stay in the future and we shouldn’t be bothered with it.

WRONG! The future will become a present to us sooner or later. And the only way we can realize that is by checking the present, which is the future of our past. Confused? Don’t be.. There’s more

1) How much cash do you have now?
Take out all your cash in your wallet and start counting. Check also all the balance in your banks. If you have a piggy bank, count those too. In short, if it is cash, count it and put the number on a piece of paper.

2) How much do you have in term of things?
Do you have a house? a car? a stereo? This is going to be more tedious than counting those coins. You will now have to estimate how much your assets worth at present. Forget about the depreciation or appreciation. Just calculate how much cash will you receive if you sell your assets now.

3) Double up everything
If the total cash you have now is about $50K, and you are now 30 years old, simple maths will tell you that by 60 years old you should have $100K.

Yes, I know that there are a lot of other factors should be considered, such as increment in salary, dividend or interest received etc. If you want to work it out, by all means please proceed. You know your finance better than I do. But logic says that unless something change, that should be the minimum you will get if there are no change in the way you manage your finance now.

Now assuming you will live until you are 80 years old. With $100K in saving, you can only survive if you spend $416 per month. I’m not sure what we can even get with $416 in 50 to 60 years time. Pay the rent maybe?

My point is this, irregardless of the inaccuracy of the calculation, we need to save for the future. And that will not happen if we did not check on our current expenditure and lifestyle. We need to change for things to change.

A good way to start is by working backward. Let’s assume we want to retire with $3000 per month. Simple maths will show that we need to have at least $720K to maintain that monthly expenditure. Now figure out how can we get that $720K

– I wonder –
How much would you like to be given monthly after you retire?

———– Personal Note ————-
I still remember my first piggy bank. At the time it was in the shape of an elephant. I had saved quite a lot of money then. It was about $40. How I knew? I knew because one day I accidentally broke a helmet screen. It belong to my father’s friend. So my father ask me to pay him with my own money.

It was a very educating moment. Even though I doubt that the cost to repair the helmet is $40

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This post has 4 comments.

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  1. filantera`
    26 Feb 08 8:43 am

    huuuuuuuu the tabung gajah hehehe

    yup like people said, save for the future first, the rest then we spend ๐Ÿ˜€

  2. 26 Feb 08 8:29 pm

    filantera – yes that tabung gajah ๐Ÿ™‚ black in color. I wonder if that is the elephant I kept having in my childhood nightmare

    spending the rest somehow so much more attractive hehe

  3. 05 Mar 08 12:22 am

    piggy bank…Agagagaga…funny….aiyoooo…i ni alaยฒ bankrup…purse ade 30 hinggit je…Agagagaga…bank??? lagi lawak…need to work…then menabung la keje…

  4. banji
    05 Mar 08 7:18 pm

    aRa – takpe, one step at a time. yg penting skrg kerja kan? gambatte neh

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