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Hooray ! I Got My Bonus !

Aug 18, 2007
Ten dollars is ten dollars. Right ? Not really. I've been exploring making money on the internet and recently checked my google adsense account. I have just crossed the ten-dollar mark. I was really pleased. This is the first money I have made entirely on my own, without depending on an employer to pay me, or needing a base capital with which to start investing. I worked really hard for it. On a per hourly rate, it would have made me slightly under one cent an hour. Pathetic. But I will treasure this money. Last week, I was also given ten dollars from the supermarket I regularly shop at. It came in the form of a voucher as I had accumulated enough points. I spent it immediately. Afterall, it was free extra money.

I was told of a study that was done. People were given a scenario. If you had bought a cinema ticket for ten dollars, and on the way to the show, dropped the ticket. Would you buy another ticket ? About fifty percent said yes, and fifty percent said no. Then the scenario was changed. This time, you are on the way to see a show, and you drop ten dollars. Would you still buy a ticket when you reach the cinema ? This time, ninety percent said they would ! The point of the study was to prove that we all think about money differently, even though the value is still the same.

Think about your salary. The hours you put in, the time you sacrificed from your family and friends for the company. That money was hard-earned. You would be very careful with how you use it. Now think about your bonus. Say the company did extra well this year, and gave out a much larger than expected bonus. What do most people do ? They rush out and treat themselves to a new toy/dress/handbag/sofa , put down a downpayment for a new TV, or go on a well-deserved holiday. At best, the bonus is spent. In some cases, they are in more debt than before. The same happens when people get a raise. They rush out and put a downpayment on a bigger property, or a new car, putting themselves in greater debt than before.

What about those who are lucky enough to win the lottery ? One often hears how people with money problems keep hoping to win the lottery, thinking that all their money problems will be solved. But ask them what they will do with the money if they got it and the answer generally involves spending it. Before long, it is all gone too.

It has been described as people taking a financial laxative. As soon as money comes in, out it goes again.

We need to learn how to manage our money. It is not how much money you make, but how much you keep. Too many people are ignorant about how to handle money. As a result, money keeps flowing away from them. For those who learn to manage their money, it just keeps increasing.

The poor only have expenses. Any money that comes in is used up immediately for daily needs. The middle-class buy liabilities they think are assets. They buy a bigger house, a vacation home, a car and list all these down as assets. But these all cost them money to maintain. The rich buy assets. These put money into their pocket. Assets come in many different forms. They can be houses which generate rental income, stocks with dividends or businesses which generate free cash flow. The more assets the rich buy, the richer they become. Some people who appear rich are really poor by this definition. They are entirely dependent on their jobs.

We have to learn to see money for what it is. It is the same numerical value, whether it was hard-earned, or "free". If we treat all kinds of money with the respect it deserves, it can help us towards our goal to be financially free. I just got an email recently informing me I would get my bonus this year. It came with a little joke at the end saying " you can still go for the sales !" Once spent there, it would become worthless. Instead, I should be putting some time and effort to find out what I can do with this money so that it will grow and work for me, generating more money.

I'm not sure how true the story is. I once heard a story that Warren Buffett was in a lift when he spotted a 1 cent coin. He stooped down and picked it up. As he put it in his pocket, he grinned at the surprised looks of the others in the lift, and said " The beginning of my next billion!" The exact story may or may not be true, but the lesson behind it is true. Be careful with your money. Take time to learn about it. And it will help you to be financially free.
About the Author
Karen Cheong strongly believes that we all need to be educated financially in order to become financially free.

She shares what she has learnt about making money, investing and personal finance in her blog http://www.whymoneymatters.blogspot.com/
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