17 Things Yuppies Need to Know to Win the Game of Money

The biggest financial opportunities and dangers exist in the first 5 years of how young professionals use their money. This is because during this phase, money habits are learned, developed and reinforced. If you acquire wealth habits, then your life would be a fulfilling journey to security, freedom and eventually abundance. But if you acquire poverty habits, then your life would be full of struggle, debt, and scarcity.

The article gives you the 17 things you should know if you’re a yuppie (or still feel like one) in order to succeed in the game of money. The financial tips are categorized starting from general money tips, to spending, saving and investing.

– About Money in General – 

1. Money is a versatile tool – know its uses!

 

Yes, money can buy our basic needs and wants. But money can do so much more than that. It can be used to create a better future for you. It can enable you to fire your boss, and buy your financial freedom! It can be used to devlop innovative products and services. It can help the poor and create abundance. Money is amazing with a lot of uses. The important part is you study how to use it.

2. Your money is an extension of who you are.

Money is extremely powerful because it senses your deepest desires. Give money to a insecure person, and it will be used to prove himself. Give it to an unhappy person, andit will be used for entertainment. Give it to someone who was overly sheltered and it will be used to explore the world. Give it to an abundant person, and it will be used to help others. So actually, by understading how you use money, is also understanding yourself alittle bit better.

3. Study money and it becomes your slave.
Ignore it, and it becomes your master.

 

If you subconsciously keep using money to compensate for your hidden insecurities, then your dependency on it will only grow over time. Eventually it will overcome and drive your life. Money will then be like an addictive and powerful drug to you. But if you study money – know its power and limitations, then money will just be a tool to get want you want out of life. You will be using money with the same outlook as how a carpenter uses his hammer.

 

– On Earning Money –

4. Do not to do things, “Just for the Money”.

Life can sometimes be tough, and force you to do things just for the money – and that’s okay once in a while. But remind yourself that it doesn’t have to be that way all the time. There are a lot of ways to make money, so might as well choose one that also makes you happier.

5. Your income is proportional to the value you create.

 

Money is a by-product of value provided. When value is added to you (through a product or a service), you pay money. And when you are the one that provides the value (through a product or service), then you earn money. So if you want to make more money, find ways to provide more value to others. When you start looking at money from a value creation perspective, there will be an unlimited number of ways to earn money.

6. Learn to solve bigger and badder problems. 

The bigger and more complex problems you can solve, the more money you can demand. So continue to grow and develop yourself professionally. If what you can offer to your employer or clients is the same as 1,000 other people, then you will be forced to take a lower paycheck. But if your service is unique and you significantly stand out from the rest, then you can demand for a higher price (salary) for your services.

 

– On Spending Money –

7. Being Wealthy and Feeling Wealthy are Two Very Different Things

 

The things you do, and the things you have, have very little to do with your wealth. While a nice pair of shoes, and the latest gadget may make you feel good, rest assured it didn’t make you any wealthier. This is because wealth is measured only by Savings and Earning Assets: Savings is how much money you have left, at the end of the month. Earning assets is how much of your money is making more money for you.

8. Aim to be wealthy first, then feeling will follow.

Buying the feeling of wealth is a super short-term move because once a better and upgraded version of what you have comes out (and it definitely will), your feeling of wealth will again be lost. And you will have to buy it again. But if you start buying things that will make you really wealthy (like bonds, shares of stock, businesses,  and other assets), then the feeling of being wealthy will naturally come from within you.

9. “Earn Hard, Spend Hard” is a sure way to have to work forever. 

If you can relate to these lines, then break the cycle! First, find a way to de-stress without spending money. Then save that money, so you have a financial buffer while you look for a better job.

 

– On Saving Money – 

10. Try to Save Up to 33% of your Income

Many people will be shocked by 33% standard. Well, here’s the reason why. Given the following assumptions: (1) Let’s say that you are 25 years old now. (2) The mandatory retirement age is 65, and (3) the average Filipino lifespan is 85. This means you will only have 40 years of earning money,  but have 60 years for spending it. If you build the habit of spending all your money, what will you spend during the last 20 years of your life?

11. Now is also the best time to save up! 

Many yuppies think that saving money would become easier when they are already earning more money in the future. Unfortunately, this line of thinking fails to consider two things that happen in the future: (1) Increasing financial obligations like higher prices due to inflation, having kids and having to pay the mortgages. Even if you’re earning more, the pressure to spend more will be greater. Then, (2) Decreasing amount of time for your money to grow. Saving later means the effects of compounding interest will be weakened. Want proof? In the table below, you can see how much money you will need to set aside per month, if you want to have P5,000,000 at the age of 65. The values would of course differ by the time you decide to invest. (It was also assumed that the money you set aside would be invested and earn a moderate 10% per year).

12. Saving now, means paying less in the future!

Following from our example in #11, saving early doesn’t just reduce the monthly burden you need to save. It also reduces the total amount you need to save to reach P5,000,000. This is because of the long duration compounded interest will be working for you.

In the following table, you will see how much you actually saved, vs how much your money earned. Again, the values would vary based on when you start saving. Notice that the later you decide to save, the less your money earns, and the more you need to set aside!

 

– On Investing Money –

13. You don’t need insurance… YET

The purpose of insurance is to financially support the people who are financially dependent on you in the event of untimely death. So if you don’t have kids yet, or relatives that are financially dependent on you, then you don’t need to buy insurance. It would just be an unnecessary expense. Anything that the agent tells you like: “It’s cheaper now” or “you might be uninsurable later”, is just an excuse to get you to buy something you don’t need. At this point, you’re better of saving and investing your money.

14. But don’t invest it in a VUL-type product. 

 

VUL’s are insurance and investment products in combined into one. And while it might be tempting to get (since it’s an all-in-one), VUL’s are a very expensive type of insurance, and an average investment. Here’s the math on why VUL’s are bad:

  • A P1Million coverage for a 30 year-old in a VUL would cost you about P21,000+ per year.
  • While if you were to just get the simple TERM insurance, it would only cost you only P3,000+.
  • That P18,000 difference is better invested directly in a mutual fund.

*Actually if you don’t need insurance yet, why buy it? Again, the best option for people who don’t need insurance yet is to save or invest that P21,000 instead!

15. Really, DON’T get a VUL!

Insurance agents a.k.a. “financial advisors” will hate me for #14, and will give every reason possible why VUL’s are better, so I leave it up to you to do your own research. Don’t just ignore them, but listen to them and evaluate the options instead so you will learn from the meeting. But remember compare it always to your cheapest alternative which is the getting term insurance and investing the difference.

Note: The reason why VUL is the most pushed insurance product is because it’s the one that is easiest to sell (because again it is an all-in-one product). Don’t blame the agents though, that’s just the training they received from the company. Anyway, if you really don’t need insurance, focus on saving and investing instead because…

16. Your money today is worth 300x more in the future.

The average age of Filipinos today is 85 years old. That means if you invest your money today, it will have the potential to grow for about 40 to 60 years! In the world of investing this is a BIG deal – because of the power of compounding interest. Here are a few examples on how big your money can grow over that time span. If you invested P1, and it earns at a very conservative rate of 5% per year…

  • In 40 years it becomes…   P7.03
  • In 50 years it becomes… P11.46
  • In 60 years it becomes… P18.67

But if you learn to be a better investor, and invest the P1 in a moderate 10% per year…

  • In 40 years it becomes…   P45.25
  • In 50 years it becomes… P117.39
  • In 60 years it becomes… P304.48

With the investing horizon available only to you, (because you’re so young), your money is worth 300x more than what it seems! This is of course under the pretense that you study and learn how to invest. Thinking of buying a new phone worth P30,000? Do so and that’s P9million less for you in the future.

17. But the BEST INVESTMENT is still in YOURSELF.

 

The power of compounding interest is great. But it is no match with the power of your personal potential. Unlock that potential by continually striving to be a better, wiser, smarter, stronger, more disciplined, and a more focused person! What do you want to become better at. Is it at public speaking? Is it in leadership? Is it in money management? You can learn any of these by attending seminars, or buying books, or perhaps taking online courses. The choice is yours!  Keep on investing in yourself because that is the surest way to a wonderful future.

 

So that’s it for the 17 financial tips for yuppies. To sum it all up, I highly recommend that you learn how to become a better master of your money. Because as you live your life to the fullest, money can be your greatest ally, or your biggest obstacle. It all depends on whether you will take your personal financial education seriously.

With that said, I invite you to check out a more comprehensive e-course about money management, investments, and business. If there’s anything you didn’t understand in this article, it will be explained further in the course. The details of this e-course, can be found at www.GameOfWealthOnline.com/win. I’ll see you there!

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