Earl Chua

Spend less than you earn:

I know it sounds like common sense and something that everybody assumes they do, but how many of us actually do spend less than we earn? You know the saying, “The more you make the more you spend.” How is it that someone who makes $80k a year has less than someone who makes $40k? It is all defined by the person’s spending habits.

Living here in the Philippines the past month and a half, I’ve noticed that the people here like to spend money. Now Philippines is a generally poor country and the average person’s salary over here ranges from around $6-$12 a day. The thing is, the people here do not save at all and spend everything that they earn.

So when I first came here, which was right before the 1^st of the month (pay day), I thought there was some sort of holiday or something special going on. During the 1^st and 15^th of every month, all the restaurants, all the shopping centers, all of the bars are all packed. It’s like a big celebration over here and everyone is out and having a good time spending their hard earned cash. Everyone just got paid and they are all ready to spend. If you go to any Starbucks (which they have in literally every area over here) at any given time they are all packed. They are open 24hrs and I’ve even seen it packed as late as 2am. The Starbucks prices are generally the same over here as it is in the states as well. So basically because they earn less, in reality they are spending significantly more than if we were to go to Starbucks in the states.

The spending habits for some people in the states are not that much different either. It’s very easy to get caught up in the “rat race” and there are a lot of people who live pay check to pay check, some spend even more with their credit cards. Every month we accumulate bills such as our rent, phone bill, our internet bill, our cable bill, our car payment, our credit card bill, our car insurance bill, and the list goes on. Now I understand that a lot of these things are necessities for a lot of people as they are for me as well.

I’ve compiled a list of ways to help you not be broke by spending less than you earn.

1. Figure out how much you make: I know this sounds silly and I’m sure…or I’m hoping that the majority of the people reading this actually calculate how much they earn and take home every month. If you do not know how much you take home every month, how will you know if you are spending more than you earn?
2. Track how much you spend: I’m not talking about budgeting here. That’s later. Go one month and spend as you normally do but make sure to keep all your receipts and write down what you spend at end of each day. At the end of the month create an expense sheet to track how much you’ve spent and what you’ve spent your money on. You’ll be surprised.
3. Compare your expense sheet with your income: This step is important because it is required in order for you to create a reasonable budget. When you create your budget you should have in mind how much you would like to save or invest. That is the key point – save or invest. Your budget shouldn’t be to help you spend exactly how much you earn at the end of the month. Keep in mind that money saved is money earned.
4. Create a budget: Hopefully by creating that expense sheet you will become more aware of where your money is going and hopefully you spent less than what you earned. By studying the expense sheet, you will notice that the little things do add up. The Starbucks coffee everyday, the excessive shopping, eating at restaurants, having drinks at the bar, they all add up.

The next thing to do is to determine which expenses you could do without or minimize. Maybe you can start slowly and only buy coffee every other day or twice a week. Maybe you can try to limit your shopping habits. Maybe you don’t have to buy random girls drinks at the bar just because they ask. Get your priorities straight.

If you want to create an expense sheet or budget with excel, email me and I’ll send you the template that I use.

The other night I was getting a facial and naturally, during a facial you have a lot of time to think. I ended up being somewhat productive during that time because I did a lot of thinking and planning. I thought of some good website ideas, thought of some good websites to research, thought of some things that I needed to get done, and basically planned what I needed to do when I got home.

After the facial we grabbed dinner, walked around, went to the store, and then went home. I was happy to get home because I knew that I had a lot planned for the night but as soon as I sat in front of my computer…my mind went blank. I forgot what I had planned…or at least 80% of it.

Back in the States I always have my cell phone with me. I have a Treo 700p and I love it. I never leave home without it. Part of the reason is because I like to be able to keep in touch with everyone that I need to, but the other reason is that it keeps me organized. From the calendar, task list, Microsoft office, and even the calculator…I cannot function efficiently without it.

The one application that most people take for granted though is the memo pad. I love the memo pad. Anytime you have any kind of idea, whether you’re driving, working, watching a movie…it’s nice to be able to jot it down on your phone because you usually have it with you.

Unfortunately my phone service does not work in this country therefore I have not been carrying it with me. Instead I’ve been carrying a basic Samsung cell phone that is good for nothing but calling and maybe texting. It has a memo pad but I’m too spoiled and cannot stand typing on non pda phones.

It wasn’t until recently that I realized how important it is to write things down. Your best ideas come when you least expect it and if you don’t record it, you WILL forget it. You also remember things better when you write it down.

Whether its your cell phone, laptop, ipod, notebook, or even a piece of napkin; always keep something with you to write on.

When you think about something that you feel is a genius idea, write it down and look back at it in a couple days. It might end up not being that great of an idea anymore but at least you can re-evaluate it. On the other hand, if you feel that it is a genius idea then you will be glad you wrote it down.

I’ve come up with a list of traits and qualities that I feel are essential to build upon in order to ensure that you reach your maximum potential in business. I obviously do not have all of these qualities, but am using this as a goal to help myself improve.

1. Become Opportunity Aware:

Ever think to yourself, “There’s got to be a better way!” Or, “If only there were some kind of business that would help me with my problem, I would for sure use their service!” There are hundreds of thousands of opportunities out there waiting for you, the only problem is figuring out what works best for you and which one do you see yourself enjoying.

2. Take Risks:

No business is risk free and the sooner you realize that, the sooner you will be able to take the next step. The easier it is for you to assess risk, the more potential you will have for success. You’ll be able to make intelligent and bolder decisions without fear getting in the way.

3. Do Your Research:

Research the market; start up costs, potential customers, trends, etc. If you get into any kind of business without doing extensive research first, maybe you are a little too much of a risk taker. Know what you’re getting yourself into first.

4. Become Self-Motivated:

When you start your business, you have no one pushing you, no one telling you what to do, and it’s hard to stay on track. It’s essential that you keep yourself focused and motivated. If you are someone that loses motivation easily, gets easily discouraged, and constantly needs somebody to tell you what to do and keep you in track… maybe you need a boss.

5. Be Determined:

You’re going to encounter a lot of doubters and haters when you first start out. If you truly believe in your idea then go for it. If every person listened to every hater then what would this world be? You also have to understand that starting a business has its ups and downs. You have to be prepared to not make any money for the first couple of months. That’s why it is really important to have a strong will and to be determined.

6. You Must Avoid Procrastination:

If you’re a seasoned procrastinator like myself, then you’re going to have a hard time staying on track and staying motivated. The sooner you complete your task the more productive you will become, which in turn will make you more motivated. Don’t start something else or something new until you complete all you can with the current task.

7. Be Creative:

In business, being creative and standing out gives you the edge needed to set yourself apart from your competition. When you have a handful of businesses offering the exact same service, the one who stands out the most will be the one with the most customers.

8. Learn to Easily Adapt to Change:

The business world, as well as everything else in life, is in constant fluctuation. You should learn to be able to adapt to change quickly, without modifying your main goal or mission. You might be forced to change the way you do things to adapt to changes in the market, but adapting to change is a positive for you and your business. You should read the book, Who Moved My Cheese?

9. Continue to Learn:

Learning is an ongoing process that we go through our entire life. In business, you will learn things not only about the business, but about yourself as well. Just be sure to apply what you learn.

10. Focus on the Business:

Focus on how you can make your business better. How can you improve your service? How can you make the customer happier? Asking yourself questions like this helps you put yourself in your customer’s shoes and helps with creativity.

11. Learn to Welcome Responsibility:

Learn to understand that you are responsible for everything and anything about the business. When you welcome your responsibilities, you gain confidence in yourself and you become a stronger person.

12. Learn How to Market:

You can have the most awesome product, or have the best service ever…without marketing, you won’t have any customers. Marketing is the lifeline of a business and as a business owner, it is key that you develop skills in marketing.

13. Keep Good Books:

Bookkeeping is crucial! Numbers and business go hand in hand. If you don’t know what kind of numbers you’re bringing in, you don’t know what’s going on. You don’t know how much money you’re spending, how much you’re making, and how much money you’re losing by not keeping good books.

Bookkeeping is also crucial because it helps you keep track of your progress. How can you improve if you don’t know how you’re doing to begin with?

When you own and operate your own business, every idea, every move, ever decision is all up to you. You are in charge, you are in control, and you are the one to blame for its success or failure.

Running your own operation can be very stressful and it is very easy to get into a situation where you lose control of your business and the business ends up controlling you.

When we initially started running our first shop, business of course started off slow. With just my brother and I running the shop, we felt that we could handle more business; so we took control and took the necessary steps to bring in more customers. We created a marketing plan, we handed out fliers, and basically hustled to bring in more business.

Our hard work paid off and we soon became pretty busy. We became so busy that it was almost too much for just my brother and I to handle. We contemplated hiring another technician to help lessen the work load, but decided that we would tough it out and just work harder. Big mistake.

Business became way too busy for just the two of us to handle and the shop was not running as efficient as it could have been. The cars took a little bit longer to inspect, the customers had to wait longer, and we also lost a few customers who did not have time to wait. It got to the point where we became flustered every time more customers would come in.

We were so busy with working, taking on as much as we could handle, that after a while, we became burnt out. We lost motivation to bring in more customers and it got to the point where everyday we just waited for events to happen and then responded. We had turned into an employee of the business, and the events around us had become our boss. We lost control. We had to do something.

After much delay, we finally decided to hire another technician. We could not believe the difference that one person could make. The shop became more efficient, the cars were inspected quicker, and customers were happy. It became so efficient that it felt as if business had slowed down. In reality, we were inspecting more cars and working less. We took back control of the business, regained our motivation, and began marketing so that we could bring even more customers in.

Lesson learned:

When running a business, hire employees to do the work for you. As an owner, your job isn’t to work, but to make decisions and to run the business so that it can make the most money possible. When you become an employee of the business, you lose control and the events around you become your boss.