Wealthmatters’s Blog

The Budget Debate

The 2009/10 Budget Debate opened on April 23, 2009, in the House of Representatives with the Finance Minister, Mr. Audley Shaw’s presentation.

Mr. Shaw told the nation how the $547.75 billion budget for the fiscal year will be funded.

Many commentators said that there were no great surprises in funding the budget.  With the world in a recession and the earnings from the Bauxite levy almost non existent, it could have been worse.

However what many persons failed to recognize was that rumor abound for weeks as to some of the likely funding sources, and the Prime Minister, Mr. Bruce Golding, on the eve of the budget debate did a sensitizing speech to the nation for all Jamaicans to prepare themselves.  Therefore that took care of the element of the “great surprise” and yes with our national debt at over J$1 trillion, the global recession, and a government void of real economic growth plans, it could have been worse.

Your current situation

Wouldn’t it be great if the tax on gasoline, the increase in the income tax threshold did not matter to us? What can we do, where do we need to be, in order to insulate ourselves to a point wherein the budget debate and its contents do not become a stressor?

Introspection- looking into one’s own mind, to find what one thinks and feels. That is what we should all be doing about now.  How do we go about taking control over our personal lives, our financial wellbeing or lack thereof in order to ensure that we are insulated from a financial tsunami? 

Robert Kiyosaki, author of Rich Dad Poor Dad, devised a diagram called the Cashflow quadrant that determines how you generate income.  The quadrant is made up of Employees; Self employed worker; Business owner and Investor.

“Employees earn income by working for other people.  Self employed people earn income by working for themselves-they own their jobs.  Business owners earn income from the businesses they own.  Investors earn income from their investments-from money generating more money.”

Think about how you generate most of your income.  In which quadrant do you primarily fall?  The answer will help you chart your course into the future.

Conquer your fear

If we want to be able to create wealth we must ensure that we transform ourselves into the most appropriate quadrant(s).  We must be prepared to become Business owners and Investors.  We must be prepared to deal with our fears, whether it is a fear of failure or of success.  As employees, working for a company, your income is certain, what is also certain is that you know exactly what the total sum you will earn at the year end, no more no less.  Shouldn’t that be frightening? If it is not, how about the possibility of downsizing, redundancy and company closure.   

Several successful individuals have suffered setbacks early in their careers that heightened their fear of failure. Pharmaceutical tycoon R.J. Kirk’s first venture was a flop–an experience he regrets but appreciates. “Failure early on is a necessary condition for success, though not a sufficient one,” he told Forbes in 2007.

According to a statement read by Phil Falcone during a congressional hearing, his botched buyout of a company in Newark in the early 1990s taught him “several valuable lessons that have had a profound impact upon my success as a hedge fund manager.”

Conquer that fear, there is at least one very powerful idea in all of us – put that idea into action today!

Believe You Can

The Bible states that “Faith can move mountains”, really now? How is that possible you may ask?  If you believe you can move mountains then you will.  What is your mountain? Your mountain is any obstacle than stands in your way to success.  Success may mean academic qualifications, financial security, acquiring a home, relationships or any other achievement or dream that you have set for yourself.

Believe Kill and Believe Cure

If you think you can, you are right, if you think you cannot you are right.  The “I can I am” positive attitude, generates enough energy needed to act.  When you believe you can the how to achieve it will develop.   The “I cannot” negative attitude, generates enough energy needed to not attempt an action.  When you believe you cannot you have effectively told your brain that this is not possible, so there is no need for you to work on a plan of action. 

Programming your mind

Your mind is the most delicate, most sensitive instrument in existence.  It is similar to a computer, what you program into it determines how it will function.  You may have the most powerful super computer in existence, but if you program it with the incorrect data, it will never function as intended.  When you program your mind with the seed of positivity, the “I can” attitude, it will propel you to abundant success.  On the other hand, when you program your mind with the seed of negativity, the “I cannot” attitude, it will propel you to failure.

Take control of your life

The person who says he wants to be poor usually suffers from a guilt complex or a feeling of inadequacy.  He is like an individual who cannot make his college football team and so he pretends he doesn’t want to play football.

Control is about education.  The more financially educated we become; the faster we can spot opportunities in crisis.  Our educational institutions prepare us to pass exams and find the perfect job.  We are taught to be professional and academically proficient, at no time are we taught the essentials of budgeting, assets and liabilities, cash flow management, the importance of net worth and the how to in starting our own business.

Dare to dream

Remember Martin Luther King’s “I have a dream” speech.  Remember Barack Obama’s “Yes we can” presidential campaign.  By all means dare to dream.  “The most rewarding things you do in life are often the ones that look like they cannot be done” – Arnold Palmer.

Go ahead change your vocabulary and enlarge your vision.  “According to your faith will it be done to you” – (Matthew 9:29 NIV).  Think big! I repeat Think big! To create wealth visualize the life you want to live, focus on your goals, envision yourself with the millions, the business and the real estate………  If you had parked those dreams, unpack them by writing them down.   

Stop seeing yourself as a nine to five employee and start treating yourself as a large corporation.  Like corporations prepare a business plan, a marketing plan, prepare a strategic budget and a cash flow projection.  What product(s) are you going to focus on to grow the income side of your “business”?  Once you have identified the product(s), start with the execution; keep a monthly income and expenditure account to determine your status.    

Financial education is a journey, some of us may achieve our objectives in six months, others one year or even longer, but the important thing is that we take that first important step in laying the footprints to success.

Money does not make you rich, financial education is what will make you rich.  By that I mean money alone cannot make you rich, take for example a lotto winner who wins millions of dollars and in one to two years that person is not only broke but in debt.  WHY?  That person lacks the financial education to know how to keep and grow those millions.  S/he believes that those $$$ is ad infinitum, so s/he cannot finish it, and that’s their reality.

If you focus on creating multiple income streams then you are going to think of creative means to make this a reality.  Prepare a financial statement (list the dollar value of the things you own – assets and deduct the dollar value of the things you owe – liabilities) of your ‘real life’position.  Focus on your networth (assets less liabilities) – focus on expanding /growing your networth, because what you focus on expands.