Ever felt that everyone else makes money but you? Well you are not alone. Sometimes I feel that too. No matter how hard you work and how much you make, it never seems enough or it ends up being spent fast. After much analysis I kind of figured out why I was feeling this way. Picture your cash flow in comparison with water flow, flowing through a circular pipe. Beginning from the 12 ‘o clock position, moving down a clockwise motion, we will pass by 3 points in this cycle. First being your EARNING CAPACITY. Second being your SAVING CAPACITY and lastly your INVESTABLE CAPACITY. As long as you have the earning capacity the water will continue to flow. So when does this cycle break? It breaks when you begin to incur expenses. It’s just amazing how one can live without any expenses unless of course he/she is so damn good at living off others. Tsk..tsk..tsk and now that’s a very bad thing to do, becoming a leech. Don’t live without a backbone! We all have talents so put in the effort to bring it out of you. Well anyway coming back to topic, when we start incurring expenses it’s like inserting a tap into the pipe. The moment you turn on the tap, water starts flowing out from the cycle, slowly depleting it. This is called a leak in your financial cycle. The more expenses you create the greater the outflow. What’s even worse is when you start incurring expenses that keep accumulating and never seem to stop. One good example will be credit card debts. When you start owing banks for all those things you spent on impulse because you bought more than you could afford. The interests and, even at times, late payment charges will kick in to add to your owing. This is a vicious cycle that will get you hooked especially if you are paying them back on a monthly basis based on just the minimum amount due. You will always end up paying more than what you initially borrowed because of all the said charges. How else do you think the banks make money? In fact if you think about it, all banks offer low interest rates for your saving deposits but charge high exorbitant rates to other customers who borrow YOUR money and at the same time paying you peanuts. Moreover did you know that regardless of how much money you deposit, the bank only guarantees the first $20,000 of your deposit? So in the event the bank goes bust during a financial crisis, like what happened in America a few years ago, you can imagine the chaos. Most working adults in Singapore are tied up to some form of debt. They can vary from study loan, auto loan, personal loan, housing loan, etc. Acquiring all these loans actually make you an employee of the bank. Most of us don’t even know that we actually work part time for the bank. Let me tell you why. Let’s look at a scenario, taking up a personal loan. The borrowing Bank will be your employer and the loan recipient will be you, the employee. Loan will be termed as salary and interests earned will be termed as profits. It goes like this. For an advance salary of $20,000 that you take from your employer, you sign an employment contract for 5 years (loan tenure). You will work for him day and night just to pay him back your salary and of course with an additional $6,700 (calculated based on 12% per annum) profit generated from your “sales” for the company. Basically you just worked for someone for 5 years, gave them back your pay along with all the profits you earned for them. I should nominate you for the Employee of the year award! Saddening part is many of us don’t even see it this way. We think that we “need” to borrow because we have expenses. It’s just an interim solution to a problem. Come on! It’s a borrowing. You will need to pay it back at some point in time. So if I were you, I would just go out there and work, make my own money and be my own boss! Banks are there for us to leverage on and not to borrow for whimsical spending. In my honest opinion, growth in Singapore is taking place too fast. Prices of goods and services, properties and vehicles are sky rocketing and the majority here are finding it difficult to catch up. If your earning capacity, savings and investments do not match up with your leakages, soon your financial pipe will burst causing a financial tsunami to take place. This may drown you and maybe even your family. Don’t succumb to it. With all that in mind I urge everyone to plan ahead of time, spend wisely and create contingencies. Remember you don’t need an astrologer to predict your future. You just have to be mindful on how much you spend based on how much you earn, save and invest and I bet thereafter you’ll be able to read your own fortune! Good luck. Today I do things no one will do so that tomorrow I can do things that no one can do.