An individual can file for bankruptcy if he or she cannot repay debts of not less than S$15,000 to a creditor, just like how a company can become insolvent if it is unable to repay debts amounting to S$10,000 within 21 days as requested by a lender, creditor or bank.
Hence I believe it is important that we manage our financial health and lifestyle like a company business and operations. Let me illustrate how to run your life like a company.
1. Revenue
The salary or monthly income we bring in from employment or own work is the revenue from sales of the precious commodity of our time, remuneration of our efforts or skills to our employer or customers. Generally, we would want to increase the income by performing well for that pay increment, promotion, get more sales or perhaps clock more overtime work for OT pay.
However, if we partake in side hustle, i.e blogging, Youtubing, giving tuitions, MLM, deliver Grabfood etc, own extra properties or investments, we can have more sources of revenue from additional pay cheques, collecting rents, dividends or interests.
2. Expenses
Our spendings on food, groceries, clothes, transport, housing are akin to a business expenditure. It is crucial to keep them low and get the most bang out of every buck in order to boost our net income, which is Revenue minus off Expenses. Subscribe to newsletters and alerts and be resourceful to know the current latest promotions and deals of online shopping and ecommerce apps will help. Using cashback or miles card for spendings will allow increase of account receivables in the form of cash rebates or miles reward for travels in future.
3. Cashflow
Managing cash inflows and outflows is very important to sustain one's financial well being. Cash is king after all. We do not want to be caught in a situation of being unable to pay for bills, pay our children school fees or give our parents allowances.
We must create a budget and monitor it tightly to allocate our incoming cash flows on repaying our short term and long term debts and liabilities well, at the same time able to pay for all the purchases. Furthermore, contribution to warchest and emergency funds are not mandatory like CPF contributions but it is a good habit to have. This will greatly help in our investment objectives.
4. Balance sheet as Net Worth
Tracking of our net worth is similar to how a company reports its balance sheet, which clearly states its Assets, Laiabilities and Equity. We should also list down all our personal assets i.e cash, property, collectibles, investments, financial assets and perhaps depreciated cars, watches and wines even. Then track all our liabilities and debts from loans, credit cards etc. The difference will be our net worth, the equity portion of a business.
4. Capex Expenditure or Investment
For every purchase of goods and stuffs more than S$1k such as gadgets, laptops, new phones, it is important we do a Cost Benefit and Needs analysis before we commit. We need to ensure that every item we purchase will benefit our lifestyle by increasing our productivity or improve our standard of living. For purchases or sales of even greater value items such as properties or stocks, we need to go through a systematic thinking process and comprehensive evaluations before taking firm actions.
5. Build relationships with partners, stakeholders
We need to build rapport with people we interact with for our own entity to function well in the society. Dealing with colleagues and bosses tactfully in the workplace. Treating your subordinates or customers with respect. Showering love and care for your family members and pets. Helping the less fortunate people and animals in the society are ways to build a holistic and well-rounded relationships.
6. Reputation
As part of marketing and community engagement efforts, we can consider leveraging on available social media platforms such as LinkedIn, Facebook, Instagram, YouTube, forums, online communities, interest groups, blogs to showcase our skillsets, talents and share thoughts and ideas to the world.
I am just sharing a wild thought that came to my mind during the circuit breaker amid this pandemic. Feel free to give any comments and feedback. Thanks for reading!
With Love & Peace,
Qiongster
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