Knowledge

Just had another night with friends. This time i met an old friend of mine from the secondary school. He came out doing his own business already. Honestly speaking, i learnt a lot from him on the financial planning and many other little things too.

If you wanted to open your own business, there are a lot of things to consider. Everything involved money. Yes, it's all about money. Inflation rate in Malaysia kept increasing and according to my friend Billy, this year inflation rate is about 7%. That is a lot if your doing a small business.

Counting every side of income to cover every expenses, even spending on food doesn't count a small money. For example few decades ago, one packet of noodles cost RM1.00. With yearly increase of the inflation rate by counting 6% each year of 10 years which equals 60% of total inflation rate. What would be the pricing of one packet of noodles now? It's RM1.60.

Of course, when your looking at this small amount of pricing you won't see any big changes. But every single cent counts. RM10.00 of a small plate noodle, with increasing of 60% which would be RM16.00. That's an increase of RM6.00! How scary is that?!

Okay, inflation rate effects a lot in business. Having to earn RM6,000 per month sounds nice, but that is without deducting your monthly expenses. Lets say you have a girl friend who moved on together with you and planned to get married, you need to think about buying a house and a car.

With monthly loan from the bank, at least you need to pay RM2,000 above. Left RM4,000 WITHOUT deducting the salary of the worker and other small expenses. How much left? Assuming at least, RM2,000 for salary and small expenses you left RM2,000. Saving your own money for future, RM1,000 which left RM1,000 for yourself.

After listening to my friend, opening a business is not an easy job. Every little thing and every little cent needs to be counted clearly. Financial management is important. Sound boring eh? But this is the truth you need to face. Unless your just an employee just to wait the end of the month for the salary. I dare to say, even with your basic salary of RM2,000 you won't have enough left once your paying insurance and other stuff again.

We're still learning. Knowledge is important. We never stop learning after you came out of studying. Whatever you've learn in school or university, in the end you'll came out doing different thing than what you have learn. Everything starts from the bottom.

Having this little insight of financial management is good. I learnt a lot from him. Do you ever thought this far? Think for yourself.