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Monday, July 11, 2011

Create Your Own Money

Create Your Own Money

Creating your own money is the most important financial skill you can master in your journey to financial freedom. Without it, your other skills such as saving or being frugal won't really have that much impact since you don't have any money to save anyway.

There are only two ways to make money: 1) reduce your expenses, and 2) increase your income. 

Reducing your expenses has its place. It allows you to have the discipline to focus on the things that really matter to you. It's maximizing the resources that you have. But it does have its limit. At some point you can no longer reduce your expenses without sacrificing your own health and being. 

Increasing your income, on the other hand, has limitless potential. However, it is not always as surefire as many people think. A lot of people are still struggling to make money. Jobless rates in the US is at an all-time highs. In the Philippines, we all know that a lot of people are struggling even to put food on their table. I don't want to sound cruel, but the reality is not many people know how to create their own money.

What Does Creating Your Own Money Mean
In the book Rich Dad Poor Dad, Robert Kiyosaki tells a story of his best friend Mike and him devising a plan to create their own money after reading it from a science book. 

To start with their little project, they knocked on their neighbor's doors to ask if they had any empty toothpaste tubes. One day, after they've had enough tubes, they decided to finally start creating their own money. After a grueling ordeal of following each step of the procedure, the first batch arrived. 

As they were celebrating, Robert's dad and his friend asked them what they were doing. Mike and Robert simply said, they were creating their own money. His dad's friend burst out laughing. 

His dad explained to them that what they were doing was considered illegal. They cannot just print or mint their own money. It's called counterfeiting. With that, they ended their very first business venture with bruised ego. His dad, however, encouraged him, explaining that they were closer to making their own money than most people will ever be.

I shared the story to you for two reasons. First, when I first read the story, I remembered how it felt playing as a child like. As a child, me and my friends had our own world. There were no inhibitions. There were no restrictions. There were no limiting beliefs. Second, just like Robert and Mike, I learned printing your own money isn't as easy as it seems. 

As a child, all I really knew about making money was growing my own vegetables, raising goats and pigs and doing odd jobs like cleaning our neighbor's house and occasionally helping my mom to harvest tobacco leaves at a nearby town while enduring the excruciating heat from the sun.

Selling Banana Cue Without Saying A Word
I was a shy child growing up and even the mere act of buying was a scary task for me. One thing I learned early on, is that you can't be effective in selling if you are afraid of buying. 

One time during my first year in grade school, my aunt asked me to sell banana cue. What I did is to just sit by the bench and put the plate of banana cue beside me. I remember I was so silent, I didn't even ask anyone to buy from me. 

Whenever someone got curious and saw the banana cue, they would see the sign saying 50 cents each, and just hand over to me their coins. I would get the money and give them the banana cue without speaking any word. I really don't remember whether I even sold half of the banana cue that time. 

As far as I can remember, that was the first time I ever sold anything - and without even speaking any word.

My First Job and How I Got Promoted Almost Every Year
There were odd jobs I got into while studying in the university to help out my parents pay off my school expenses. One was a fingerprint-identification project and the other a security system. 

It seems more technical than it sounds but actually it is just some programming work I did which was related to what I was doing in school anyway. It didn't pay much but it was a start.

My very first real job is as a COBOL programmer from a multinational IT company. At that time they offered me PhP16,000 as an entry-level programmer. It was a BIG amount for me then, considering I was fresh out of College. 

I enjoyed it so much especially when after one month, the company did some restructuring and I ended up having a PhP1,000 increase. Coming from earning a few bucks here and there to thousands of pesos was a big leap for me.

I was so grateful with the opportunity, I decided early on that I would work hard at my job. I could say it paid off quite handsomely since I got promoted almost every year, but it didn't exactly start out that way. During my first few years, I was content in doing a good job and just keeping everything to myself. 

There was a certain pride in mind saying that if what I did was good enough, my boss would somehow find out about it one way or another. At first it worked out fine, but later on I started to wonder how come some of my colleagues who I thought was not so strong technically than me was getting ahead while I was stuck where I was.

That year I didn't get promoted. I was adamant. I was frustrated. I felt I should be the one getting the promotion. That's when I realized I needed to become bigger if I ever want to get to the next level. 

One of the most common feedback you will get when you work in the corporate world is the issue of "visibility". In the simplest of terms, it means, when no one knows you or what you are capable of, getting a promotion will be very hard. The book The Magic of Thinking Big by David Schwartz was a big help in this area. If you haven't read the book I suggest you start skimming through it. 

It is while reading the book that I realized that doing a good job is NOT only about completing a task. 

Being good in a job has a lot to do with selling as well. You have to sell yourself every single day. You have to show your boss that you are a valuable part of your team. You have to sell your ideas to your team mates. 

You have to show them you really care. Be more proactive in sharing your ideas during meetings. You don't have to be "proud" to make your point but you do have to speak up when you have something valuable to say. 

How Not To Create Your Own Money
One time, my friends and I were walking inside a bookstore when we saw the book Rich Dad, Poor Dad. One of my friends said it was a good book. Curious, I bought it and devoured the stories. My life was never the same again. Inspired by the book, I looked for ways to earn money. 

One time, I was also looking for something to sell over the internet. I was a tech junkie so I surfed the internet a lot. Since I loved watching movies and TV series, I checked out one of the popular auction sites in the Philippines for movies I can watch.

It turned out, there was this one seller who had a collection of all TV series you can imagine. I noticed the VCDs (yes, we still didn't have DVDs then) were only about P25 each. Since I like working with numbers, a lightbulb popped in my head and I said to myself, I can make VCDs cheaper and sell it for P20 and still have some profit. After all, one blank CD was just around P5 then. 

I used my old PC, bought a CD burner and started my first venture. To get my own master copy, I bought one for myself. I made another copy and sold it in the same auction site. A few days after, my mobile phone was bombarded with inquiries.

I completed my first order and met with the buyer face to face, what they call as "kaliwaan". Not a pretty good term, I know but what the heck, I sold something. That was big for me. I realized I can actually sell.

I then told my friends I was selling VCDs of their favorite shows and my business started to boom. Then an unexpected event happened. I receive an order from someone I didn't know. The order was more than I have ever handled before. Overcome with greed, I accepted it. I bought the shows he wanted from my supplier and waited in our meeting place.

A few more hours and it started to dawn on me, I was scammed. It felt like a big drum of cold water just flushed me into the toilet. I lost some money.

That experience proved to be a turning point in my business. While I was able to make the money back in some other ways, I realized I was sacrificing too much of my time making the business work. I was the marketing guy. I was the delivery boy. I was the accountant. 

I was everything. To top it all, my business was not even legal. I had to stop. I told all my contacts that I was no longer in the business. It was painful. But it was all worth it. In the end, I felt better knowing that I never could live with myself knowing that I was making money in the expense of someone else.

While I am not particularly proud of that business, I did learn a lot of things from the experience that has served me well up to this day. The most important of which, is being true to your values, being honest with the people you meet, and doing business legally and ethically.

What Does This All Have To Do In Making Your Own Money
What does all the above have to do in making your own money? A lot I would say. In creating your own money, it is very important to stay true to your virtues. 

When you fail, get up. When in doubt, surge forward. When you're afraid, feel the fear but do it anyway. For when you start something, the universe will conspire to give you what you want. 

Rich Money Habits

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