Penny Wise, Pound Foolish

The idiom refers to an attitude that is very careful and mean with small amount of money but very extravagant or wasteful with large sums.

You will think that one, who is careful and mean with small amount of money, is acting so because of his or her obsession in hoarding his or her money.  So it will not make sense for him or her to waste on large sums.

Yet it is a common fact because many are predictably irrational as I have shown in previous articles.

Here are some examples :

  1. Driving to a fairly remote petrol station to top up the gas because it is the cheapest.  Perhaps saving one or two dollars on the petrol but consuming 2 liters of petrol driving to and fro the station which cost 4 to 5 dollars.
  2. Always worry about spending money on petrol and yet own and hardly drive an expensive high capacity car which will depreciate to little in 10 years and will guzzle a lot of more petrol than a lower capacity car for the same mileage.
  3. Buying a lot of stuff in bulk with near expiry date. Trying to save 20% of the purchases but end up throwing away the excess when expired.
  4. Holidays are usually not planned earlier so as to enjoy very good discounted airfare prices. The savings are so substantial that it can mean enjoying a bit more on better class hotels and eating in better restaurants.

Sometimes it hurt relationship as such a “penny wise pound foolish” person may sting on paying for drinks with friends or relatives in a local coffee shop, but has no qualm in paying high  monthly mortgage interest running in the thousands of dollars.

Believers are not to live such a miserable existence as miserly persons.  Otherwise the miserliness reveals the condition and preoccupation of their heart in worshipping money rather than God.

I have seen many believers shooing away the poor elderly or invalids selling tissue paper in the train stations or local coffee shops but have no problem in paying for exorbitant car parking charges for the sake of a little convenience.  They may be unwittingly shooing away a brother or sister in Christ.  One day, when the Lord separate the sheep and the goats during the judgment of the sheep and goats, will we be flashed such scene of shooing away the least of the brothers ?  Matt 25:31-46.

Is it not wise to save on the pounds so that we can give the pennies to the poor, instead of being foolish to save the pennies and waste the pounds away ?

I have this joy of saving the pounds and giving to the least of the brothers and the poor and needy as well.  Is not the kingdom of God about peace and joy in the Holy Spirit ?   Rom 14:17.

Taking Care Of The Whole Being Of Spirit, Soul And Body

I learned from the internet blogs that the most popular course in the Harvard University is the Positive Psychology class taught by Dr Tal Ben-Shahar.  It attracts 1400 students per semester and 20% of Harvard graduates take this elective course. According to Ben Shahar, the class – which focuses on happiness, self-esteem and motivation – gives students the tools to succeed and face life with more joy.  According to most of the blogs, this 45-year-old teacher, considered by some to be “the happiness guru”, highlights in his class 14 or 15 key tips for improving the quality of our personal status and contributing to a positive life.  (Some blogs include tip no 15 of developing a sense of humour.  Some may dispute whether his tips mentioned God.  I believe it is possible as religious people are more likely to give thanks for everything they have and are generally more joyful in life.)

I have noticed that all these 14 or 15 key tips are advice to take good care of one’s whole being of spirit, soul and body.  As Ben Shahar is a Jew,  it is not surprising that his tips correlate with the general biblical principles and wisdom of living in the Kingdom of God which is peace and joy in the Holy Spirit.  Rom 14:17.   My comments on these tips made reference to the relevant Scriptural verses.

Tips For The Spirit

  1. Thank God for everything you have.  Write down 10 things you have in your life that give you happiness. Focus on the good things!
  2. Fervently believe in God. With him nothing is impossible!

Comments :

The Scripture exhorted us not to be anxious about anything but to bring everything to God in prayer with thanksgiving.   We are to focus and think on things that are true, honourable,  just, pure, lovely, commendable,  excellent and praiseworthy.  Phil 4:6-9.

Surely nothing is impossible with God as He is the Creator of the whole universe.  Luke 1:37.   And He will reward those who fervently believe in Him and seek Him diligently.  Heb 11:6.

Tips For The Body

  1. Practice physical activity.  Experts say exercising helps improve mood.  30 minutes of exercise is the best antidote against sadness and stress.
  2. Breakfast.  Some people miss breakfast for lack of time or not to get fat. Studies show that breakfast gives you energy, helps you think and perform your activities successfully.
  3. Wear comfortable shoes.  If your feet hurt you, you become moody, says Dr. Keinth Wapner, President of the American Orthopedics Association.
  4. Take care of your posture. Walk straight with your shoulders slightly backwards and the front view helps to maintain a good mood.
  5. What you eat has an impact on your mood.  Do not skip meals, eat lightly every 3 to 4 hours and keep glucose levels stable.- Avoid excess white flour and sugar.- Eat everything healthy. Vary your food.
  6. Take care of yourself and feel attractive.  70% of people say they feel happier when they think they look good.

Comments :

The body of a believer is the temple of the Spirit of God and obviously extreme good care of it has to be taken. 1 Cor 6:19-20. 1 Tim 4:8.    So whether we eat or drink, we do it all for the glory of God.   1 Cor 10:31.  When we are in good health so is our soul.  3 John 1:2.

Tips For The Soul

  1. Assertive.  Ask what you want and say what you think. Being assertive helps improve your self-esteem. Being left and remaining silent creates sadness and hopelessness.
  2. Spend your money on experiences.  A study found that 75% of people felt happier when they invested their money in travel, courses and classes; while only the rest said they felt happier when buying things.
  3. Face your challenges. Studies show that the more you postpone something, the more anxiety and tension you generate. Write short weekly lists of tasks and complete them.
  4. Put everywhere nice memories, phrases and photos of your loved ones.  Fill your fridge, your computer, your desk, your room, YOUR LIFE of beautiful memories.
  5. Always greet and be nice to other people.  More than 100 inquiries state that just smiling changes the mood.
  6. Listen to music (Praise God).  It is proven that listening to music awakens you to sing, this will make your life happy.
  7. Develop a good sense of humour.  Learn to laugh off matters, specially when things don’t go right for you.

Comments :

The Scripture exhorted us to count it all joy as we meet all kinds of trials in life because trials train us to be steadfast and yield the peaceful fruit of righteousness.  Besides, if we lack wisdom to face certain challenges, we can ask God and He will grant us generously.   James 1:2-4.  Heb 12:7-11.

Listening to music soothes our souls.  Whenever King Saul was tormented in his spirit, he would send for David to play him the lyre.  1 Sam 16:14-23.  Singing psalms, hymns and spiritual songs is evidence of a Spirit filled life.  Eph 5:19.

Whenever we are nice to people speaking kind and gentle words,  not only we deflect animosity but we also gain friendship.  Prov 15:1.  Gracious words are like a honeycomb, sweetness to the soul and health to the body.  Prov 16:24.

Always keeping a merry heart is not only good medicine for the body but also it bring out a cheerful face.  Prov 17:22.  Prov 15:13.  It can be achieved by developing a sense of humour and laughing off stressful matters.

It is the gift of God that we may eat and drink and find satisfaction in all our toil.  And spending on travel is one great satisfaction.  Eccl 3:13.

How Wealth Reduces Compassion

Berkeley psychologists Paul Piff and Dacher Keltner ran several studies looking at whether social class (as measured by wealth, occupational prestige, and education) influences how much we care about the feelings of others.

The findings from these studies seem to go against common thinking that the wealthier we are, the more likely we are to act fairly.

In one study, they found that less affluent individuals are more likely to report feeling compassion towards others on a regular basis.

In another study, they found that those with less income and education, were more likely to report feeling compassion while watching the video of the cancer patients.

These studies built upon previous research that showed how upper class individuals are worse at recognizing the emotions of others and less likely to pay attention to people they are interacting with (e.g. by checking their cell phones or doodling).

https://www.scientificamerican.com/article/how-wealth-reduces-compassion/

That can explain why as a country progresses in affluence, the rich and poor divide will get wider causing social upheaval later.

Such scientific research findings actually lend weight to our Lord’s Word that it is difficult for the rich to enter the Kingdom of God.  But of course, nothing is impossible with God.

Zacchaeus in Luke 19:1-10 proved it is possible for a rich man to give up the hold of possessions to be our Lord’s disciple.  Luke 14:33.  Though the rich majority are likely to end up like the rich young ruler in Luke 18:18-29 who turned away from Jesus sadly.

The church has to command those who are rich in this world not to be proud and not to trust in their money, which is so unreliable and tell them to use their money to do good. They should be rich in good works and generous to those in need, always being ready to share with others. 1 Tim 6:17-19.

If human nature tends to be less compassionate when getting wealthier,  how amazingly true is the exhortation of Scripture that it is great gain to live in contentment with godliness.  1 Tim 6:6-10.

 

 

Some Tips To Save A Penny

Ask For Discount Always

It does not cost us anything to ask for discount in a restaurant or any entertainment  place.   Sometimes, out of goodwill, the restaurant may offer you a dessert free of charge even if there is no discount offer.

Dinner At The Mid Range Restaurants

Go around 9 pm as most restaurants take the last order at 10 pm.   As you finish your dinner at around 10 pm, they are likely offer you a dessert or cake which will otherwise be disposed anyway.   Similarly for food kiosks,  if you purchase at this late hour, you are likely to get a hefty discount or a lot more food thrown in free.

Discount For Members

Whether it is supermarket, restaurant or any entertainment place, sometimes members get to enjoy discounts and membership points to redeem gifts.  It is not a hassle to ask any member to make the purchase for you. You get to enjoy the discount while the member receives more membership points.

Car Park Charges

Once I parked my car in a 5 star hotel car park for several hours to attend a seminar.  The car park charges were exorbitant. In most 5 star hotels, if not all,  the guests are entitled to complimentary parking.   I went to the bar and asked the first foreign guest I saw sitting at the bar counter whether he was staying at the hotel.  When he replied in the affirmative, I asked him for a favor.  I asked if I could buy him a drink in exchange for his complimentary car park privilege.  He saw no harm as he earned another drink while I need not pay for the car park charges.  You may find yourself in such situation sometimes because the seminar or exhibition may be held in 5 star hotels but the organizer does not offer you complimentary parking.

Theme Park Entrance Tickets

Most theme park offers bulk discount and usually the shops just outside the entrance of the theme park may have these discounted entrance tickets.  It is not a hassle just to walk over to ask all these shops on the availability of these discounted entrance tickets.

Online Purchase

Do not be surprised that you can get even good quality brand goods delivered to your door-step for a fraction of what you will pay in the retail shops in the mall.   Today, so much stuff can be purchased online.

You can even design your own promotional banner, flyers, brochures,  curtains, covers, etc, for only a fraction of what you will pay engaging professional services in shops or offices.

Stretching The Dollar During Recession

Prov 6: 6-8.  Go to the ant, you sluggard; consider its ways and be wise!  It has no commander, no overseer or ruler, yet it stores its provisions in summer and gathers its food at harvest.

Prov 27:12.  The prudent see danger and take refuge, but the simple keep going and pay the penalty.

As mentioned in earlier articles on wisdom nuggets, there were 6 recessions in the last 30 years – 1985, 1991, 1997, 2001, 2008 and 2015 – with an average period of 6 years between recessions.  Getting lower prices for the big expense items such as an apartment and a car during a recession should be obvious as long as we are willing to wait out the 6 expansionary years between recessions.  But it is predictably irrational that many will still buy such big expense items during the expansionary years than the recessionary years.

Residential Apartment

2 of the largest expenses in life are an apartment and a car which most will take a mortgage loan and a hire purchase loan for 30 years and 10 years respectively.  If one could save up and buy at the next recession, one would have saved so much as to pay up such loans earlier than the stipulated loan tenure.

Allow me to share my personal experience as an example.  My peers and I started our career in 1985.  Most bought the public housing apartment in 1987 and paid up the mortgage loan by 1992.  Most then upgraded to private apartment in 1994 or 1995 at the peak of the housing prices after surviving the recession in 1991.  I decided to continue saving and skip the 1997 recession till the next recession in 2001 before considering upgrading.  Following is the comparison of our different financial status.

Year My Peer Myself
1992 Owned HDB apartment worth $ 350,000 Owned HDB apartment worth $ 350,000
1994 Bought 120 sq m private apartment for $ 975,000. Took 25 year loan of $ 600,000 and paid monthly installment of $3500. Continued to save $3500 per month and skip buying apartment in 1997 recession.
2001 Principal loan is still between $ 500K to $ 600K with 18 years’ loan repayment remaining. Had saved up $ 320,000 with compounded interest instead of paying monthly mortgage.
2002 Principal loan is still between $ 500K to $ 600K with 17 years’ loan repayment remaining. Bought a 210 sq m apartment for $ 800,000 with a 40% discount from 1995 prices.  With the HDB apartment sold at $350,000, $ 320,000 saved up and some CPF balance, I could almost pay up the apartment without taking any bank loan.

Car

During the good years between recession, the Certificate of Entitlement (COE) will be very high.  If we can change our cars during the recession, we will save much by paying less for the COE and the depressed car price as well.   Allow me to share my experience.  I traded in my 5 year old Mitsubishi Lancer in 2009 for a brand new Suzuki Swift and a 7 seater APV without forking out any money.   I was paying a HP installment of about $ 800 per month for the Lancer and when I took out both brand new cars at a total cost of $ 85,000, I continued to pay the same $800 plus installment for the next 10 years. The COE during the first 6 months of 2009 and the car price were so depressed that the COE offered by the car distributor was practically zero.

Travel

During recession,  you can get very cheap airfare, hotel and food during vacation travel.  For one vacation travel destination during the good economic years,  you can enjoy up to 3 vacation destinations.

Home Necessities

During recession, you can stretch the dollar so much for home renovation and repair,  replacement of necessary old home appliances and furnishing, and purchase of new clothing.  Depleting inventory becomes a top priority for all manufacturers faced with excess manufacturing capacity and you can expect very good discounted prices.

Offers Galore

Shopping and dining offers will be in abundance during recession.  Time to bless your family with treat to the finest restaurants but paying the price in fast food restaurants normally.

There is apprehension to spend during recession for fear of losing the job.  To me, it is irrational fear.  As there is a recession every 5 to 7 years, you still have to worry at the next recession when you have already bought a high priced apartment and a car during the good years anyway.  So instead of spending during the good years, save up this money till the next recession in a separate bank account.  This account should not have existed if you have spent this money away during the good years, and so you cannot treat this account as a rainy day savings account which is another separate account.

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(Un)conventional Wisdom

All wisdom comes from God.  The wisdom God has given us generously is meant to be shared with fellow believers.

At exceptional times like recession, certain decisions made against conventional bias are necessary to stay afloat in business.

I would like to share on two business strategies which make a difference in recession times – turning a disadvantage into an advantage;  and risk pooling which is a mathematically proven stratagem.

Strategy Of Turning A Disadvantage Into An Advantage

When every competitor sees a disadvantage in certain business situation and reject or walk away,  we can triumph through accepting the challenge of the disadvantage and turn it to our advantage.

After the 9/11 terror attack on New York World Trade Center, the dot com bubble burst and the world plunged into recession.  All over the world, the factories were cancelling orders.  I was working for a global distributor of electronic components as the chief executive in Asia then.  I allowed all cancellation knowing that the customers would bully us by not accepting deliveries anyway.  I tried cancelling the same with our suppliers at the same time otherwise I might end up with a lot of inventory booked at higher prices in case there would be price erosion due to the recession.  The group CEO and the board of directors of this NASDAQ listed company thought I was rash to allow such cancellation causing a huge drop in order backlog.  The bigger competitors of ours faced the same dilemma but they refused to allow cancellation from the same customers.

Over the next few months, I received the main bulk of the orders back from our customers at lower prices but I also got lower prices from our suppliers who were keen to keep their factories going.   The customers simply kept rescheduling the orders retained by our competitors which were booked at higher prices as compared to ours.

We had the best sales performance in this particular recession year as a result of this unconventional decision.

Strategy Of Risk Pooling

Risk pooling is a known concept in controlling inventory.   Instead of having several warehouses in several countries to service the customers better but running the risk of having the wrong inventory in the wrong country all the time,  it is better to pool all inventory in one location and service all countries.  Today, the logistics capability of delivering to the doorstep by the courier services is efficient, fast and relatively cheap.  Even for sea freight, any delivery within Asia can be accomplished in one week including custom clearance.

Risk pooling has the advantage of reducing inventory carried in total in all locations and enables sharing of the same inventory across all locations.  It also enables savings in using less human resources to manage multiple warehouses and the rental cost as well.

I have one centralized warehouse in Singapore servicing Hong Kong, China, Taiwan, South Korea and Southeast Asia with satellite sales and marketing offices in all these countries as opposed to our competitors having an office cum warehouse in each Asian country.   As a result, the delivery performance of my company is consistently above 98% while the rest of the bigger competitors are at 90% giving us a place to be competitive against the much bigger competitors.

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An Entrepreneur Is A Non-Conformist

In an earlier post on Wisdom Nuggets, I have shown going against predictably irrational behavior of the majority fueled by covetousness, one may ironically get the very results of what everyone is pursuing.

A disciple of Christ is a radical disciple. He refuses to conform to the world.  Even encountering storms in life, he will continue to trust in the promises of God.

Likewise an entrepreneur is a non conformist. In his earnest pursuit of the best value or solution for a given problem, he may go against conventional wisdom of the day. He strongly believe in his cause and persevere till he proves the effectiveness of the value or solution he has discovered.

Allow me to share some personal examples.

Once I was trying to introduce a new digital read-out into a market where the German brand was the most established. Most of the technicians were trained using the German brand of digital read-out in schools or training institutes. Conventional wisdom was that nobody would change to buy another brand regardless of the price. The German digital readout was sold for $ 3500 and the cost of installing it onto the machine was separate and cost another $ 1000 for the brackets and installment labor. Buyers could only take a hire purchase loan of 90% of the cost of the digital readout and not the brackets and labor cost. I decided to offer through the largest distributor of the machines in consignment a total package price of $ 2500 including brackets and labor. That would be a saving of $ 2000 and the buyer only needed to pay deposit of 10% of the total package cost which would be $ 250 and the rest could be covered by the hire purchase loan. But for the German brand, the buyer would need to fork out $ 1350. Within 2 years, the digital readout I promoted overtook the German brand to become No 1 seller in the market.

Once, I even made semiconductor chips with my brand name ANK (Anthony And Kenny). Conventional wisdom was that factories around the world would never buy such a high tech product from unknown brand names and unheard-of manufacturers. Creative Technologies and Aztech were 2 local companies which supplied 90% of the world’s demand for telephony cards – sound card and 56k modem rolled into one. They produced 1.4 million and 0.3 million cards per month respectively. Once there was a shortage of 4 semiconductors chips and one signal relay and Creative got most of the allocation from the suppliers leaving Aztech without any allocation. I was approached and I managed to turn on a relatively unknown factory in Europe to make these components for me and labeled ANK. At that time, the whole production in China for the signal relay was only 10,000 units a month and I needed 300,000 a month. I went to turn on the factories in Ningbo to get me this volume production. I had no knowledge of the manufacturing technology but that did not deter me to work out with the Chinese factories to produce such a relay which was manufactured in Japan at that time only.

Once when I was trying to introduce a new brand of washing machines into the crowded market here. All the distributors refused to promote seeing no particular advantage against the more superior Japanese and European brands. And I could not afford any advertising budget for these distributors as well. Conventional wisdom was to sell new entry brands at extremely low cost. I went to look for a large direct retail shop bypassing the big distributors. At that time, most brands retailed for $ 600 to 700 so I positioned my brand at $ 650 instead of selling really cheap though my cost to the retail shop was $ 250. That gave the retailer a cool $ 400 profit unlike the established brands which the retailer would get only $ 50 and the promoter at the shop would only get $ 5 for each machine sold. I ensured that the shop gave $ 50 as commission to the promoter and the machine had to be sold with gifts costing another $ 150. To the consumers, they would perceive a very good deal when they saw the gifts of Philips appliances costing $ 300. The promoter was so motivated to promote my brand because she would get 10 times more commission than selling other brands. We moved so many washing machines more against one European brand who had advertised over TV at that time.

Once I took over a failed food court from Kopitiam, a local chain of food courts at Lucky Plaza in Orchard Road. I turned it around offering SGD 2 for all meals from the stalls I owned while renting cheaply to other stallholders selling less popular food items. I got a different crowd of office workers from other food courts serving mainly tourists. It was a hybrid model of owning some stalls and renting out the rest. This gave economy of scale for the self owned stalls for labor and purchasing. Such hybrid model also kept all stalls running. Soon we had the big Filipino weekend patronage.

Convocation Speech At A Local University In 2010

A convocation speech in which I shared about entrepreneurship and extolling the virtue of applying the Pareto Principle to achieve contentment in life to the young graduands who were about to enter the next important phase of their lives.

Pro Chancellor or President
Graduands
Ladies and Gentlemen,

A very good afternoon to all of you.
First of all, I would like to thank Professor XXX and the University for this privilege and honour accorded me to give this convocation address.

I am delighted to be here to join you in this joyous occasion. I would like to congratulate you, the graduands, on your convocation. All your hard work has paid off today.

Congratulations !

Let us also recognize and thank all, especially your parents and lecturers, who have made sacrifices to help you in one way or another to achieve this important milestone.

A few of you may choose to continue your studies but many of you are about to enter this new phase of life which is the start of your career. I believe all of you have already given much thought about the possible direction to take.

Entrepreneurship is much encouraged today as the path to take and the benefits are well expounded and proven. Your training in this University has put you in good stead to be an entrepreneur in technical disciplines.

Allow me to share my personal journey to give you a head-start on this particular path and also to share one or two principles which have served me well all these years.

I realized early in my career that there is always opportunity to find an optimal cost effective and superior solution to a need, be it a product or service and make a profit in the process. Personally, I look at two approaches all the time.

One approach is to find a new superior product or service altogether, and the other is finding better value to offer in the entire value chain of making the product or providing the service.

For the former, it involves innovation of new products or services. For the latter, we know in every business organization, there is always these same necessary activity functions such as research and development, design, sales and marketing, production, customer service and distribution; and the entrepreneur can always strive to find better solution to enhance better performance in all these activity functions in the entire value chain of making the product or providing the service.

I believe everyone can have a shot at entrepreneurship by looking at these two approaches.

I will suggest working for a corporation for a start. With the experience gained in working in a particular activity function, it will be easier for you to search for superior performance in this particular activity function you are familiar with.

I tried the latter approach first by looking at the distribution activity function. Early in my career, I was employed in sales. After working several years in the sales and marketing function and with the experience gained, I was asking myself whether a local new company could provide better value add service in the distribution function for the foreign American or European enterprises willing to venture into Asia. Two or three decades ago, it was much easier just to be a pure distributor of American and European companies in Asia, but I preferred the company I intended to build in Asia would be part of a global partnership with foreign enterprise. I changed the simple distribution or agency model into a hybrid model of passing off the local company as a de-facto branch of the foreign enterprise in Asia. But in essence, it is still very much a locally majority or minority owned company.
The traits of an entrepreneur have been much discussed but there is one which I would like to stress here. And that is belief in the competitive edge or superior value one sees in the innovative product or service while others cannot. That is, the entrepreneur is a non-conformist.

When I was trying to promote my company as an one-stop provider of various products in one catalogue buying from various Japanese suppliers in the early 90s. The skeptics would discourage by telling me that the major customers would not be so dumb as not to buy directly from the Japanese suppliers. My belief was that the major customers would prefer to work with an one-stop supplier who could provide all products in one catalogue. It might seem to defy logic but it worked. I went on to build a global brand name in partnership with a foreign enterprise.

I have ever produced semiconductors and other electronic components under my own brand name without any capital investment in factory by outsourcing the manufacturing to foreign factories. Again, skeptics would say that no customer would buy semiconductor chips with unknown brand given the stringent qualification process. Again I proved them wrong.

For the former approach of innovation, one can look at licensing technologies from the universities here where there is a lot of research in various fields.

The world today is facing major problems in such areas as energy, environment and health care and we need innovative solutions in these fields. Our government has availed many opportunities in the form of grants to encourage both research and commercialization of ideas in these areas. That opens vast opportunities for all who wish to embark on this path of self employment. The jobs today are no longer “iron rice bowl” so to speak, and so entrepreneurship offers this opportunity of long term self employment as long as the enterprise built is a viable concern into the far future. One can also have the satisfaction of bringing tangible benefits to mankind.

Two years ago, I tried this innovation approach by licensing solar cell technology from a local university to make enhanced solar EVA films used in solar cells. I have yet to divest any equity in my firm with an initial paid up capital of $ 150,000 through a grant from Spring Singapore and a loan from a listed company . The firm now has commercially produced products just ready for adoption by the market.

There is one principle I would like to share which will serve you well into the future. Though we learned this principle in engineering, it could be applied to time management and even relationship. And that is the Pareto Principle or 80/20 rule.

It roughly states that 80% of the effects come from 20% of the causes. In business, 80% of the business will come from 20% of the customers. To try to increase a further 10% of the business from the majority of the balance 80% of the customers will expend a lot of your time and energy if every customer demands the same attention of your time and energy. And that is not very wise time management and your health and relationship will suffer as a result.

This principle should serve as a daily reminder to focus 80% of our time and energy on the 20% of our work that is really important. Don’t just work smart; but work smart on the right things.

You can also apply this principle to your personal finances. You will find 20% of the expense items make up 80% of your total monthly expenditure. It will be prudent management to trim the expenses of these 20% expense items. It is not wise to feel good just for a brief moment telling people that you stay in an expensive posh condominium or posh car if you are struggling and feeling the insecurity all the time about the mortgage or hire purchase. With the trimming of these big expense items, you will then have the extra to be generous in many other ways such as giving an allowance to your parents, or buying treats and gifts for your loved ones or those less fortunate. Remember Contentment, not Greed, will always bring you joy and peace in your lives.

I wish you success in your every endeavour. Thank you.

Pareto Principle

In the Bible, we read of how the judges and other heroes of faith gathered information, considered the possibilities, weighed the information, considered the trade-offs and opportunity costs, and then carefully made their decisions.

As we seek God’s kingdom and His righteousness first, many things will be given to us including wisdom which He will give generously when we ask. Matt 6:33; James 1:5.

Today, by the grace of God, I see some proven wisdom principles as the common grace of God and they are easily articulated and shared. I believe the Pareto Principle is one such wisdom principle which we will do well to adhere by doing first things first.

The Pareto Principle, also known as the 80–20 rule, states that approximately 80% of the effects come from 20% of the causes. Or more easily understood is that 20% of the causes produces 80% of the results.

The management consultant Joseph Duran popularized this principle and attributed it to an Italian economist Vilfredo Pareto.

This principle can be applied to many sciences and even many facets of life.

As a student, I studied only the 20% of the topics of each subject which are really important and true to form, 80% of the exam questions came from these 20% topics.

Later when I worked as a sales representative, I concentrated my sales effort on the 20% of the customer base which gave the company 80% of the sales and I consistently met or exceeded the job expectation.

Even in my marital relationship, I always remember to do those 20% most important stuff which will greatly please my spouse 80% of the time.

By doing the first things first, I will have sufficient time to perform most critical tasks without being overwhelmed or burned out.

I realized that I consistently met or exceeded the expectations through adhering to the Pareto Principle without having the pressure and consequent stress to excel to the very top.

When I graduated with second class honours (upper division), I was awarded one of the most prestigious postgraduate scholarship without being denied such opportunity by those who obtained first class honours.

When I started my career in sales, I did relatively well and by the age of 29, I was made the general manager of a branch office of a USD 1 billion Spanish conglomerate in Asia.

By adhering to the Pareto Principle for all tasks and decisions, we will have proper time management to perform most without the need to sacrifice other important facets of life.

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Predictably Irrational Behavior

You will notice that many will rush to buy their residential properties or cars during the good economic times and end up driving the prices exorbitantly high.

But when there is an economic recession, you will find prices so depressed and yet there is hardly any buyer.

There were 5 economic recessions in 1985, 1991, 1997, 2001 and 2008 in the last 25 years averaging one recession every 5 to 7 years. Should not one buy his first residential private property or car at the next downturn to take advantage of lower prices, saving more and taking a lower loan mortgage ?

I have seen this predictably irrational behavior for the last 25 years of many people buying their properties at the peak.

Perhaps they buy because of the confidence of holding on to jobs during good economic times. But the mortgage loans taken are usually of 25 to 30 years’ duration. They will still face the possibility of losing their jobs in the next downturn while the principal sum of their mortgage loan is relatively untouched because the first few years of mortgage installments go to paying interest.

I believe the main reason for such predictably irrational behavior is more of greed or covetousness  – the fear of losing out on good deals to others.

I started my career in 1985 and many of my peers were able to save enough to buy their first residential private property in 1994 after saving up the initial deposit of 20% or more. Most bought their first property between 1993 to 1996 at the height of the property boom taking a 25 year mortgage loan.

I decided to wait till the next downturn which happened in 1997. Because I waited out, while my peers would be paying on interest for their mortgage, I would be saving up more money.

So when the prices had gone down by 30 to 50% in 2001, I was able to purchase my residential property without taking any mortgage loan as I had saved up to 50% of the peak price in 1996.

While my peers continued to worry over their mortgage loan over the entire repayment period of 25 to 30 years, I have one less worry.

Should the private property prices stay high and I really miss the chance of owning a private residential property, I will not lose any sleep because I am more than content to have just a roof over my head in public housing.

Contentment indeed brings great gain while covetousness only bring anxiety as illustrated in the above example.