How I use the 80/20 principle at university.

I was just surfing a forum and found a question from someone asking how individuals are using the 80/20 principle while undertaking tertiary study to achieve their desired results at university. Below is a list of a few quick tips I listed in response.

1: Study in an area you are passionate about: I am studying a Bachelor of Business Entrepreneurship at RMIT (I live in Australia). This university can potentially allow me to travel overseas, and has some international links. Studying this course is in relation to my passion, not something I chose at random. Pick what suits your abilities, passion and strengths.

2: Learn how to develop report templates: Essentially I use one of two templates styles I have created for all of my reports, just changing the headings and then updating the headings in the Table Of Contents (nb: If you set this up right, it should take 30 seconds).

3: Always be the group leader: Learn to delegate out to others. Use the above mentioned template, allocate word limits to each section and pass the sections off to people based on their strengths (so they can use 80/20).

4: Get a job with a lecturer or in relation to your study: I now work for one of the many businesses that my favorite lecturer runs. In the first six weeks I managed to obtain an 11% pay rise. The benefit to me is that I gain experience in my field while learning in a practical environment.

5: Apply for any credit transfers: if possible (don't study unless you have to; it costs time and money, both which students have little of).

6: Create a time line for your assessment deadlines and percentage marks for each in excel: Eliminate the unnecessary and track the progress weekly/ fortnightly, etc.

7: Don't practice presentations: Whip up a powerpoint (one line dot points) and present impromptu. Much better results and minimal effort, while ensuring the content is fresh in your mind and not stale.

How are you using the 80?20 principle to maximize your study (or your work, etc.)?

A little experiment

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Making money online is not an easy feat. Many people try it and are unsuccessful, leaving with their morale diminished and a lack of motivation to persist through the tough times.
As I am personally new to the game of entrepreneurship, I thought I would try a little experiment. Better still, as a reader of this blog (which I currently do out of a passion of sharing knowledge to help others succeed and achieve their goals in life), you will be able to track and monitor my progress, while being able to learn from my setbacks/mistakes in the process.

If you have started to implement the Eight Wealth Pillars, then your savings account should be beginning to increase. That's great! The next step in the journey is to begin to create an additional income stream.

Today I have started a new blog: http://www.moorewater.com/. The focus of this blog is to demonstrate the initial stages of turning a hobby into a website that will eventually make a passive income. Head over to http://www.moorewater.com/ now to see how things have been set up initially with only a few hours of investment and only $9.69 US so far.

A few points worth mentioning that I have begun to implement on this new site are as follows
  • Own domain name (building the Moore brand, but unique and away from blogspot.com or wordpress.com URL's).

  • Niche: Defined a new unique niche for this blog with potential to grow and expand.

  • AdSense: Took 2 seconds to setup, though I don't count on this making any revenue anytime soon.

  • Feedburner: set up the subscription using feedburner.google.com which will allow me to port to Wordpress later on as required (free to set up).

  • Blogger: Allowed me to set the site up with free hosting and a custom made template in minutes, although it might not stay on blogger forever.

  • Analytics: Using Analytics to track the site traffic and progression of site views.

Total setup costs: $9.69 US (cost of domain name).
Total setup time: Two hours (including writing first two posts).

By the way: The random photo up the top was from when I went to the Aquatic centre in Melbourne earlier last year. It was the only photo I was able to take before the batteries in my camera died :(

Investing in Yourself

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I am all for frugality but there are certain times in life when it is best to be spending money on yourself. There are many ways to invest in yourself, however I irrevocably advocate only spending money on yourself if you can afford to pay cash for the below listed items (except a university degree).

What are some of the ways you can invest in yourself? There are several but they generally have to do one of a few objectives:

  1. Teach you a new skill.
  2. Improve your health.
  3. Improve your finances.
  4. Improve your spirit.
  5. Make you feel more confident (long term).
  6. Improve employment opportunities.
Some examples that meet the above requirements are the following:
  • Buying new clothes.
  • Going to university.
  • Going to a TAFE or Junior College.
  • Going to the gym or a pool.
  • Playing a sport.
  • Going to church.
  • Taking a home study course.
There are many more but I think these help to get the point across. Investing in yourself is good if it:
  1. Does not get you into debt.
  2. Improves your quality of life in some way.
I am not talking about justifying the purchase of a new car because you believe you will be able to get a better job or will feel more socially accepted. You know the truth and what is really going to make a long term benefit in your life. Be frugal in your living expenses but don't hesitate to continue to dedicate to your self-investment.

Wealth Pillar Eight: Making a contribution

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The last Pillar in this series is the one that is often overlooked the most. It is overlooked both by authors of wealth creation and people attempting to acquire wealth for themselves also.
Making a contribution using the wealth you obtain
You don't have to look far to see that high profile celebrities and millionaires are always contributing to society. While it may not be publicized, they all hold true to the importance re-distribution and helping others to achieve success.

Contribution to the world can be done in many ways if you are wealthy. Some of the main ones are listed here.

Contribution of Money
Obviously this is the one that receives the most controversy. Many people complain that the rich don't share their money or use it to help the world. Without taking a stance on the argument I would like to point out two things:

  1. A lot of rich people give money to charities, churches and organizations privately (and do not make a public display of it).
  2. Giving money can be a great way to help the world.
Most rich people follow a 'tithing' style of giving where they give 'at least' 10% of their income (usually more). This is one way you can contribute.
Contribution of Time
As your wealth increases, you may find you have more free time thanks to a passive income. This time could be spent helping charitable organizations, mentoring individuals on how to become successful business owners and investors or helping serve in some way.
Contribution of Knowledge
If you manage to implement these Eight Wealth Pillars and become successful along the way, then you will no doubt have a level of knowledge in business, investing and personal finance that others will aspire to. You can be generous and make a contribution by writing a book, teaching people at seminars or a university or college, or by publishing a blog.

Contribution of Spirit
Many people have a spiritual or religious life. some of these circles would love extra participants to help with things they are doing. However, that is not what I am talking about when I say the contribution of spirit.

A lot of people have their spirit and belief in themselves crushed. This may result from a number of circumstances. Being able to contribute in a way that builds their spirit and helps them to gain confidence in themselves again is an excellent way to contribute to society.

How you contribute to society is up to you. The important thing to note is that as a wealthy individual you have a responsibility to help others in a way that plays to your strengths. This does not necessarily mean giving away your money.

Articles in the Wealth Pillar Series:

Wealth Pillar One: Pay yourself first

Wealth Pillar Two: Learn to budget

Wealth Pillar Three: Improve your investing returns

Wealth Pillar Four: Protect yourself from losses

Wealth Pillar Five: Make your home an asset

Wealth Pillar Six: Develop a future income

Wealth Pillar Seven: Increase your earning ability

Wealth Pillar Eight: Making a contribution

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Wealth Pillar Seven: Increase your earning ability

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We all like to feel as though we are rock stars and the world owes us a living. Unfortunately the reality is that the world doesn't owe us a living. You only have to start your working career to realize that the world doesn't think you are worth millions... just yet.

Increasing your earning ability is one of the most important pillars, as it can dramatically boost your results in all the others. While everyone focuses on passive income as a goal, if you can increase your ability to earn you will progress a lot faster. Usually you can receive a little more by giving a little more.

How you can increase your earning ability

If you want to increase your ability to earn, there are a number of things you can do. While asking for a pay raise might be one of them, you have a far better chance to earn if you give more of yourself or if you have more value to contribute.

The following points are ways to potentially increase your income (both short term and long term):

  • Work overtime.
  • Work on public holidays.
  • Volunteer to take on extra responsibility or education.
  • Go to university, TAFE, junior college or college and get qualified.
  • Find ways to make the company earn more (or spend less).
  • Do more than you are paid to do.
  • Go for a promotion.
  • Develop skills in new aspects of the business.
  • Provide solutions to problems
  • Develop material/products/services/ideas that are beneficial to the company.

There are many others, including working for yourself. The main thing is to find out what will work in your particular situation to increase your earning ability, and then to focus on doing that

What are the benefits of an increased earning ability?

There are many benefits, some contrary to the perception in society. A few of the benefits are listed as follows:
  1. Increase your savings.
  2. Have more income to spend.
  3. Less competition for your services in a higher position.
  4. You become more valuable to the company.
  5. More satisfying work.
  6. More chance for seeing and being spotted by other opportunities.
  7. More chances to learn.

What have you done, are you doing or can you do to increase your ability to earn?


Articles in the Wealth Pillar Series:

Wealth Pillar One: Pay yourself first

Wealth Pillar Two: Learn to budget

Wealth Pillar Three: Improve your investing returns

Wealth Pillar Four: Protect yourself from losses

Wealth Pillar Five: Make your home an asset

Wealth Pillar Six: Develop a future income

Wealth Pillar Seven: Increase your earning ability

Wealth Pillar Eight: Making a contribution

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Wealth Pillar Six: Develop a future income

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(Photo: http://www.flickr.com/photos/chris_gin/2279537269/)

Will you have an income when you retire?

This is a question many people are considering in the current climate as share prices fall, superannuation returns drop and employment has diminished. Being able to retire not only with enough money to live, but with an income that will support the lifestyle you dream of is a critical aspect of your wealth creation plan.
How you can ensure a future income.

There is a number of ways to begin to ensure an income for your future. This can include businesses that provide a passive income for minimal time investment, rent from real estate, dividends from share investments, royalties from music created, etc. The list is huge, but the important thing is to start while there is time left to get the wheels in motion.
The importance of multiple income streams in retirement.

As the recent economic climate has shown, it is best for an individual not to solely rely on one source of income in retirement (and during working years for that matter). As retirement is increasingly becoming a worst-case scenario, ideally you should look for a way to enjoy your life while preparing to increase income streams as you go along.

An example of this might be as follows:
Joe Brown has recently graduated from university undertaking a Bachelor of Business Management. He obtains a job as a trainee executive on $45,000 a year. From this income, Joe begins to save 10% of his pre-tax income a year ($4,500). He intends to invest $4,500 a year for the next 39 years (until age 60) with a return of at least 8.00% per annum.

Assuming Joe does this as planned by age 60 he will have have $1,165,754.33 in his investments. If he keeps it in the current investments he will have a passive income of $93,260.35 a year to live on past the age of 60. This is the first future income stream.

Joe works hard at his job and manages to receive multiple promotions and from 21-31 begins to become recognised as an expert in his field. His income has increased to $80,000 per annum so he invests some of his money (which he has saved as he has budgeted his expenses rather than increasing his lifestyle) into an investment property that produces a positive cash flow. He uses this positive cash flow to pay down the principle on the loan. This will then become a second income stream (either through rent once the loan is paid off or sale of the property for a capital gain).

Now being an expert in management, Joe starts out as a management consultant in his free time and develops some material which he turns into a CD and a manual. He then sets up a site selling his consulting services and his product. Being a savvy market, Joe manages to set up his site to a point where he gets three hours of management consulting work a week in his spare time at $100 an hour ($300 a week), and sells his product on the site which produces an additional $500 a week (profit).

Joe quits his job and takes up management consulting full time. He begins to outsources aspects of his business and hire other consultants to do the one on one services, and hire a website manager to manage the site development and online product sales. Joe is now making over $150,000 a year profit from his business ,and only spends three days a week managing it. This is his third income stream.

Joe also begins to max out his superannuation account and sets this up as a fourth income stream. After taking two months off to travel around Europe, Joe begins to run seminars with his two spare days a week, one which he charges for surrounding managing growing businesses, and the other free for his community in which he teaches the poor and lonely on how to find happiness and success in life. Streams five and six are well on the way, and his satisfaction increases knowing he is making a good contribution to society.

As you can see, our hypothetical Joe is slowly building himself an empire which will continue to produce him an income even while he is not there. This will ensure that he develops a future income in retirement.

How you go about this process of setting up multiple income streams is entirely up to you, however I would recommend the following two suggestions:

  1. Get educated regarding business and investing: There are many people who will happily take your money from you and prevent you from seeing it again. Study and make wise decisions regarding your money.
  2. Find a mentor: find someone who has done what you intend to do and learn as much as possible from them. And don't be afraid to show your appreciation for their help, whether it is by paying for their meal, getting them tickets to their favorite sporting event, etc
Articles in the Wealth Pillar Series:

Wealth Pillar One: Pay yourself first

Wealth Pillar Two: Learn to budget

Wealth Pillar Three: Improve your investing returns

Wealth Pillar Four: Protect yourself from losses

Wealth Pillar Five: Make your home an asset

Wealth Pillar Six: Develop a future income

Wealth Pillar Seven: Increase your earning ability

Wealth Pillar Eight: Making a contribution

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Wealth Pillar Five: Make your home an asset

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This is the one Wealth Pillar that tends to create a lot of controversy. There are three main ways you can look at this pillar, and there is no one right solution. The important thing is to find the method that works best for you, and to do it only after you have begun implementing the first four pillars of wealth.

There are three ways that entrepreneurs, investors, etc. commonly view as ways to make their home an asset. They are as follows:

  1. Buy a house outright/pay off your loan ASAP.
  2. Don't buy a house, rent and invest the difference + deposit.
  3. Don't buy, travel abroad and live in luxury on lower expenses, then invest the difference.
All three have their benefits and impositions, but they are all viable.

Buy a house outright or pay off your loan ASAP.
The theory with this principle is that if you buy a house with cash, or pay off your loan ASAP, that you will be saving money in loan repayments and rent, which can then be allocated to investment. While this is true, in this day and age it is quite hard, due to the high price of housing and the high deposit required. It can be beneficial, but in my personal opinion, is not the best option for undertaking this wealth pillar.

Don't buy a house, rent and invest the difference + deposit.
Buying a house requires a high deposit (usually around 20% of the purchase price). This money could alternatively be invested over the life of the loan and make a significant difference to your investment portfolio, far beyond the amount the house will appreciate in that time. Even if renting costs more than the weekly repayments associated with buying, the difference is still usually dramatic enough to justify renting. In the current economic environment however, renting is usually much cheaper than principle and interest loan repayments.


Don't buy, travel abroad and live in luxury on lower expenses, then invest the difference.
If you are able to find employment as a telecommuter or if you are able to start a business that has a global perspective and can be operated without you being tied down to a single working location, you can begin to travel abroad, where expenses are a lot less. Tim Ferriss, author of the four hour work week says that while he was travelling and living in different countries for 15 months, he saved thousands that would have been spent on living in the United States. This excess (aka spread between lving costs in other coutnries vs Austrlia, United States, etc) can then be invested to create a difference.

Whatever decision you make, the important thing is to make a decision that will benefit you and your goals in the long term. But don't compromise the first four pillars to do the fifth, build on the progress in the order of construction.

Articles in the Wealth Pillar Series:

Wealth Pillar One: Pay yourself first

Wealth Pillar Two: Learn to budget

Wealth Pillar Three: Improve your investing returns

Wealth Pillar Four: Protect yourself from losses

Wealth Pillar Five: Make your home an asset

Wealth Pillar Six: Develop a future income

Wealth Pillar Seven: Increase your earning ability

Wealth Pillar Eight: Making a contribution

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Wealth Pillar Four: Protect yourself from losses

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You need to be able to protect the wealth you are beginning to increase from loss. There are many ways you can lose wealth that is starting to build including:

  • Spending it before you can live off the interest.
  • Investing in areas in which you have no knowledge, leading to bad decisions.
  • Not having the correct investment structures to protect your assets from lawsuits and other threats.
  • Not having any required or viable insurance.
Wealth Pillar four is to protect your investments from losses. The best way to do this is to seek professional advice from a solicitor and an accountant, as well as having a mentor to guide you through the process.

What are you risking by not protecting yourself? Do the costs outweigh the benefits? Seek professional advice and act in a way that will benefit you and your investing growth.

Articles in the Wealth Pillar Series:

Wealth Pillar One: Pay yourself first

Wealth Pillar Two: Learn to budget

Wealth Pillar Three: Improve your investing returns

Wealth Pillar Four: Protect yourself from losses

Wealth Pillar Five: Make your home an asset

Wealth Pillar Six: Develop a future income

Wealth Pillar Seven: Increase your earning ability

Wealth Pillar Eight: Making a contribution

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Wealth Pillar Three: Improve your investing returns

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Wealth Pillar Three is to improve your investing returns. There are several ways that an individual can do this.

In essence, there are three vehicles a person can invest in to improve wealth:

  1. Shares
  2. Property
  3. Businesses
Ideally you would have investments in all three, but when just starting out this is not so easy. What you need to do when starting out or just gaining traction is to take the little you have and multiply it and continue to find ways of investing it that will multiply it faster.

A very basic example of this can be seen as follows:
Stephen (fictional character) has been working hard in his job and paying himself first. He has been budgeting his money in such a way that he is now saving $400 from each fortnightly pay he receives from his work (this equates to $10,400 in savings a year.).

These savings are currently sitting in a bank account earning 3% per annum, a very low return (nb: this low a return actually provides a negative return after taxes and inflation are calculated into the equation.). Stephen has $2,500 saved thus far.

Stephen can begin to find a potential investment that will increase his ROI (Return on Investment) per annum. A basic example could be moving his savings to a term-deposit that pays 7% per annum. This extra 4% would make a huge difference in compounding returns over the length of Stephen's working life.

How much is too much?
Ideally, most investing books recommend aiming for a 12-15% return on investment for long-term compounding returns. The important thing is to do your own research (as I am not qualified to provide information about which products to purchase) and to make decisions that will benefit you over the length of your life, not just in the next one or two years.

Generally if you hear promises of returns higher than you feel comfortable with, chances are they might not be realistic. Ensure you undertake due diligence in all your financial decisions before risking losing the capital you have started to build for yourself.

Always remember
Be on the look out for ways to improve your investing returns. Increase your returns slowly and develop confidence and education so you can more wisely make decisions about increasing your investment returns.

Articles in the Wealth Pillar Series:

Wealth Pillar One: Pay yourself first

Wealth Pillar Two: Learn to budget

Wealth Pillar Three: Improve your investing returns

Wealth Pillar Four: Protect yourself from losses

Wealth Pillar Five: Make your home an asset

Wealth Pillar Six: Develop a future income

Wealth Pillar Seven: Increase your earning ability

Wealth Pillar Eight: Making a contribution

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Wealth Pillar Two: Learn to budget

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(photo courtesy of Jeff Keen, used under this Creative Commons license)

In essence, Pillar Two of Wealth is about helping you to spend less than you earn. Increasing the gap between earnings and expenses will greatly improve your results in the current economic climate.

Most people cringe when they hear the word budget. This is primarily due to a scarcity thinking and the belief that a budget 'limits' what one can do with their income. The first thing you need to do in relation to budgets is to change your mindset. Believe there are benefits, and that a budget can help you to achieve your dreams of wealth.

The next step is to begin using the tree main financial statements to track your personal financial details, namely:

  • Profit and Loss (PNL, or Income Statement).
  • The Balance Sheet.
  • The Cash Flow Statement.
These spreadsheets allow you to track where your money is coming from and going to (note: if you do a search on Google for templates of these, you should be able to find some you can use effectively for your individual purposes).

The third step is to trim the fat. Reduce or eliminate any expenses where possible and begin to save the difference. Examples might include reducing the withdrawals you make of cash from an atm or reducing your car insurance or phone plan. Find out what you can reduce (without limiting your lifestyle) and save the difference.

The final step is to project the financial statements for the future and budget income to meet expenses and savings requirements. Doing this will ensure that you properly allocate money for bigger expenses (such as registration, insurance, etc.) rather than being surprised when it shows up.

This is the basics of budgeting. It is a useful tools which aids in ensuring that you can save 10%+ of your income. Keep using it and adjusting to improve as you proceed along with your wealth building.

Articles in the Wealth Pillar Series:

Wealth Pillar One: Pay yourself first

Wealth Pillar Two: Learn to budget

Wealth Pillar Three: Improve your investing returns

Wealth Pillar Four: Protect yourself from losses

Wealth Pillar Five: Make your home an asset

Wealth Pillar Six: Develop a future income

Wealth Pillar Seven: Increase your earning ability

Wealth Pillar Eight: Making a contribution

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