Today’s NST features a report on Citibank’s financial survey done in October 2008. The result concluded that Malaysians are not prepared to lose their job due to lack of savings. 21% of the respondents said that their savings could only last them a month.
We have heard it many times. The common financial advice given is to have at least 6 months savings for rainy days. How many of us actually do save? In the survey, 60% of respondents said they save 20% of their income, excluding the 11% deducated for EPF (Employees Provident Fund).
Once again I see the 80/20 rule in the result. The Pareto principle or 80-20 rule is like a principle in the universe. It says that the majority of results come from a minority of inputs.
Rather than trying to be a financial expert or an accountant, one can use the 80/20 rule as a general guideline. It may not be 100% accurate but you won’t be left high and dry for the least.
The point is you can often focus your effort on the 20% that makes a difference, instead of the 80% that doesn’t add much.
Last night I shared with a friend about putting aside some funds as money needed for upkeeping the equipments for his business. It is a business that requires equipments to be in tip-top condition. However, I did not mention the 80/20 rule to him. I hope that he will read this blog and apply this in his work and life in general.
Take a look at the titles below and see where and how people apply the Pareto principle.
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2 Comments
actually it is not 80-20, it is a bell shape or a pyramid.. to make it easy to understand the ang mohs simplicize it to 80-20
why no pictures geh? put some of ur pictures ler
Hi Charles, 80-20 is easier to remember I guess.
As for the pictures, I prefer some privacy. This is some sort of personal blog which I don’t want my boss/colleagues/family members to find out…yet.
Thanks for dropping by.
Cheers!