How To Pay Yourself First: The First Law Of Wealth Building

Many people desires great wealth, but the question is ‘How many of us desiring wealth are actually working toward acquiring the wealth we wanted’? Few, very few. Many desired wealth greater than that of the wealthiest man who ever lived, but hardly do they work toward serious wealth building their dreams.

Mandela said in one of his quotes that wealth and poverty are two different choices from which we choose. Wealth is like a profession that you must have adequate knowledge of – you can’t become an Engineer without being trained as one, you can’t become a Pilot without passing through the school of aviation, neither can you become Geologist without having adequate knowledge of solid or liquid matter that constitutes the earth. The same goes for wealth, you can’t simply be wealthy if you don’t have adequate knowledge of wealth building or how to create wealth and sustain it.

What Is Wealth?

Lot of people have shallow knowledge of what the word “Wealth” means. Some desires to be wealthy just because they think their life will be better of, without understanding what it means to be wealthy. I’ll start with the dictionary meaning of wealth.

Wealth is defined as:

Noun:-  A great quantity or store of money, valuable possessions, property, or other riches.

Economic:- Anything that has utility and is capable of being appropriated or exchanged. Utility an economic term referring to the total satisfaction received from consuming a good or service. Or the state of being useful, profitable, or beneficial.

Wealth is more than the amount of money you have in the bank(s) or at hand, it extends to all the valuable things one has and even far beyond the objects one can see. King Solomon is regarded as the wealthiest not only because of his riches, in addition to his riches, he was very intelligent and wise.  Having adequate knowledge or skills to earn, is wealth as well, as long as you can exchange your knowledge or skills for money. Robert T. Kiyosaki defined wealth in his own way, he said, ‘Wealth is not the amount of money one has but the duration of time it spends in your possession’.

Am not an expert or wealthy yet, but am one of those learning how to be wealthy beyond monetary aspect alone. Leaving good legacy behind, to me is also wealth.

How Do I Start My Wealth Building?

This article can’t teach you all you need to know about wealth creation but will be another eye opener for readers. Many of us have read several books on how to make money or how to become a millionaire, billionaire etc. Some authors do advice readers to pay themselves first while others do skip this piece of advice. I myself do wonder what it means to pay myself first and kept asking how do I pay myself? I got the answer and the concept of paying oneself first shortly after reading ‘The Richest Man in Babylon’.

The Concepts Of Paying Oneself First

When you ask people if the salary or wages they earn at the end of the month or work done is 100% theirs, their answer will be yes. But you are wrong if you don’t pay themselves first. Let me break it down and tell you why the money you earn isn’t yours until you start paying yourself first.

When you receive your salary at the end of the month or your wages at the end of the service you rendered, the next thing that comes to your mind is paying your bills or satisfying your wants. You will settle the electricity bill, water bill, school fees, go shopping, replenish your wardrobe, fix damaged furniture, etc. The money you spent doing these things are not going back into your pocket, you sure know that, at the point of exchange it belongs to someone else.

SEE ALSO: How Your Passion Will make You Successful In Business

The rest will surely be spent on transport and feeding until nothing or little is left before the next payment is done. Even if you save some of the money in the bank or using other savings method, you still didn’t pay yourself if at the end of the day you exhaust it.

How to build wealth

You will pay yourself first by saving nothing less than 10% of the amount you earned either on monthly, weekly or daily bases. This method may seem impossible because of the stack of bills you have to settle, it is however, the best you pay yourself first before settling every other bills. Paying yourself first is the first bill you must pay.

Some do wait till the end of the month before saving the left over, am not condemning this act, but it has its shortcomings – you won’t have anything to save when there is no left over, and it will become more difficult to save when expenditure increases.

Paying yourself first is very beneficial, and the benefits are as follows:

When you pay yourself first, you are mentally establishing savings as a priority. You’re telling yourself that you are more important than any other thing. Building savings is a powerful motivator — it is empowering.

Paying yourself first encourages sound financial habits. Saving regularly makes you plan the way you spend your earnings wisely. Paying oneself takes a long time to develop as an habit because it has no immediate gratification.

By paying yourself first, you’re building a cash buffer with real-world applications. Regular steady contributions are an excellent way to build a nest egg. Paying yourself first gives you freedom — it opens a world of opportunity

By paying yourself first, you are saving for the future. When you start paying yourself first, you start making plan for the future when you won’t be able to work anymore.

How Do You Pay Yourself First?

The process of paying oneself first has been made easy in this era of technology. These processes offers the best method in such  painless manner, invisible and automatic. Many companies include retirement plan in their employees payment plans. One thing you must not forget is that your savings should be tied to goals – either immediate goals like buying a car, a house, studying, re-investing it into your business etc. or long term goals like retirement plan, establishing your business, planning for your children future, etc.

SEE ALSO: How To Prepare Your Staffs For Early Retirement

Here are three ways to start the process of paying yourself first:

1. If your employer offers a retirement plan (most companies now offer compulsory retirement plans) — enroll as soon as possible, especially if the company matches your contributions.

1. Open a high interest savings account at a bank – Set up automatic transfers into this account, either directly from your paycheck or from your regular bank account. Treat these transfers like you would treat any other financial obligation. This should be your first and most important bill every month.

1. Direct depositing is another way to go. For those who are self-employed, it’s hard to determine the amount to pay from month to month because the income is not fixed. There are times that they will earn much in a month and other times that they will earn very little. It should be at the back of your mind that no matter the amount earned, you must pay yourself. So, such person should have a bank account where he deposits his payment.

If 10% will be too much for you as a starter, you may start with an amount that is convenient for you. What you should not fail to are – never fail to save and never forget to increase the % as time goes on. And in case of those who earn big, you may save more than 10% and if at the end of the month you have something left you may save that as well. It will serve as a booster to your savings.

Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this. –Dave Ramsey

https://www.wealthresult.com/2014/11/pay-yourself-first-first-law-of-wea.html

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Compliance Q&A with a Watch Manufacturer: Subcontractors & Substance Regulations

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We often write about product compliance on Chinaimportal.com. However, we thought it was about time to cover a different angle: The viewpoint of the supplier. During a recent visit to Shenzhen, I had the opportunity to ask a few critical questions to a leading, unnamed, Watch manufacturer. Keep reading, and learn more about compliance and risks in Watch manufacturing – lessons that can be applied to virtually any industry.

Can you ensure compliance with REACH, RoHS, CA Prop 65 and other substance regulations?

Yes, as our main markets are the United States and the European Union, we must ensure compliance with a variety of standards and regulations. Among them are those you just mentioned: REACH, RoHS and California Proposition 65.

However, our responsibility is limited to what we produce and assemble. Some components, for example, the battery and the movement, are supplied by international brands. For movements, you probably already know about Seiko, Citizen Miyota and Ronda. These are RoHS compliant, and we can get complete documentation directly from them. The same goes for the battery, which is purchased from Seiko, Sony or Samsung – all of which produce batteries according to EU and US battery regulations.

How is this affecting the pricing of your watches?

For example, REACH and RoHS compliant material cost more than the material that is not compliant. There are only some very small, and rather unprofessional, buyers that don’t understand this. All of our established buyer’s in foreign countries always understand that it cost more. A Watch case can be made in many different materials, and there are also different qualities of different materials. The cost different is not that big anyway, so this is rarely an issue.

As you purchase components, for example, Watch cases and straps, from a large number of specialised subcontractors, how do you ensure that the incoming materials are in fact compliant?

We request material sheets from our subcontractors, for the materials we buy. This can, for example, be a 316L Stainless Steel Watch Case. When we procure the components for our customers, which we do for every order, we tell our material suppliers which standards and regulations the material must be compliant with. If we must ensure REACH compliance, we then communicate that we need a REACH compliant case. Today, about 70% of our components are REACH and RoHS compliant. But this is because we mostly export to Europe.
Request documents when we order the first time. Communicate in advance. But we don’t check MDSF on all orders. But we are good at keeping track. About 70% are REACH and RoHS.

So, that implies that the buyer must communicate all applicable standards before placing the order?

Yes, we just tell component suppliers to which standard they must comply. We forward the requirements that our customer has informed us of. If they don’t inform us, it’s very hard for us to know exactly what is required in their country.

Do you test the incoming materials yourself?

No. We just check the documents of our supplier. Like most, if not all, Watch manufacturers in Shenzhen, we don’t have our own laboratory. We can, of course, send incoming materials to a third party company, like ITS or SGS, but this cost is charged to the buyer. If we would include testing for every order, we would need to increase our prices. It would make us look very noncompetitive.

I assume this also applies to product labeling?

Yes, of course. We can offer some support with graphical design. For example, we always create a concept design for the customers approval before we start making the prototype. But, we don’t know exactly how a product must be marked in every state or country around the world. The customer gives us the graphical files, and then we print or engrave it.

What other product regulations and standards do you have experience with?

Different customers have different requirements. What I can remember right now is ASTM standards, EN 71 and various Heavy metal tests. For straps, we are also required to restrict Phthalates.
Some companies, for example, Wal-Mart and JC Penney, have their own company standards. These are stricter than the legal substance limits, of lead and other heavy metals. In such cases, the buyer must send us a full list of substances and limitations, so that we can check if our material suppliers can comply or not.

Do you normally handle all testing procedures or this is something managed entirely by the customer?

Normally this is done entirely by the customer. We just send the samples to their test company in Shenzhen or Hong Kong, and they do the rest. Some companies even have their own laboratories, so that they can do the testing themselves. However, we already work with SGS and Intertek. So, if the customers want, we can contact them and book the testing and send samples. But the costs are always charged to the buyer. We don’t pay for testing.

Hence, most, if not all, test reports are issued in the customer’s name?

Yes, because if they book the test, then the test reports are issued in their company name. This is also what want. However, we also have some test reports issued in our company name to show. This is often required by new customers who want to check up on us before we start working together.

Do your buyer normally submits batch samples for every order?

Some do, but not all. One customer, a French fashion company, do testing on all orders. Both for REACH and RoHS, and for every part. Even the glass. They are very strict. Others do a test on maybe every second or third order. It’s up to the customer.

I noticed in your factory that some Watches are CE marked, while other are not. Do you assist European buyers with ‘CE marking compliance’?

No, we don’t know much about the CE mark requirements. Some customers do CE testing, for example, the EMC directive testing. But we don’t know exactly what is required to comply with CE mark regulations. This is always handled by our customer.

Our Conclusion

Things are never as simple as just “finding the right manufacturer”. Ensuring compliance, one of many challenges when buying from China, is ultimately your responsibility as a buyer. While the suppliers capabilities are indeed a pre-condition, the supplier shall never be considered a “one stop shop”. Hence, the role of the importer today is more that of an engineer, or product developer, than a trader in its traditional sense.
You must also keep in mind that this Supplier Q&A was done together with an industry leading manufacturer, with big brand names and a backlog dating back to the early 90s. The vast majority of suppliers out there are not as resourceful as this one. In fact, most would not even bother to answer these questions, or struggle to do so.

These lessons are not only of value for Watch brands. The same dynamics apply in all industries where substance control is relevant. This includes, for example, apparel, textiles, toys, children’s products, food contact materials, furniture and.. well, the list goes on.

Buying in China and Selling on Amazon – Part 1: Shipping & Logistics

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It’s the gold rush of our time (or at least the decade). Seemingly, everyone wants to get their products out on Amazon.com. I’m no stranger to e-commerce myself, as that’s how I started doing business with Chinese suppliers in the first place. However, up until quite recently, E-commerce in Europe and America has been dominated by independent online stores, rather than market platforms. This is about to change.

About Amazon.com

What makes Amazon.com different is that they are not only offering an online platform, but also an integrated logistics system. Ship your bulk cargo to one of Amazon’s warehouses and they take care of the rest, sending your items to your final customers. But that’s only the easy part. Assuming you are buying from China, or any other country outside the United States, you need to get your cargo from a factory floor far away, to an Amazon warehouse. That is often easier said than done, and much can go terribly wrong.

So, we did what we usually do when we don’t have all the answers. We asked an expert. In this article, Kathy Rinetti, Customs Manager of Flexport.com in San Francisco, explains what importers must know about shipping and logistics, when buying in China and selling on Amazon.com. She also explains how non-US businesses can start selling on Amazon.

Kathy, please tell us a bit about yourself and your work prior to Flexport

I bring over 20 years of international trade experience with emphasis on compliance and customs clearance. Prior to joining Flexport, I helped define the U.S. Customs classification logic for two leading international trade software companies. At Flexport I focus on combining compliance with customer service to make importing a painless process.
Flexport helps importers navigate shipping and importing using an innovative software solution. Clients are notified when documents are needed and of their shipments’ statuses every step of the way.

Is it possible to have cargo forwarded directly to an Amazon.com warehouse, from the Port of Destination in the United States?

Yes, definitely. To do this, the Bill of Lading would need to be filled out properly with:

1. the Importer of Record as the name of the importer
2. the Consignee as the Amazon warehouse

It is important that the Amazon warehouse’s contact information be included, because they usually require appointments for shipment deliveries. If this info is missing or inaccurate, it can delay the delivery of the product.

What are some tips for shipping to an Amazon warehouse?

After a shipment is cleared through U.S. Customs, importers will need to make an appointment with their Amazon warehouse and update them on the delivery timetable. Appointments are required, but they also take 2 – 7 days to be confirmed once they are requested, and they cannot be changed.
In addition, it’s important to maintain your levels of supply in the Amazon warehouse. Amazon determines which vendors with the same product are given higher status by monitoring each vendor’s stock of goods, and if you do run out of stock for popular items, Amazon can and will ask your competing vendors to carry those products going forward.

Should importers selling on Amazon.com select any particular Incoterm?

Importers should negotiate DDP (Delivered Duty Paid) terms, because everything in regards to costs would be settled prior to the shipment’s delivery at the Amazon warehouse. The shipper and the importer would thus not have to worry about any delays that could result from paperwork and clearances or pending payments.

Should the warehouse address be declared on the Bill of Lading, or any other shipping document?

The warehouse address and contact information must be included as the consignee on the house bill of lading.

Are there any labeling requirements that US importers selling on Amazon.com should be aware of?

Amazon warehouses may have special instructions regarding labeling and organization of products. This information can be found here.
In addition, by federal law, all goods must be marked with country of origin. For example, goods originating in China should be marked “Made in China.” The marking must be legible and permanent enough for the ultimate purchaser to be made aware of the goods origin. More details about labeling requirements can be found here.

We also receive inquiries from non-US based companies planning to sell products on Amazon.com. Is it possible, as a foreign entity without a local presence, to import items into the United States and sell on Amazon.com?

A foreign-based company can apply for a Customs assigned number which will allow them to import into the US. It’s a requirement that a foreign importer designate an agent for service or process.

This number can be obtained by filling out a Customs Form 5106 and submitting it to Customs, or by having a Customs broker do it electronically on their behalf. Once the company has a Customs assigned number, they will be able to obtain a Customs bond and import into the U.S. under that bond.

Product Compliance in the LED Industry: A Case Study

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Indeed, many Chinese manufacturers claim compliance with the relevant European Union (CE Mark) and American (FCC and UL) directives and safety standards. But does this really mean that they can maintain the full set of compliance documents for all, or least part, of their products? Well, we decided to find out. In this article, we offer insider insights into the actual state of EU and US product compliance among LED manufacturers.

LED Lighting Safety Standards & Required Documentation

As explained in this article, it’s a common misconception that it’s either the manufacturer’s responsibility to ensure compliance or that the importer must only obtain a product certificate, test report or declaration of conformity. That is, however, not the case. First, as you may already be aware of, the importer is responsible for ensuring compliance – not the manufacturer. Second, as part of this responsibility, the importer must prepare all relevant documents.
In theory, the Chinese manufacturer should be able to produce these documents. Take the CE Technical File for example, which must include the following documents:

• Declaration of Conformity
• Test Reports
• Circuit Drawings
• Bill of Materials / Component List
• Risk Analysis
• Summary of Standards & Directives
• Labels
• User Guide

As mentioned, many importers make the assumption that they’re set as long as the supplier can produce a Declaration of Conformity, and the products are labelled with the CE mark. As said, this is entirely incorrect. A full set of compliance documents is mandatory. Now, how many suppliers can actually provide the full set of documents, rather than just the DoC?

Our Findings in the LED Industry

In order to not distort the result, we only picked relatively large LED manufacturers in the Pearl river delta. Some of which are established for over a decade’s experience in manufacturing LED lighting for the EU, US and other markets. Hence, we do believe that our results are representative for the industry as a whole.

At first, we listed ODM SKUs directly from each supplier’s catalog. Next, we made a list of all the required documentation, which must be provided by the supplier in order to ensure compliance with, in this specific case, the applicable EU directives. The result, for two of the suppliers that participated, follows in the tables below.

Supplier A

SKU	DoC	Test Report/s	Support Documents
RX2-E27	EMC:YesLVD:YesRoHS:No	EMC:YesLVD:YesRoHS:No	Circuit Drawings: None Bill of Materials / Component List: None Risk Analysis: None Labels: None User Guide: None
RX5- E27	EMC:No LVD:No RoHS:No	EMC:No LVD:YesRoHS:No	Circuit Drawings: None Bill of Materials / Component List: None Risk Analysis: None Labels: None User Guide: None
GX1- GU10	EMC:YesLVD:YesRoHS:Yes	EMC:YesLVD:YesRoHS:Yes	Circuit Drawings: YesBill of Materials / Component List:YesRisk Analysis: None Labels: None User Guide: None
SD1 – E14	EMC: No LVD: No RoHS: No	EMC: No LVD: No RoHS: No	Circuit Drawings: None Bill of Materials / Component List:YesRisk Analysis: None Labels: None User Guide: None
SD2 – E14	EMC: YesLVD: No RoHS: No	EMC: YesLVD: No RoHS: No	Circuit Drawings: None Bill of Materials / Component List: None Risk Analysis: None Labels: None User Guide: None

Supplier B

SKU	DoC	Test Report/s	Support Documents
XGB1	EMC:No LVD:No RoHS:No	EMC:No LVD:No RoHS:Yes	Circuit Drawings: None Bill of Materials / Component List: None Risk Analysis: None Labels: None User Guide: None
A37 4W	EMC:No LVD:No RoHS:No	EMC:No LVD:No RoHS:No	Circuit Drawings: None Bill of Materials / Component List: None Risk Analysis: None Labels: None User Guide: None
A38 4.5W	EMC:No LVD:No RoHS:No	EMC:No LVD:No RoHS:No	Circuit Drawings: None Bill of Materials / Component List: None Risk Analysis: None Labels: None User Guide: None
A38 7W	EMC:YesLVD:YesRoHS:No	EMC:YesLVD:YesRoHS:Yes	Circuit Drawings: None Bill of Materials / Component List: None Risk Analysis: None Labels: None User Guide: None
GU10 4.5W	EMC:No LVD:No RoHS:No	EMC:No LVD:No RoHS:No	Circuit Drawings: None Bill of Materials / Component List: YesRisk Analysis: None Labels: None User Guide: None

Our research included in total eight LED manufacturers, and more than 15 SKUs each. However, the table data above is representative of the result as a whole. Before we move, I’ll summarise the issues we’ve now identified:

1. The manufacturers can only provide products that are partially compliant. They cannot provide a full set of documents for a single SKU.
2. Many products have no compliance documents, including test reports, at all.
3. While the manufacturers surely do possess Circuit Drawings and Component Lists, they hesitate to share such documents – even if the buyer is required to access them.

What is very clear after this research is that very few, if any LED manufacturer, can provide a full set of compliance documents. That may at first seem strange, considering that these manufacturers have exported to said markets for years. Indeed, they evidently possess the technical expertise to manufacture products in compliance with EU and US regulations.

Our Conclusion

What is very clear after this research is that very few, if any LED manufacturer, can provide a full set of ‘ready made’ compliance documents. That may at first seem strange, considering that these manufacturers have exported to said markets for years. Indeed, they evidently possess the technical expertise to manufacture products in compliance with EU and US regulations.
While existing regulations are based on the assumption that the manufacturer provide the importer with all required compliance documents (which is the case in domestic trade within the EU, for example), this strategy clearly doesn’t work when importing from China, and possibly other developing Asian countries.

Instead, the importer can no longer assume the role of trader. The main responsibility of ensuring compliance, falls in practice entirely on the importer. Hence, the role of the importer today is more of the role of a product developer and engineer.

The supplier, on the other hand, is only there to provide the resources for the importer. One such resource is the supplier’s ability, in terms of technical expertise, to manufacture product in compliance with all applicable regulations, in the buyer’s market. However, the importer must still manage all aspects of product compliance, outside of component procurement and assembly.
Now, keep in mind that the results of this study would have been far worse wouldn’t we already know that these manufacturers are among the top LED suppliers in China. Only a minority of the suppliers are on this level. So, how can a supplier’s ability to ensure compliance be assessed? There may not be a failsafe method. But, what we do look for is previous compliance. In other words, we assess the supplier’s existing product compliance documents to get an idea of whether or not they have the technical expertise to manufacture compliant goods. That is about as safe as it gets. But, an existing test reports or DoC does not substitute the need for testing, and other procedures.

This conclusion is not only relevant to LED lighting importers. Instead, this applies to virtually all businesses, including electronics, toys and industrial products.

The stakes are high, to say the least. As some of you may know, authorities in the European Union and the United States stepped up enforcement after multiple reports of hazardous Balance Scooters, most of which are assembled in Shenzhen. Amazon.com quickly followed suit, and required all sellers of Balance scooters (or Hoverboards) to provide various compliance documents. Those who failed to so, which may well have been the majority of the sellers, were suspended from trading.

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