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Published May 18, 2016

What if you own an automated teller machine (ATM) that dispenses money every month for the rest of your life, what will you do with it? I’m pretty sure you’ll take good care of it. Keep it clean, place it in a safe area and lock it. You want it protected because the machine is very valuable. 

The same is true with your earning ability. You are the money machine of your family and you provide them through your monthly income. But, have you been taking good care of yourself? Have you protected yourself? 

Let us understand how to fully maintain ourselves as the money machine of our families.

You are the money machine to your family
You are the money machine of your family

Assuming your ATM dispenses 20T per month and suddenly it breaks down. You have it repaired but to your surprise, it now dispenses only 10T per month. Will you be happy

Now relating to our earning ability, let’s say we are earning 20T per month, what if something happens to us (example: accident, job loss, health degradation or worst case – death) can we still provide to our families? How much are we worth as a money machine?

Sometimes its very ironic, when we have a car worth 1 million, we have it insured for 1 million. When we have a house worth 5 million, we have it insured for 5 million. But when it comes to us, as a money machine to our families, we are usually under-insured or no insurance at all! Now, which or who is more valuable, the car? The house? Or you? And if its you, how much are you worth?

Are you properly insured?
Are you properly insured?

Now using the 10/20 Rule: 

Annual Income x 10 = Protection Needs

So if you are earning 20T per month using the 10/20 rule:

20T x 12 = 240T annual income
240T x 10 = 2.4M protection or insurance need

Therefore you are a 2.4M worth of a money machine. When something happens to you, your family will receive 2.4M. It is also then important to financially educate your family so that they will not spend all the money they received but learn how to invest it. 

Example your family will receive the 2.4M and then they invest it in a vehicle that earns 10% interest per year, therefore:

2.4M x 10% interest = 240T per year
240T / 12 months = 20T per month

The 2.4M is intact while giving 20T per month via the interest of the investment. Therefore, your income as a money machine is replaced by the 2.4M from your insurance protection. 

We don’t want our 2M SUV be replaced by a 600T sedan nor our 5M worth of a 2-3 story house be replaced by 1M bungalow. We insure them properly so that in case of any untoward incident, we get the same value. Same thing with our income as a money machine, we provide 20T per month to our family and we don’t want our family to suffer because we haven’t protected ourselves sufficiently. 

Life insurance does not replace our life but it replaces our income in case something happens to us prematurely. The reason we work hard is for our families and if we are not properly protected, our family will suffer if we are not adequately insured. 

So how much are you worth as a money machine? 

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