The MONEY MATRIX
The MONEY MATRIX is a tool created by Yap Ming Hui to help you understand the current state of your finances and how you can move towards financial freedom and, eventually, wealth.
Moneymaking Capability: The Y-axis measures a person’s moneymaking capability. Specifically, it measures your ability to generate an active income – the higher your moneymaking capability, the more income you generate.
Money Optimisation Capability: The X-axis measures a person’s money optimisation capability. Specifically, it measures your ability to turn your active income into assets and then use it to support your lifestyle in the most optimal manner. The higher your money optimisation capability, the more assets you will accumulate and preserve.
The activities undertaken for money optimisation will vary depending on a person’s intention to move towards self-sufficient, financially free or wealthy, in the money matrix. A person with high money optimisation capability would benefit from having the freedom of choice. He/she can choose to work because he wants to, not because he has to.
Discovering Where You Are On the Money Matrix
There are six unique sections in the MONEY MATRIX. Each person belongs to one section and all people in that section share common characteristics. The sections will show you where you are today and will help you chart a course for where you want to be in the future.
Your position in the MONEY MATRIX is not static. This means that you can move from one section to another. This movement dependent upon your moneymaking capability and your money optimisation capability.
Now, let us look at each section independently within the MONEY MATRIX. Can you find where you are on the MONEY MATRIX?
Poor – Low moneymaking capability and Low money optimisation capability
Your income is low and you spend most of it taking care of your living expenses. You are most vulnerable at this section because when work stops, your current active income is also affected. There’s a likelihood that you will need to depend on someone else financially for your basic survival needs.
Middle Class – Medium moneymaking capability and low money optiomisation ability
You have an above average and decent income which you spend mostly on maintaining your comfortable lifestyle. The risk is that you will not be able to maintain this lifestyle if you lose your current active income.
Rich – High moneymaking ability and Low money optimisation capability
Your income is very high, but you spend most of it maintaining a luxurious lifestyle and your financial resources are not fully optimised. You will not be able to maintain this lifestyle if unexpected financial disaster strikes or if you lose your current source of active income.
Self-Sufficient – Low moneymaking capability and High money optimisation capability
You may have a low income but you manage your personal finances very carefully. You have some money saved up and may have some of it invested wisely. As a result, you manage to accumulate enough assets to ensure your financial survival in the event you lose your active income..
Financially Free – Medium moneymaking capability and High money optimisation capability
You are actively focussed on saving or investing a high percentage of your income. As a result, you manage to accumulate a reasonable size of assets to maintain your current living standard. In the event that active income stops, you still have enough assets to take care of your living expenses until you die. However, your assets and the income generated will be depleted after your demise.
Wealthy – High moneymaking capability and High money optimisation capability
You have an extremely high income and enjoy a comfortable, but not luxurious, lifestyle. You have managed to accumulate a sizeable amount of wealth that generates a huge amount of passive income that is more than enough to cover your living expenses. In addition, you have deployed the necessary measures to protect your wealth, thereby, making it, in theory, last generations.
In order to transition through the MONEY MATRIX, you must first determine which of the six (6) sections you are presently at. Next, use the MONEY MATRIX as a guide to help you improve your financial position until you eventually arrive at the strongest financial position, the Wealthy section.