What Is The Pareto Principle And How To Use It

What Is The Pareto Principle

The Pareto principle, or the law of the vital few, or the 80-20 rule was the work of an Italian economist Vilfredo Pareto. Pareto observed in Italy in 1906 that 80 percent of the land owned by 20 percent of the population. Later on, Pareto observed the same 80/20 proportion applies to many other aspects of life. This observation gave us the Pareto effect or Pareto law which has been known universally. Simply stated, the Pareto principle is – a large proportion of results come from a small proportion of works or causes (a vital few).

Why You Need To Know the 80-20 Rule

You need to know the 80-20 rule to use your time and efforts more intelligently and efficiently to become more productive. If you can track the 20 percent products or works that bring you the most (80 percent) results, you can emphasise on these 20 percent and cut down the other 80 percent unproductive, time wasting tasks you do. Knowing your productive 20 percent and unproductive 80 percent will put you on the edge and you will be better equipped to handle your entrepreneurial journey than anyone else.

Some 80-20 Suggestions

Here are some common scenarios where you can apply 80-20. These are just some example to show you. Find out your own situations where you can apply the Pareto principle and prosper.

- 80 percent of your sales come from 20 percent of your products. Find out these 20
percent and improve them to get more sales.

- 80 percent of your work is being done by 20 percent of your employees. Take good
care of these few employees and decide what to do with the rest.

- 80 percent of your errors come from 20 percent of causes. Fix these 20 percent
causes first.

- 80 percent of the things you do daily or monthly, only 20 percent are really
important. Do these important 20 percent with utmost care.

- 80 percent of your results (or income) comes from 20 percent of your works. Do
these 20 more often to get better results.

- 80 percent of the time you use (wear) 20 percent of your stuffs (clothes). Eliminate
the other 80 percent you never use and live clutter free and less stressful life.

- 80 percent of your failures are coming from 20 percent of your wrongdoings. Eliminate
these 20 percent and succeed more often.

- 80 percent of your health problems are coming from 20 percent of your unhealthy
habits. Cut these 20 percent bad habits and live a healthy life.

Well, I can go on and on with this list forever. But these should be good enough to give you an idea. Find your own situations to apply Pareto rule and prosper.

Some Interesting A Dawn Journal Facts In Light Of The Pareto Principle

Here are a few interesting A Dawn Journal facts:

- 80 percent of visitors are coming from 20 percent countries

- 80 percent of traffic is coming from 20 percent articles

- 80 percent ad revenues are coming from 20 percent keywords

Final Word

I do believe in Pareto principle, but I don’t believe the 80-20 matrix is always constant. I think it fluctuates and disperses from the exact 80-20; however, it stays very close to, or within plus or minus 80-20 range. For example, it makes sense to assume that lots of times 80-20 proportion will actually be 70-30, 65-35, or even 85-15.

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How Hoarding Can Be Your Enemy

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Many of us find that the key to being financially secure is to ensure that we always have one eye on what is coming in and one on what’s going out. Making sure that there is more coming in than going out is, in most opinions, absolutely essential. But hoarding money is one thing, while hoarding possessions is quite another. Many people become quite attached to their possessions, and will keep the old ones no matter how many new they add. The reasons for this are perfectly understandable – when we bought them, these possessions represented something useful to us. It is often quite a wrench to part with them.

However, the time will come when you cannot move because your house is so full of the many things you have collected without even really noticing, and after a period of time just squeezing things in wherever they will go starts to be both difficult and pointless. In this case it is really worth thinking long and hard about whether you actually need half of the stuff you have accumulated over the years. Of course you wanted it at the time, but the fact is that you have probably got by without it for some time now. Maybe someone else could get some use out of it. This is where online auction sites like eBay come in extremely useful for you, and for others.

If you have got to the point where you have so many hoarded possessions that they are beginning to bulge out from every available corner, then it really is time to de-clutter, and one way of doing this is to sell some of the things that you have collected it. If you are a hoarder by nature it is probably still in fairly good condition anyway, so why not have a look and see what people might pay for it? You might actually find that you benefit from having your own policy of only buying something new when you have cleared some space to put it into. Rather than just throwing it all into a dumpster – which a surprising number of people will do when it comes to the time to rearrange things – you could put it up for sale and make some money – allowing you to budget better for anything new that you buy.

You will find that if you use online auction sites, people will pay more for an item that has some rarity value, or that comes as part of a pair. The more things you have that are like this, the better when it comes to trying to raise some cash. Of course, you may find that some of the possessions have sentimental value to you. It is perhaps a good idea to hold on to some of this if you feel that you would be negatively affected by selling it on. The best advice in this situation is to ask yourself whether it is something that is preventing you from moving on, or something that helps you remember. This will help you decide.

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Survive A Layoff; Start Recession Proof Jobs

Ever since I wrote the Recession-Proof Jobs article, I’ve been thinking about writing more on the subject. Initially, I was thinking of writing an article describing all recession-proof jobs. Then again, I thought, what would be the purpose of describing jobs which would require long training and won’t let you start right away?

Today, I will describe a few jobs that you can start right away or within a few months. These jobs require short-term, very little, or no training. I am sure there are more opportunities like these but these are the ones I can currently think of off the top of my head. Always keep your mind and eyes open and be on the lookout. Soon enough, you will find opportunities to ride out this economic crisis.

Repo Man – A repo man repossesses property or goods from buyers who defaulted on payments and can’t pay them anymore. During recessions, this trade seems to flourish as many people lose jobs and are unable to keep up with payments. To work as a repo man, you need to find bailiffs or repo firms that employ repo workers. If you don’t have training or experience, you will be starting off as an assistant or helper. To locate a firm near you, search online by using these keywords: “bailiffs jobs Canada” or “repo man jobs Canada.”

Auto Mechanic – Qualified mechanics are always in short supply, and you can use this to secure an entry-level job, such as parts-runner or assistant to the mechanic, and complete your automotive courses towards achieving certification as a full-time mechanic. A job as a mechanic will always be on demand, not just during a recession. Check with local auto-repair shops or look in the newspaper for opportunities.

Fast-Food Worker – Layoffs are abundant these days; however, long lines at Tim Horton coffee shops tell me that fast-food stores are nowhere near feeling the heat of recession and they are constantly hiring. As more and more people are losing jobs, they are avoiding fancy restaurants and gathering at fast-food shops to socialize. Therefore, fast-food shops have to hire more workers to keep up with the excess flow of customers. You do not need any training or certification to work at a fast-food restaurant. Although it does not pay well, something is better than nothing and during a recession any employment opportunities should not be overlooked.

Thrift Store Worker – During a recession, thrift stores like Goodwill and The Salvation Army seem to do well. People avoid buying new and costly products and these second hand stores flourish. I have seen that these types of stores are on a hiring spree to keep up with increased demand and you don’t need any formal training to be hired.

Security Guard – During an economic downturn, stealing and other offences go up and so does the demand for private security guards. You can be hired by security firms with no training and they will give you some quick training to put you on the fast track.

These are only a few worth mentioning. There are many other job opportunities that exist in a financial crisis which we may not even know about. Keep your eyes open and always be on the lookout.

A rough economy also brings fresh opportunities for entrepreneurs. Creative entrepreneurs can weather the global financial crisis by looking ahead and seeing opportunities in the future. For example, regardless of economic conditions, Green and environment-related opportunities will flourish and there are opportunities in these areas. 

Also, some particular sectors do well in recessions and you need to find and utilize those sectors. I can give you a couple of quick examples:

1. People like to stay home and use more cable TV and Internet.

2. People cut services and products they hardly use and stick to the basics, such as gym memberships, magazine subscriptions, luxury items, etc.

An optimistic entrepreneur should always track these trends and come up with innovative products and services to fill the gap. With innovative thinking and the right information, yes – you will be able to ride out the recession and work towards achieving your dreams.

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Let The Green Journey Begin

I am happy and excited to introduce my new Green web site The Green Living Blog to A Dawn Journal readers. I created The Green Living Blog to make the world of environmental issues a lot simpler and clearer for people who want to do their part.  

The Earth is the source of everything we use on a daily basis, from cradle to grave. However, we fail to realize that resources are depleting so quickly that one day the planet will not be able to accommodate our demands. Our daily actions affect the environment in which we live. We and some of our actions are a cancer to the earth and one day this cancer will spread to a point from which there will be no return.

The Green Living Blog is written for the curious individual interested in doing what they can to alleviate our own burden on the planet. The Green Living Blog will be a way of learning more, understanding better, and hopefully also being entertained.

I will be updating The Green Living Blog once a week. Visit this new Green site here – The Green Living Blog. Also, here is a Press Release I issued yesterday announcing the launch of The Green Living Blog –

Canada’s Favourite Personal Finance Author A. Dawn Launches Global Green Site

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Money, Finances, Economic Crisis, And Relationship

If this is your first time here, You may want to subscribe to ADJ via RSS. If you are reading this page via RSS reader, you can visit the main page here -Canada’s Personal Finance Blog

Money is one of the major causes of friction in a relationship. Most probably, money issues are second only to infidelity as a cause of divorce. In a relationship or a marriage, couples are bonding together from very different backgrounds. Two different persons with different incomes, different debts, and different ways of managing personal finances are joining together to share and form common values and perspectives. These issues, specially money issues can be a real problem.

An unstable, or even a healthy relationship, can go thru a rocky ride during economic downturn. The reason is very simple. Money and finances get over-heated and threatened during post economic downturn. These issues always exist; however, during good times we tend to ignore these because there is always food on the table and somehow we manage to get by. But things change during economic downturn. When jobs are hard to find, the cost of living is on the rise, suddenly things don’t look rosy anymore. Our emotions and spirits change and our relationships reach on the verge of a breakdown.

What you can do to protect your marriage/relationship in a downturn? Try taking the following steps. These steps are not just good during an economic downturn. You should apply these anytime to make your relation journey a smooth one.

• Talk – Communicate with your partner regarding money issues and any other issues on a regular basis. Take the current economic crisis as an opportunity to get together and start communicating. Talk about your fears, goals, issues, and so on. Divide financial tasks and work together to make changes on your financial plans.
• Track Your Expenses – Tracking expenses gives you a visualization of where your money is exactly going. You need to know this to cut unnecessary expenses and increase your savings. You can do all sorts of calculations and thinking in your mind to figure out where your money is going – but the real picture may not be the same as your mind tries to depict. Spending just a few dollars here and there daily can add up to a large amount at month’s end and tracking expenses will show you how powerful it can be to cut once-daily visit to your coffee shop. Tracking expenses will gradually help you make better decisions.
• Set Goals – Set long and short term goals. Write down these goals in a notebook and setup monthly or quarterly meetings with your partner to review your goals. Goals could include buying a house in three years, kids’ education fund, retirement etc.
• Budget – I don’t believe budget works; however, follow these two simple rules and avoid the hassle of budgeting: spend less than what you earn and spend within your means, and track your spending.
• Change Your Outlook – Change your outlook from my money, your money to our money. Once you are married – your incomes, debts, money, finances, everything become OURS. That’s the purpose of marriage or staying in a relationship.
• Maintain Joint Accounts – Always maintain joint checking and savings accounts. This forces you to work together and it’s easier to manage one account than many accounts. Joint accounts provide the extra boost to become financially successful as couples. It reminds you that you two are one now, and your financial success depends on how you can plan and act jointly.
• Maintain Two Separate Credit Cards – You need to do this to have better credit scores. Better credit scores will help you to get lower interest rates on your loan to buy large item purchases such as house, car etc.
• Don’t Hide Anything – Never hide anything from your partner. If you have bought an expensive item impulsively, discuss it with your partner. It is better to tell him something you did without his knowledge now, rather than him finding out years later.

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The Joy of Not Working

Imagine that an undergraduate engineering student is doing the following:

• Taking a year off

• Quitting school not once, but twice

• Skipping 85% of his classes

• Failing first-year English three times
  

If he is in a class of 250 students, what would you expect him to rank? The last possible rank (the 250^th) or maybe the 150^th?

This is not an imaginary story. This student is now the world famous author Ernie Zelinski. He did graduate, ranking 7^th among those 250 students. Zelinski’s international bestseller The Joy of Not Working has sold over 250,000 copies and has been translated into 17 languages in 21 countries.

I just finished reading this book, and was greatly inspired by it. While reading The Joy of Not Working, I had the feeling it was I, not Ernie who wrote it. I could not have agreed more with everything he said, each paragraph, every sentence, and every word. It was such a feeling … it was just like reading my own thoughts expressed eloquently by someone else. Perhaps this is because I am going through a phase in my life in which I desire to live on my own terms, and that is what Zelinski talks about in this book.

I am happy to announce that Ernie Zelinski has agreed to an interview request.  The interview will be conducted sometime next week, and I would like to offer my readers the opportunity to ask him some questions.  Please email me your submissions over the next few days.  I will pick a few of the best ones and include them in the interview. Also, I will be doing a review of The Joy of Not Working shortly.To submit your questions, you can email me through contact page, or you can leave a comment right underneath my postings.

Twenty- five summers ago, Ernie Zelinski asked for two months off work. His boss declined, but Ernie decided to take two months off anyway. He was fired upon his return. That was his last job and he has not worked since then.

Free E-Book – Download the preface, Chapter 1, and Appendix from The Joy of Not Working.

Buy the full version here

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PayPass is not yet widely available. Not all credit card companies and merchants offer PayPass enabled cards and terminals. Tim Hortons, Petro Canada, No Frills and Loblaws are among few merchants to accept PayPass.

I encountered similar situation at many PayPass merchants. At Tim Hortons, whenever I presented a PayPass credit card, the cashier did not know what to do with it; furthermore, she had to call someone else to show her how to put through the transaction. At some stores, I was told it does not work. At a Cineplex theatre, once I showed my PayPass card – the rep at the counter pushed aside the PayPass reader saying it’s broken. PayPass is supposed to be “Tap and Go”, but I wasted more time trying to use PayPass than Interac and regular credit card.

This is obvious that MasterCard and PayPass merchants rolled out PayPass service without training their staff. This should be a simple, non-expensive training, and it does not take a rocket scientist to figure this out. Before you try to come up with something to make consumers’ life simpler – train your staff first, otherwise, you will be making everyone’s life complicated and consumers will reject your products and services.

• Splash some water on your face to refresh yourself. This is a simple yet effective way to refresh yourself.

• Go out for a walk. A walk in the fresh air can give you renewed energy to stay up at work.

• Eat some fruits or drink their juices. Drinking coffee can give you instant adrenaline boost to feel revived but over time it causes exhaustion. Fruits and their juices can invigorate you without causing any side effects.

• Keep nature or other soothing photos on your desk. Nature photos can reduce stress and improve productivity.

• Avoid greasy fast food for lunch. Greasy food can make you feel tired and sleepy. Brown bag your lunch. Bringing lunch from home will not only save you money but also a lot healthier.

Devices like BlackBerrys and Cell Phones have become so integral to people’s lives that it is hard to imagine a day or even an hour without these high tech gadgets. Undoubtedly, technology has given us so much, but at the same time it has taken out some simple things of life. Being alone without any interruptions from any outside sources is one of them and there are times when you just want to be alone.

Millions of BlackBerry users felt what it likes to be without wireless email for the first time across North America. Due to a system outage, BlackBerry Users were not able to access their email from Tuesday night till Wednesday morning. Although this outage stranded lots of people, I think it’s a good thing to have once in a while. Do you remember when was the last time you did not have to worry about checking your email or you answering you cell phone? It’s scary how dependent we’ve become on these things and it is high time we set aside moments only for ourselves. If you go on vacations, try not to take your cell phone, BlackBerry or laptop with you. An ideal vacation should be totally free of regular interuptions. When I can’t afford to take vacations, I spend a day in the park or at the bookstore without worrying about my daily stuff. You will be surprised to see how invigorating these simple Not To Do items can be. So next time your BlackBerry stops working, don’t worry, enjoy evert moment because it wont last long.

A recent research found that in addition to all known benefits, green tea can even fight against HIV. The secret lies in a component called EGCG, which fights back HIV from taking control of immune system. Drinking green tea may lower the risk of HIV and also could slow down HIV spread. Although more research is needed, this is enough for me to start drinking green tea. I am sure there will be a lot more health benefiting news coming out in the future and there is no need to wait for any conclusive reports. I will start drinking green tea today and it will be one of my lifetime healthy habits.