Manage your money NOW!

This i have to write about, as i feel that it is very relevant and applicable to all those who have just started work recently, or even for those who have a fixed amount of income every month(scholarships, PTPTN loans, parents allowance, etc.), or even those who have been having troubles saving money living in a country where pay is low and expenses are high compared to developed countries like the US, according to Soo Hooi, where pay is 3.5 times more but expenses are the same as us here.


Well as an introduction, Soo Hooi's mom came over for the weekend and made dinner for us on Monday night, followed by a brief yet educational sharing on financial planning. For those who think they seem to be only barely surviving to make ends meet, with rent and transportation and food expenses taking up most of your salary, and entertainment expenses are difficult to compromise to maintain a healthy social life. its very interesting to identify what is necessary and unnecessary, and how to make your money last for you and prepare for emergencies. Here's the guideline on how to breakdown your finances. see if you are adhering to it. its a sample of my current budget against the guidelines, which is flexible, depending on how much you value certain things in life. below is the actual amount i spend, and the percentage is based on my current Net salary.


Rent 145 6.53%
Utilities 30 1.35%
Transportation 120 5.41%
Prepaid 100 4.51%
Tithes 251 11.31%
Food 345 15.55%
Parents 500 22.53%
Total Expenditures 1491 67.19%
Savings 500 22.53%
Total liquid balance 228 10.27%


The guidelines are as follows:

1. 60% expenses (rent, food, transport, entertainment, income tax, travelling, shopping, etc)
2. 15% children education(without children then can split between expenses and investment)
3. 15% investment/retirement fund(unit trusts, stock market, ASB, must be 8% return on investment to be worthwhile, usually short term return on investment at 5 years)
4. 10% insurance (36 illnesses, savings)

Before you embark on any investment, you start saving on FD first. you should accumulate 3-6 months expenditure, like me, RM1491*3, to put in FD, just in case i lose my job or unpaid leave then can cover my expenses for 3 months, or more depending on how much you want to put in FD. FD rates are low, and if you withdraw earlier that the stipulated date then you lost the gain from interest. so best if you open a few FD accounts with different maturity deadlines so can minimise the loss since you'll never know when you will need the money.

then insurance is separate from the coverage you have with any company, one example is the plan that covers 36 critical illnesses where if anything happens to you then you get the cash lump sum amount unreceipted, meaning if anything happens to you, once doctor certifies as such, then you get the cash without any questions asked.

insurance can also be used for savings, but not for investment purposes because elsewhere, the ROI is higher.for those who dont know what ROI is, its Return on Investment, simple explanation is for an amount you choose to invest, the amount you will gain from it. as a guideline, any investment is considered profitable and worth pursuing if it gives a return of 8%. meaning for every RM1 you invest, you gain 8% on top of your initial investment. In the insurance case, the guideline is that you opt for the longer duration and larger amount, since the earlier you start on insurance, the more you gain in a sense you pay less in a long time, which is OK because youre paying off the money at a fixed inflation rate. hope it makes sense, that was what i understood and digested throughout the whole session, more information ahead.

Then comes investment, where there are such "instruments" as unit trusts, ASB, Stock market. whatever the investment, depends on how long youre willing to wait. ASB actually doesnt really offer that good rates, because its called Simple interest calculation, since you will need to withdraw all your money and buy again the next time it opens, if im not mistaken, so technically youre only earning between 4-5% keuntungan as opposed to the current inflation rate of 3.5% (if youre getting 9% interest from putting into ASB), when you can gain about 8% on unit trusts or other investments, which is actually not as risky as you think, just that might take longer than usual to get your returns.

So that's about all the information i have for now, which i am compelled to share about as i understand how difficult it is to make ends meet when you're just starting out and we're all officially not supposed to be financially dependent towards our parents already. the goal of financial planning is to be financially independent, which has different meanings as listed below:

1. being able to support yourself without anyone's help
2. being able to manage your expenditures with your earnings regardless of the size of your paycheck.
3. being able to sustain yourself in emergency
4. being able to gain from your investments without putting much effort - goyang kaki dapat duit!
5. being able to live comfortably way past retirement, while providing a comfortable life for your family and dependents.

so yeah i hope that everyone should get started on planning your finances, as it would be easier to manage small amounts( also for those who were lucky to start off with a significantly large paychecks), while taking advantage of our current situation where majority of us are without commitments and we can leverage on the time for our money to grow since we're still so young(my juniors beg to differ on this statement:S) and it also applies for those who are still studying. the earlier you get a headstart and make a habit out of it, the better off you are in being good stewards of God's blessings, which are what we are called to do when we're here. here's all i have to say for now. all the best in planning for your future!

p.s. i just realised that this blog ignores whitespaces no matter how much you tab. i it is because (prepared for some IT indulgence) that HTML ignores whitespaces so even if you put a single word by pressing the "enter" key many times it doesnt come out as you want it to be, you need to include "<""p"">"<""/"p">" to form a paragraph and insert your text into the "p tags" to make it like this:

these are lines of nonsense where i am trying to use to make a point
There's another tag you can use to get the text aligned exactly as how you want it to be but i forgot its name so you need to google and find out yourself.

i had to insert double quotes in the p tags to make it visible else it would not appear on the page. when using them, disregard the quotes.so much for being of help. haha, enjoy!