How ambitious are you, financially, when it comes to New Year resolutions, or after receiving bonuses?
You’re most likely to say: “I’ll start saving RMX a month” or “I’m putting aside RMX for my emergency fund” and the wish list goes on.. But what happens 3 to 6 months down the line? Those resolutions would have altered completely to: ”Oh, I need to do some renovation to my kitchen” or “ This month is our wedding anniversary, I would like to take my wife on a nice vacation overseas”. Not that you can’t enjoy all the goodies, but like any other resolution, unless some action is taken on your part, nothing will ever change!
Most people face this dilemma when they have money in their hands – to save or to spend! Unless they decide to save, their financial future will be very bleak. Let us define the meaning of dilemma. According to Meriam-Webster Online dictionary, is a problem involving a difficult choice. A situation where you cannot decide what to do! Saving or spending has always been the most talked about topic in the area of financial planning because this is a basic decision one has to make in order to achieve financial independence!
Let’s look at the typical savings dilemma within each age group. These dilemmas differ as they grow older and hopefully become wiser!
The Savings Dilemma
Ages 21-30
I don’t need to save now… I’ve just started work
I don't earn a lot yet, and I'm entitled to a little fun while I'm young.
There is plenty of time. I'll start saving when I earn more…
Ages 31-40
I can’t save now….. I have a lot of financial commitments.I've got a growing family on my hands. It takes all that I have to keep them going. As soon as the children are a little older, I'll start to save.
Ages 41-55
I can’t save now…
I've got three children studying in college. I need to pay for their education.
My medical bills are piling up; my old car is acting up;
I have yet to settle credit card bills from previous family trips.
I can't save yet
Ages 56-65
I can’t save now…I know I should. I’m living on my EPF money...but it will only last me less than 5 years. If only I started saving 30 years ago, then I might be able to enjoy a nice vacation...
But it's too late now. You can't save when there's no income.
Sounds familiar? If you do not want to end up regretting and blaming yourself later, then you need to get rid of those dilemmas and save.It takes all that I have to keep them going. As soon as the children are a little older, I'll start to save.
Ages 41-55
I can’t save now…
I've got three children studying in college. I need to pay for their education.
My medical bills are piling up; my old car is acting up;
I have yet to settle credit card bills from previous family trips.
I can't save yet
Ages 56-65
I can’t save now…
I know I should. I’m living on my EPF money...
but it will only last me less than 5 years. If only I started saving 30 years ago, then I might be able to enjoy a nice vacation...
But it's too late now. You can't save when there's no income.
Sounds familiar? If you do not want to end up regretting and blaming yourself later, then you need to get rid of those dilemmas and save starting from NOW!! It’s never too late to start saving, better late than never!
You see, saving money isn't about sacrifice. It’s more of making small adjustments here and there. No matter how much you make, you can still save. If you earn less, then start with a small amount. As long as you follow the rules of living within your means, then you won’t go wrong. So, don't wait until you have more money to start saving. Start immediately because saving money is one of the means of building wealth and the smartest way to prepare for your financial future.
How do I do it?
All you need is to have financial-discipline which is about controlling your spending and making sure you pay for the things that need to be paid. What you need is to create a budget and implement it. If you cannot control your spending then no matter how much money you make it will never be enough. Control your WANTS, get only what you NEED, say NO to impulse buying and follow your budget strictly, then you’ll be alright.
Once you have changed your spending habits, the rest will follow through smoothly. A key part to financial success is learning the skill of discipline and spending wisely. Once you are able to accomplish both of these objectives, you will be well on your way to save more!
But, how to stay disciplined? Among other things that you can do are as follows:
Set a Goals
Make sure you set a goal that is SMART (Specific, Measurable, Attainable, Realistic, Timely). An example of a goal could be; I want to have RM15,000 in two years as deposit for a house. The ensuing action for the goal could be to save RM625 every month. Setting goals is likely the first step to turning dreams, ideas, and wishes into REALITY! When you set a goal, you commit yourself to achieving your goal.
Use Rewards and Punishments
If you are able to maintain your budget or able to reach your goals, then perhaps you can reward yourself a treat. However, if you suddenly find yourself going over the budget, then as a punishment, you may have to forego some pleasurable activities.
Automated Savings
For those who feel that savings on regular basis is a choice, one option could be through forced saving, which is via salary deduction.
Accountability
It is always good for you to share your goals with your spouse or a close friend. By doing that you are in some manner accountable to them. They may from time to time ask you about your goals, and surely you want to show that you are competent enough to stick to your goal.
In conclusion, it doesn’t matter how much you save. What is important is that the earlier you start saving, the more time that you’ll have to accumulate a really large nest egg for the years ahead. Stay consistent and be disciplined and god willing, when the time comes you know that you are financially prepared for them.
Thursday, September 11, 2008
Living On Less Money
What goes up and never comes down?
Besides your age, the price of goods and services is a possible answer too! In fact of late, there has been much talk about rising food and fuel prices all over the world. With prices going up and income remains relatively stagnant, it’s very important that we learn how to live more prudently.
What does it mean to be Prudent?
We may not like to use this word in our daily lives but we are going to hear it more often today than ever. Ask our forefathers and most often than not, they would tell us that their lifestyle was synonymous to this word. People today may be earning more than their forefathers, much more, but somehow, we are constantly a little short of cash, what more to save. It’s really not surprising because in those good old days you can buy a bowl of noodles for five sen whereas today, even a beggar would snub at the five sen that you dropped into his bowl!
Being prudent or frugal simply means managing in order to save. It means getting the most for your money. People who are prudent constantly find ways to save time, money and energy and let us state that being prudent does not mean being a “cheapo” / stingy or “kiam-sap”, as the Hokkiens call it. How can I practice being Prudent or Frugal?
There are many ways to live on less money and below are some suggestions to help you stretch your Ringgit further:
• Reduce your daily expenses – before you buy anything, ask yourself:
1. Do I really need this?
2. Can I get it cheaper somewhere else?
3. Can I get it for free?
• Cut something big out of your budget – go without a car (ouch!) and save on petrol, repairs, road tax, insurance and tolls or for being less harsh, try scaling down on your car type, like going for lower capacity vehicles.
• Use less – turn off the lights when not in-use and switch to energy-saving bulbs, cut-down on air-cons, wash full loads of clothes and dry them outside (rather than using a drying machine) and turn off all electrical appliances when not in use.
• Reduce waste – use paper on both sides (go paperless, whenever possible!) and use cloth diapers rather than disposable ones.
• Reuse or Recycle – compost your wastes, wherever possible (which can be used to plant your own vegetables!), grow a garden & turn your trash to cash!
• Make things last longer – mend clothing, re-glue shoes, and fix things before they’re beyond repair.
• Find new uses for old things – paint old furniture, make quilts from old clothes and convert old large tables as desks. In other words, recycle, recycle, and recycle!
• Find cheaper substitutes – buy generic brands, shop at garage sales, rent instead of buy
You can also be frugal by taking care of your needs in creative ways, by sharing with others and buy using community resources. Here are some other ways to save:
• Find free or cheap entertainment. (we’ll talk about this more later)
• Share big purchases.Sharing can help you get what you need for less money. For example, you may share a ladder, drill and perhaps a vacuum cleaner with your neighbours. You can also share a lot of your children’s play equipment with your friends or family members and car pooling is certainly another good example.
• Trade or barter for services or products.Yes, we are living in a modern world but who says that we can’t practice bartering? In fact, you can trade or barter all kinds of things. If you can give a good haircut and your friend bakes very good cakes, trade your skills. You both get something you need and you both save money. Think about your skills, the things you enjoy and the things you do well. Next, think about the skills and talents of your friends, family and neighbours. Check around to see if someone wants to trade with you. Start out with something simple and see how it works. Who knows, you may someday create another “eBay”!
How can I save money on Entertainment?
This is one area where we spend quite a lot without realizing. However, it’s still possible to get good wholesome entertainment for free or almost free. Just because you’re trying to save money doesn’t mean you can’t have fun. No matter what your income, make time to relax and enjoy (after all, you only live once!) It’s probably even more important when you have less money. Without fun, it’s hard to lead a healthy life. Here are some suggestions:
• Borrow books or attend seminars/ programmes for free from the public library
• Rent a video and try making your own kacang putih / cookies instead of going to the cinema
• Visit the museums, zoos or the parks and enjoy the fresh air (depending on where you are!)
• Look out for free concerts, kid’s programmes and family activities from the newspaper or through the tourist information centres/ websites
• Take an inexpensive class through community education, learn a new craft or revive an old interest. You can even convert that hobby into a business
• Attend free book readings for adults and kids at your local bookstores or library
• Walk, hike or bike to explore something new or visit a favourite place
• Watch the sun rise and set, find constellations in the sky, or perhaps start a project with your family like planting a tree (durian or mango trees would be perfect as that will help you save money on fruits!)
There’re a whole lot of other ways to enjoy cheap, good and wholesome entertainment, if you care to look around (just get onto the internet and run a search on “prudent lifestyle” or “frugal” and you’d be amazed as to what you’ll find!). In fact, another interesting activity that you may want to try is “people-watching”! Sit by the parks or malls and just observe what people do, how they walk, talk and laugh and how some parents “communicate” with their kids. There’s a lot to learn by just observing other people and best of all, it’s FREE!
Conclusion
Living on less money does not necessarily mean living any less. It’s more about living our lives more abundantly and purposefully and not merely living for others. Being prudent in all aspects of our lives is the cornerstone of wealth-building. If you hope to be financially free someday, you’d need to make prudent financial management a way of life, no matter what your income level or status.
Be a Smart Consumer and let’s “Make Prudent Financial Management A Way of Life” today!
Besides your age, the price of goods and services is a possible answer too! In fact of late, there has been much talk about rising food and fuel prices all over the world. With prices going up and income remains relatively stagnant, it’s very important that we learn how to live more prudently.
What does it mean to be Prudent?
We may not like to use this word in our daily lives but we are going to hear it more often today than ever. Ask our forefathers and most often than not, they would tell us that their lifestyle was synonymous to this word. People today may be earning more than their forefathers, much more, but somehow, we are constantly a little short of cash, what more to save. It’s really not surprising because in those good old days you can buy a bowl of noodles for five sen whereas today, even a beggar would snub at the five sen that you dropped into his bowl!
Being prudent or frugal simply means managing in order to save. It means getting the most for your money. People who are prudent constantly find ways to save time, money and energy and let us state that being prudent does not mean being a “cheapo” / stingy or “kiam-sap”, as the Hokkiens call it. How can I practice being Prudent or Frugal?
There are many ways to live on less money and below are some suggestions to help you stretch your Ringgit further:
• Reduce your daily expenses – before you buy anything, ask yourself:
1. Do I really need this?
2. Can I get it cheaper somewhere else?
3. Can I get it for free?
• Cut something big out of your budget – go without a car (ouch!) and save on petrol, repairs, road tax, insurance and tolls or for being less harsh, try scaling down on your car type, like going for lower capacity vehicles.
• Use less – turn off the lights when not in-use and switch to energy-saving bulbs, cut-down on air-cons, wash full loads of clothes and dry them outside (rather than using a drying machine) and turn off all electrical appliances when not in use.
• Reduce waste – use paper on both sides (go paperless, whenever possible!) and use cloth diapers rather than disposable ones.
• Reuse or Recycle – compost your wastes, wherever possible (which can be used to plant your own vegetables!), grow a garden & turn your trash to cash!
• Make things last longer – mend clothing, re-glue shoes, and fix things before they’re beyond repair.
• Find new uses for old things – paint old furniture, make quilts from old clothes and convert old large tables as desks. In other words, recycle, recycle, and recycle!
• Find cheaper substitutes – buy generic brands, shop at garage sales, rent instead of buy
You can also be frugal by taking care of your needs in creative ways, by sharing with others and buy using community resources. Here are some other ways to save:
• Find free or cheap entertainment. (we’ll talk about this more later)
• Share big purchases.Sharing can help you get what you need for less money. For example, you may share a ladder, drill and perhaps a vacuum cleaner with your neighbours. You can also share a lot of your children’s play equipment with your friends or family members and car pooling is certainly another good example.
• Trade or barter for services or products.Yes, we are living in a modern world but who says that we can’t practice bartering? In fact, you can trade or barter all kinds of things. If you can give a good haircut and your friend bakes very good cakes, trade your skills. You both get something you need and you both save money. Think about your skills, the things you enjoy and the things you do well. Next, think about the skills and talents of your friends, family and neighbours. Check around to see if someone wants to trade with you. Start out with something simple and see how it works. Who knows, you may someday create another “eBay”!
How can I save money on Entertainment?
This is one area where we spend quite a lot without realizing. However, it’s still possible to get good wholesome entertainment for free or almost free. Just because you’re trying to save money doesn’t mean you can’t have fun. No matter what your income, make time to relax and enjoy (after all, you only live once!) It’s probably even more important when you have less money. Without fun, it’s hard to lead a healthy life. Here are some suggestions:
• Borrow books or attend seminars/ programmes for free from the public library
• Rent a video and try making your own kacang putih / cookies instead of going to the cinema
• Visit the museums, zoos or the parks and enjoy the fresh air (depending on where you are!)
• Look out for free concerts, kid’s programmes and family activities from the newspaper or through the tourist information centres/ websites
• Take an inexpensive class through community education, learn a new craft or revive an old interest. You can even convert that hobby into a business
• Attend free book readings for adults and kids at your local bookstores or library
• Walk, hike or bike to explore something new or visit a favourite place
• Watch the sun rise and set, find constellations in the sky, or perhaps start a project with your family like planting a tree (durian or mango trees would be perfect as that will help you save money on fruits!)
There’re a whole lot of other ways to enjoy cheap, good and wholesome entertainment, if you care to look around (just get onto the internet and run a search on “prudent lifestyle” or “frugal” and you’d be amazed as to what you’ll find!). In fact, another interesting activity that you may want to try is “people-watching”! Sit by the parks or malls and just observe what people do, how they walk, talk and laugh and how some parents “communicate” with their kids. There’s a lot to learn by just observing other people and best of all, it’s FREE!
Conclusion
Living on less money does not necessarily mean living any less. It’s more about living our lives more abundantly and purposefully and not merely living for others. Being prudent in all aspects of our lives is the cornerstone of wealth-building. If you hope to be financially free someday, you’d need to make prudent financial management a way of life, no matter what your income level or status.
Be a Smart Consumer and let’s “Make Prudent Financial Management A Way of Life” today!
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