Money Wise

“I make money because I have to pay for everything apart from my school fees. My mother even makes me pay my own telephone bill.”

-Ivanka Trump-

daughter of Donald Trump, who works in her father’s conglomerate.

Sharon, 35, and her husband, Andy, are professionals with an expensive lifestyle. While both were single, they enjoyed dining out, going on holidays and generally living it up. After getting married, they continued with this lifestyle, until their first child came along and they started talking to other friends with young children.

They learnt that having children is not cheap! Both realized that if they continued their current way of life, they would not be able to afford a good education for their little ones; neither would they be able to retire comfortably. 

So both sat down to review their monthly expenditure. they found that there were many items that they could cut down on, such as limiting themselves to one holiday a year rather than the three they were taking.

They also decided to sell off one of the three cars they owned. By doing just this, they found they had RM5,000 extra each month to put in savings and investment.

By telling this morale story, you should now change your lifestyle. Don’t eat at Posh restaurant everyday.

When it comes to your children, remember that you are not doing them any favours by giving them everything they ask for. It will help them in the long run to learn the value of money from young.

Once they are old enough to accompany you to the supermarket or any other shop, let them know beforehand that you are out to get groceries, or a present for Auntie N, and that you are not going to buy them anything. If you keep doing this, and stick to your guns, your child will soon realize there is no point in kicking up a fuss about that lillipo or toy that he feels he just has to have!

As soon as your children are old enough to handle pocket money (generally when they enter primary school), you could start teaching them to handle their own money by giving them a weekly allowance.

Let them know that you will buy everything they need, and that their pocket money is for them to use on the little extras that they would like to have. As they grow older, they will probably want computer games and other items which their pocket money will probably not be able to pay for (unless they saved for years).

At this point, you could introduce them to the idea of earning money. This they could do, for example, by taking additional chores around the house, or by doing very well in school.

Bad habits spell bad news. They could lead you to serious financial problems. But you are not stuck with them. The first step in correcting bad habits is to recognize you have them. Only then can you actually do something about them. Here are some tell-tale signs:

• You are using your savings to pay off current bills; savings are savings, they should not be touched. Your bills should be paid for by your monthly income
• You are often late in paying bills or are paying them only after receiving the warning notice
• You have to take new loans to pay for your existing loans
• When you are out shopping, you buy things that you know you don’t really need
• You are borrowing money from friends and family members and at the end of each month, you find that you owe them more money than you can
• You begin to delay or defer your loan repayments

If you stick to your budget, you should not have to resort to any of the habits above. Not only will you have a clean bill of financial health, you will also be in a position to start planning for your future needs.

A good number of us will have attempted making a budget at some point or other in our lives, but will have abandoned ship soon after. Here are some reasons we stop:

• We don’t keep track of our expenses - for this, we need to keep all pur bills and receipts, and enter them into a log either daily or at least weekly. Left too long, we will start losing and misplacing our bills, etc
• We were unrealistic in making our  budget, and then got frustrated when we kept spending more than allocated. To prevent this from happening, don’t go overboard unnecessarily in keeping costs down.
• We allow ourselves luxuries over and above what we have budgeted for, telling ourselves that we will simply cut our expenses the following month. As tempting as this is, don’t do it. Especially with luxuries. If there is something you want which you cannot afford now, you need to save enough before getting it, rather than the other way round.