Studying Hard vs Financial Planning

I recently had a conversation with a university friend whom I hadn't met in 25 years. During our conversation, my friend, who has two children, mentioned an intriguing question asked by one of their children: "Why should we study so hard when the government approves a minimum wage starting at RM 1,500 per month?" My friend was stunned by this question, and I couldn't help but smile. Determining Your Future Salary The real question to ask is, "How much will be your last drawn salary if you start with RM 1,500 per month now?" Let's assume you begin working at age 20 and plan to retire at age 60, giving you 40 years of working life. For the sake of simplicity, we'll assume a permanent annual salary increase of 4%. The answer is that your last drawn salary upon retirement at age 60 will be RM 7,201.50 per month! In contrast, considering an article that suggests a fresh graduate's starting salary will be RM 2,500, and assuming a permanent increase of

A Young Boy Teaches His Father About Financial Planning

Mr. A has a son and his name is Ah Boy. Ah Boy has a bad posture, which requires regular visits to a chiropractor. Although Mr. A has been taking Ah Boy for treatment and encouraging him to do daily core muscle exercises, the chiropractor suggests a more intensive rehabilitation that comes with a higher medical fee. Mr. A is upset and stressed because of the current economic situation and higher inflation impacting his household expenses. However, he doesn't want to burden his son with his frustration.

Mr. A takes this opportunity to involve Ah Boy in financial planning by asking him to calculate how much they need to spend on treatment every month. Ah Boy realizes that the intensive rehabilitation will cost them a few hundred dollars more each month. To avoid the additional expenses, Ah Boy promises to practice the core muscle strength exercises regularly at home, which will make him stronger and better.

If you are facing a similar situation, whereby your expenses are increasing faster than your income, here are some practical ways to handle financial challenges:

Reduce Expenses: 

Take a closer look at your expenses and identify where you can make cuts. You can start by differentiating between needs and wants. If you are driven by marketing ads and promotions, most of the time, that is a luxury expense. Try to reduce your spending on such items. For example, instead of eating at an expensive restaurant, try cooking at home. Instead of going to the movies every month, go every two months. By reducing your expenses, you can create a positive cash flow every month.

Increase Income: 

To increase your income, you can look for better career opportunities, start a small business, or engage in part-time work. This will require some planning and effort, such as updating your resume, networking with people in your field, or learning new skills. However, increasing your income is a longer-term strategy that can have a significant impact on your financial situation.

Financial planning is a vital skill that is not often taught in schools. It is up to us as parents to educate and instil good financial behaviour in our children. By involving our children in financial planning and decision-making, we can help them develop practical skills and a positive attitude towards money management. By reducing expenses and increasing income, we can handle financial challenges and achieve our financial goals.


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