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Money Matters: Material Challenges for Malaysia’s Gen-Y’$

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Money, money, money…it’s a Gen-Y’s world! ;)

 

pg34-37 featuremoney matters_Page_1Having a higher education, working on assignments and sitting for final exams can take a heavy toll on the average student. Yet, one’s life does not end there simply because one finally possesses a diploma or a degree. As the education life ends, the working (or employment) life begins. Since generally most Gen-Y youths live with their parents, they are literally dependent upon their respective families for income and support. These youths live in a generation whereby everything they have ever wanted or yearn for are easily within their means and grasp. Unless they come from well-to-do families or they are of a wealthy background, either one or both their parents would probably be working in order to provide a living for the entire family. Many of our parents lived during a time when money is hard to by. For them, a higher education is practically out of reach or almost an impossible dream, unlike their children’s generation. However, building a secure future for their children comes with a hefty price and unending sacrifices, not to mention the bleak economic outlook and uncertain economic challenges ahead. Henceforth, whatever our family’s financial circumstance, we should always pay tribute to our parents’ constant toil and untold sacrifices for the sake of our upbringing, social welfare and overall happiness. The real challenges go beyond merely a piece of certificate or an academic qualification. So to all the Gen-Y folks out there, whatever your status in life, bottomline is money truly matters!

 

 

Living the exorbitant dream

Here is the stark or naked truth: trying to manage your finances in your 20’s is tough. Even the working crowd who are in their 30’s will tell you the same thing as it is not something you simply stop or discontinue doing. Of course, looking at where you tend to overspend and try to save for your future is the smart thing to do. However, in reality, that is neither always nor necessarily the case, or even the fun thing to do. But what if you are forced to spend a certain amount of money per month whether or not you like it or want to? We are not talking about luxuries such vacations or holidays, and even shopping sprees. In general, the cost of living around the world is booming or skyrocketing. In Malaysia, the elevated price of everyday essential goods, which include food products, is real a cause for concern.

 

Furthermore, when the Budget 2014 was announced the previous year, it was announced that a GST (Goods and Services Tax) with a flat rate of 6% would be implemented since 1st April 2015. If you are in the dark or ignorant about what GST is all about, it is fundamentally a broad-based consumption tax covering all sectors or aspects of the economy, i.e. all goods and services made in Malaysia including imports. Yes, it affects Malaysians rich and poor, old and young, employed or unemployed, etc. So why do we need to pay such taxes? The answer is, so that the government can finance socio-economic development; which includes providing infrastructure, education, welfare, healthcare, national security, etc. Even then, for those involved in education and healthcare, the overall cost continues to climb or rise!

 

The daily expenditure dilemma

Never mind our national five-yearly budgets, have you actually thought about how much money is actually “draining” out of your pockets on a day-to-day basis? Call it the ‘cash drain’ or whatsoever, but before you complain about how broke you are, have you really taken into consideration what could be causing this persistently nagging dilemma of yours? Let us put that into perspective and see the bigger picture. Take for example, branded coffee such Starbucks. We all know that the outlet and its beverages continue to be popular despite the price hike, with an average price of RM12 per drink. With the implementation of GST, your favourite Starbucks Frappucino could easily cost you or set you back about RM13 or more, if you take the rise in the prices of the materials needed (i.e. coffee beans, milk, sugar, cups) and logistics (transportation of the necessary materials) into account as well!

 

Would you perhaps pay RM17 for something that you used to pay RM12 for? Even if you would, how often are you willing to do that? That is without even considering the cost of transportation, e.g. toll, petrol charges and parking fees nowadays! But, it does not mean that you should walk in the scorching sun, just to save on auto-related expenses. Say you need to head off to somewhere for a group assignment. In many situations, it would be a far better option to car-pool with your group members than to drive separately or individually. Carpooling is not just for the environmentally-conscious, mind you! And what about public transportation (i.e. bus, train, LRT)? If it is within your reach and convenience, why not?

 

Purchasing your own home

For instance, let us assume a fresh graduate is earning around RM2,300. He or she will have to bear an accumulated monthly expenditure of at least RM2,086.60, leaving only a meagre RM213.40 for savings. This is of course based on average calculations, which has already factored in car loans, tolls, parking, petrol, room rental, utilities, food/groceries and parental stipends/allowances. What if you require a minimum of RM300,000 to purchase a home, and it is not even the lavish or landed property type in the Subang Jaya or Damansara areas?

 

How long will it take to you save to fork out enough for the down payment of the respective “affordable” home in question? What remains in one’s savings is hardly enough for sure! Let us not forget that the price of property will continue to increase year by year. Even after you have purchased a home, you must not forget that there will be other charges and fees that accompany your maintenance as well as monthly loan repayments. And what if you are still repaying your student loan, and insurance policies (i.e. life, medical, auto) for that matter?

 

 

 

Fiscal discipline and budgeting – In today’s uncertain economic outlook, it is always wise to have a budget or some sort of financial plan, and to consistently stick to one! It is the most important tool to properly plan the ‘in-s’ (debit) and ‘out-s’ (credit) of your pocket or your personal finances. If you spend less than what you earn, you will definitely end up with a surplus that leads to savings and investments. You would not want to end up with a deficit budget that will require loans or the tightening of your belt, would you? If you continuously pile up on deficits, say for over a decade, you are buying a one-way ticket to financial hell!

 

Saving for future contingencies – Inculcating a good habit such as saving for the rainy day may be a good thing, but there are different types of rainy days or emergencies. In fact, a ‘predictable rainy day’ is when you know it will fall or occur during which time you need to pay off your debts or loans. With an ‘unpredictable rainy day’, you will never know or guess the severity of the event itself until it actually happens, when it is already too late by then. Untoward incidences such as accidents or illnesses usually fall under the “unpredictable” category. By diligently saving each month on a constant & consistent basis, you will be better prepared when something bad or unlucky happens to you or your family members.

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Savvy saving & smart investing – Being smart or savvy with one’s money does not always mean putting it into a bank account and earning monthly interest. The measly interest you are getting will be constantly compromised by inflation. You would probably lose more money that you could ever earn, unless of course your savings are in the millions. Fixed deposit accounts are not much better because you get less than 3-4% interest at the most. Unit trusts are no better either. Then again, there are insurance and other investment plans.

 

Hollywood celebrity actor/singer Will Smith once quipped,

“Too many people spend money they haven’t earned, to buy things they don’t need, to impress people they don’t like.”

If you spend your own money on or for yourself, it is considered prudent. If you spend your own money on or for others, it is considered generosity. If you spend someone else’s money on or for someone else’s interest, it is shoe-shining, bribery or corruption. Spend according to one’s affordability and rationality, as well as cut wastages and leakages. Besides, you really do not need to impress anyone and philanthropy is not going to spawn more cash in your bank account either. Bottomline is, wants (desires) and needs (necessities) are two very different things altogether; we sometimes tend to become confused with our economic priorities. We need to live and consume within our means, to save wisely at the very least. At times, it can be a struggle but ultimately, it is all about the choices we make in our lives that matter. If you do not expect to support others later on in life, perhaps owing to bad money-making decisions or solely due to poor financial management, do not expect others to support you too anytime soon. In hindsight or retrospect, “There is always enough for everyone’s needs, but never for everyone’s greed.” ~ Mahatma Mohandas Gandhi. – HFM

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