Cost of Living Expenses Salary Changes and Personal Debt | Top Three Financial Worries

An International Survey was done by Visa on Top Financial Concern and Confident level recently.

The survey involved 5,520 respondents aged between 18 and 65 years, from Asia Pacific, namely Australia, China, Hong Kong, India, Indonesia, Japan, South Korea, New Zealand, Singapore, Taiwan and Malaysia.

Out of 5,520 respondents there are 500 respondents  are from Malaysia.

Malaysians have identified cost of living expenses, changes in salary and personal debt as their top financial concerns this year as economic concerns linger.

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Main Concern

1) Cost Of Living Expenses – 69%

2) Salary Changes  -62%

3) Personal Debt  – 59%

Confident Level on Personal Financial Situation

1) More Confident About Their Personal Financial Situation Compared To Six Months Earlier  –25 %

2) Felt There Would Be No Change. –52%

3) Less Confident Than Earlier – 23%

 

High-Cost-of-Living

 

Less Worried

1) Value Of  Retirement Fund And Portfolio

2) Fluctuating Interest Rates

The survey show consumers are looking at their expenses, their savings and their job security to see how they can manage these rather than focusing on longer-term or more macro-economic conditions such as exchange rates, interest rates or investment portfolios

 

What is your Main Concern and Confident Level on Personal Financial Situation then?

Feel free to comment below.

 

 

Survey: Cost of living, salary and debt main concerns for Malaysians

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Cost of living, salary changes and personal debt are the top three financial worries for Malaysians, a survey by global payment firm Visa found.

In the survey conducted between Aug 21 and Sept 23 last year, 69% of Malaysians said they were extremely concerned about the cost of living expenses while 62% and 59% were worried about salary changes and personal debt respectively. “Malaysians were less worried about the value of their retirement fund and portfolio, and fluctuating interest rates,” the company said in a statement here yesterday.

However, 25% of those surveyed also said they were more confident about their personal financial situation compared to six months earlier although 52% felt there would be no change.

Only 23% indicated they were less confident than earlier.

Sixty-six per cent of Malaysians also said they were more concerned about the impact of the global financial crisis on the local economy.

The survey involved 5,520 respondents aged between 18 and 65 years, of whom 500 were from Malaysia.

The rest were from Australia, China, Hong Kong, India, Indonesia, Japan, Korea, New Zealand, Singapore and Taiwan.

Visa country manager Stuart Tomlinson said Malaysians were being practical during the current economic climate by focusing on managing their concerns, providing themselves with a level of security and peace of mind.

“For Malaysians, potential changes in salary levels are also of concern,” he said, adding that across the region, consumers were looking to see how they could manage their expenses, savings and job security, rather than macro-economic conditions such as exchange and interest rates.

fr:thestar.com.my/news/story.asp?file=/2010/1/15/nation/5475183&sec=nation

15 Responses to “Cost of Living Expenses Salary Changes and Personal Debt | Top Three Financial Worries”

  1. Learn to handle own money wisely
    ——-

    I REFER to “Survey: Cost of living, salary and debt main concerns for Malaysians” (The Star, Jan 15).

    Garry Kasparov, in his book How Life Imitates Chess, explains how one can improve one’s decision-making via calculation, evaluation and analysis. One’s success comes from harnessing the inherent power of these forces.

    The same principle can be applied to our personal financial management. Just think of cost of living, salary and debts as a game of chess.

    Let’s talk about the credit card. Much personal financial chaos comes from credit card mismanagement. The credit card is not

    a woman’s best friend and this is best conveyed in a movie titled Confession of a Shopaholic.

    The opposite works. Why not a debit card? Spend within our limits. The most important thing is to understand the difference between “needs” and “wants”. “Needs” are our necessities. “Wants” are mostly temptations which we can live without.

    Learning simple accounting principles also helps. We can enrol in elementary accounting class, learn from the financially savvy or read books like Rich Dad, Poor Dad.

    There are also simple personal cash flow software that we can purchase or download from the Internet.

    It’s important to distinguish between assets and liabilities. A car is a liability as it depreciates over time. We don’t have to buy big cars to show off if we can’t afford it.

    Don’t make sudden or impulsive buys just because of peer pressure or because your peer owns one. Think of things in appreciative and depreciative values.

    Don’t badmouth the company over your salary, which is very much tied to your education, experience and performance. Enrolling in relevant graduate or post graduate courses like those offered by Open University of Malaysia, Wawasan Open University, etc helps. Our value appreciates.

    A greater understanding on living cost, like studying our personal expenditures, helps. Could it be a huge chunk of our money is used to finance our personal bad habits, e.g. booze, smoking, gambling, etc?

    What about our personal eating habits? We can bring down the cost of food by consuming more greens, as greens are less costly. We can buy from less costly sources such as hypermarkets.

    Failure to change to be more financially savvy is no longer an option in an age of rising living cost. Learn to apply financial facts and figures in managing your personal finances. Knowledge changes one’s financial destiny.

    EDWARD WONG,

    Ipoh.

    fr:thestar.com.my/news/story.asp?file=/2010/1/18/focus/5492111&sec=focus

  2. Malaysian consumers continue to save for a rainy day
    ——

    Malaysian consumers continue to save for a rainy day despite renewed optimism, says a MasterCard Survey.

    The survey reavealed that economic uncertainty had caused 85 per cent of Malaysian consumers to either maintain or increase their level of savings, in preparation for unforeseen emergency expenditures.

    Among the different age groups, those in the 18-29 age bracket (90 per cent) are most concerned about saving for a rainy day.

    On a broader scale, the majority of Malaysian consumers (32 per cent) plan to save between 1-10 per cent of their income over the next six months.

    The three main categories of savings are, retirement (59 per cent), investments (38 per cent) and buying or upgrading property (29 per cent).

    The survey was conducted from Oct 1 to Nov 9 last year and involved 10,623 consumers from across the Asia/Pacific, Middle East and Africa.

    Three new African markets were added to the survey Kenya, Morocco and Nigeria bringing the total number to 24.

    According to the survey, while consumers across the Asia/Pacific, Middle East and Africa are feeling more optimistic about the six months ahead, many are not letting up in terms of stocking up their coffers.

    Economic advisor, Asia/Pacific, MasterCard Worldwide, Dr. Yuwa Hedrick-Wong, said: “While we see that consumers across this region have turned cautiously optimistic about the economy, they remain nevertheless concerned with its near term economic outlook.

    “This is understandable given the recent market volatility and its associated uncertainty.

    “Hence, precautionary savings are staying relatively high in the region, which in turn implies that some downward pressure on future consumption will likely persist.”

    fr:biz.thestar.com.my/news/story.asp?file=/2010/1/22/business/20100122142823&sec=business

  3. Budget for higher cost of living

    IT’S going to happen whether we like it or not. So, best to prepare ourselves mentally and financially to face higher prices of goods and services when subsidies are gradually cut.

    Last week, Minister in the Prime Minister’s Department Datuk Seri Idris Jala says the subsidies will have to go due to the Government’s widening budget deficit, currently a record RM49bil.

    While he says the phased cuts over five years will not result in inflation going over 4% per year, the vast majority of people will still have to make some adjustments, both in their lifestyles and their investment decisions.

    Concerns have also been voiced over how people will be able to cope with the rising cost of living since the average per capita income is around RM22,750 per annum.

    The “phased cuts” will still put pressure on most people’s wages, which many feel are already low and will include a broadly defined middle-class.

    The relatively low wages can be inferred from two sources – Employees Provident Fund (EPF) records, which shows that 70% of the fund’s 5.79 million active members as of past March have enough savings for a maximum of 10 years only.

    According to the records, there were only 7,464 members as of the end of last year who have more than RM1mil in their EPF accounts.

    The second source is the tax base, only three million out of an estimated 11 million workers pay taxes, meaning the rest do not earn enough to pay tax.

    When faced with higher costs of living and lower incomes, a budget becomes ever more important but financial planners say most people either do not have a budget or only have the vaguest idea of how much disposable income they have for spending.

    “It all boils down to having a budget but what’s of concern is that most people don’t have a budget so they tend to overspend,” CTLA Financial Planners Sdn Bhd managing director Mike Lee tells StarBizWeek.

    They also recommend people diversify their income in order to ensure some security in their retirement plans. This is also the advise of EPF’s public relations general manager Nik Affendi Jaafar.

    He says in a recent interview with Mingguan mStar that members should diversify their savings as what is in their EPF accounts will not be enough for their retirement assuming they live another 20 years after retirement at 55.

    “We advise our members to diversify their income and not depend on their EPF savings for their retirement,” Nik Affendi adds.

    Lee says the first rule of a budget is savings. “One must always save first after taking into account income tax, EPF and social security payments,” he says.

    Lee recommends reviewing the budget every quarter and as a general rule of thumb, to save 15% to 20% of net income before allocating for other spending.

    When it comes to making financial arrangements for investments, the same principle applies – “It will have to be adjusted according to the budget,” says Lee.

    For those who have a regular income or who are still working, the impact will not be significant since the subsidy cuts will be gradual.

    “The hardest hit will be retirees as they’ll have no choice but to make lifestyle changes,” Lee says.

    Meanwhile MyFP Services Sdn Bhd principal consultant Robert Foo suggests that people to sit down and plan their budget, especially those with young families and have future financial commitments such as children’s education and so forth.

    “They should sit down and plan. Otherwise they can hire professionals to advise them,” he says.

    Foo says the multiplier effect on the cost of living from the increase of petrol and electricity (the most common inputs in costing) should be seen from a long-term perspective.

    The Government, according to Jala, plans to increase petrol price by 10 sen to 15 sen by mid-year and thereafter an increase of 10 sen every six months until 2014 and reduce subsidies for gas, which will then increase electricity tariffs.

    “Don’t just plan for the next six months. Know your financial situation – that’s the secret to coping with the long-term rise in the cost of living,” Foo says.

    He adds that people must have a “wealth mentality” instead of a “cashflow mentality” where managing finances and investing is concerned.

    “You cannot control cost of living but you can control income flow by diversifying it,” Foo says, adding that when planning long-term, higher cost of living is always taken into consideration.

    fr:biz.thestar.com.my/news/story.asp?file=/2010/6/5/business/6395858&sec=business

  4. Families feeling the pinch due to higher costs

    PETALING JAYA: Administrative clerk Zainab Suboh wants the Government to take into consideration the reality on the ground when formulating policies as the rising cost of living is putting a heavy constraint on her household budget.

    “Every time I go to the supermarket I find that I can only buy less and less items with my RM200 monthly budget for groceries,” she said.

    Zainab, 32, said the Government must put the rakyat first when implementing policies.

    “The interest of the people should come first. Right now we are not feeling it because we are overwhelmed by financial constraints because of the rising cost of living,” she said.

    Zainab and her husband Md Fadzli Adnan, 33, earn a total of RM4,000 a month.

    “We live in a low-cost flat with three children aged two, nine and 10. I also have to spend RM300 a month on diapers and baby formula,” she added.

    She said that the baby formula was quite expensive, adding that the Government should look into providing subsidy for baby formula because infants need good nutrition for healthy growth.

    Lawyer Ron Tan, 44, said he and his wife Tan Su Yin, 40, who is a bank officer, find that their monthly savings keep decreasing by the year.

    “This is because of the higher inflation rate. We have to pay for essential goods and that substantially cut into our savings.

    “We are spending RM200 a week on groceries. Comparatively, we paid less than RM100 about 18 months ago for the same number of items,” he said.

    Su Yin said people could not cope with a minimal increase in salary, high inflation rate and low interest rate.

    “We are opting to invest rather than putting the bulk of our savings in fixed deposits,” she said, adding that their combined income totalled RM25,000.

    “We are investing for our retirement. Most of the working class people will have no money for their retirement,” she added.

    A single mother, who only wants to be known as Mellycka, 43, is feeling the pinch even with earning RM5,000 a month.

    Mellycka, a writer with two children aged three and eight, said the bulk of her salary went to housing loan and car instalments, and children and household expenditure including utility bills.

    She said she hardly had money left and found herself resorting to using credit cards after settling her bills.

    Mellycka finds it an arduous task to cut down expenses because prices of goods had gone up by 15% to 20%.

    “I just can’t afford to go out. Once I step out of the house, I have to pay for everything from petrol to parking fees to meals.”

    Vivek, a human resource manager, said despite having a household income of RM7,000, he and his wife were feeling the pinch.

    “We have to service loans for two cars and a house, which account for 45% of our total monthly income. We spend about RM1,200 on groceries,” said the 43-year-old father of one child.

    fr:thestar.com.my/news/story.asp?file=/2010/6/14/nation/6465326&sec=nation

  5. Fomca: Prices of essential goods up at 5% per year
    Reports by SIRA HABIBU, IZATUN SHARI, RACHEAL KAM and JOSHUA FOONG

    PETALING JAYA: Prices of essential goods are still rising at a rate of 5% annually, according to Fomca’s consumer research and resource centre.

    “Generally, prices of goods fluctuate in the short term but increases annually at an average rate of 5%,” said the centre’s chief executive officer, Datuk Paul Selva Raj.

    Until March, consumer prices continued its upward trend, led by increases in food prices and utility bills.

    Last month, the Statistics Depart-ment said the Consumer Price Index (CPI) increased from 111.5 to 113.2. Consumer prices rose 1.5% in April from a year ago.

    Food prices, accounting for 31% of Malaysia’s inflation index, rose 1.7% in March while the cost of housing, water, electricity, gas and otherfuels rose 1%.

    Prof Tan Eu Chye of Universiti Malaya’s Faculty of Economics and Administration said any removal of subsidies would not only cause a spike in the country’s inflation rate but also a sustained hike in the cost of living.

    Fomca is backing the Government’s move to gradually cut subsidies but said the Government should draw up alternative measures to protect consumers.

    Its secretary-general Muhd Sha’ani Abdullah said it was vital that the Government implement safety net measures by pumping funds into other social sectors.

    “Prices of goods and fuel may go up. In return, why not increase aid for education, healthcare, public transport and housing?” he asked.

    “By helping these sectors, the Government would be able to acco­mmodate and cushion the pressure felt by consumers.”

    fr:thestar.com.my/news/story.asp?file=/2010/6/14/nation/6465494&sec=nation

  6. Middle income group facing tough time
    Reports by SIRA HABIBU, IZATUN SHARI, RACHEAL KAM and JOSHUA FOONG

    PETALING JAYA: The middle in-come group has called on the Gov­ernment not to deny them subsidies.

    The director of operations for a travel agency who only wanted to be known as Allan said the middle income group was facing a tough time coping with the rising cost of living.

    “The low income group does not have to pay tax. We, in the middle income group, are burdened with tax. On top of that, we are also burdened with the rising cost of living.

    “If the Government denies subsidies for the middle income group, it will add to our burden,’’ he said.

    Another concerned citizen, calling himself Teh, said if the middle income group was denied subsidies, the Government should look into relieving them of income tax.

    Pre-school teacher Salmah Hashim said even during the worst inflation in the 80s, the Government did not deny the people subsidies.

    “Why must the Government cut subsidies at a time when it is claiming that it is doing well economically?’’ she said, adding that subsidies were crucial to keep the cost of living bearable.

    Legal executive Y. H. Tan, 33, said it would be an extra burden if petrol was sold at market rates as prices of cars were already much more expensive than in other countries.

    “We will end up paying a high price for petrol and cars, whereas people in neighbouring countries enjoy cheaper cars,’’ he said.

    fr:thestar.com.my/news/story.asp?file=/2010/6/14/nation/6465470&sec=nation

  7. Rising prices taking toll on retailers and consumers
    Reports by SIRA HABIBU, IZATUN SHARI, RACHEAL KAM and JOSHUA FOONG

    PETALING JAYA: Retailers and consumers are feeling the pinch due to rising prices of goods, especially for essential items, said Federation of Sundry Goods Merchants Asso-ciation of Malaysia president Lean Hing Chuan.

    He said the continuous price increases were a heavy burden to consumers and business owners.

    For individuals, Lean said the middle and low income group were struggling to cope.

    The situation had become disconcerting now with the increase in prices of chicken, rice, vegetables and eggs, he said.

    This was made worse by the shortage of essential goods in the market like sugar, flour and oil.

    “Besides daily consumer goods, rental for property has increased between 2% and 5% since early this year,” said Lean.

    He added the situation would worsen if the Government reduces subsidies.

    “When employers or companies are making less profit, how do you expect them to increase the salaries of their staff?” he asked, adding that the most affected group would be the employees.

    fr:thestar.com.my/news/story.asp?file=/2010/6/14/nation/6465495&sec=nation

  8. Moonlighting to make ends meet
    By SIRA HABIBU and IZATUN SHARI

    PETALING JAYA: Sacrificing quality time with the family and working longer hours to subsist in a high cost of living environment is taking a toll on many city dwellers.

    Some are resorting to moonlighting and working more than 15 hours a day to earn enough to pay for the rising cost of basic necessities and children’s education.

    A 45-year-old government servant, who only wanted to be known as Alex, said he moonlighted as a taxi driver by night and had been holding two jobs over the last 22 years – working from 9am to 3am.

    His basic pay of RM1,200 as a general worker isn’t enough to raise a family of four children.

    “My take-home pay is about RM2,500 if I work overtime. As a taxi driver, I can earn between RM2,500 and RM3,000 a month,” he said, adding that on bad days he could hardly earn RM48 to cover the daily vehicle rental.

    Despite holding two jobs and working long hours for so many years, Alex had no savings.

    “How can I save when the cost of living keep rising. I may even have to work longer hours if my second daughter (aged 18) wishes to further her studies,” he said, adding that his eldest daughter aged 20 had recently started working as a clerk.

    Alex has two school-going children aged 11 and 14.

    “My wife is always scolding me for working such long hours but this is the sacrifice I must make for my family,” he said.

    A bank employee, who wanted to be known only as Mike, worked as a musician at weddings and dinner events on a part-time basis to support his family as his monthly income of RM4,000 was not enough to make ends meet.

    He said he was able to make an additional of RM500 or RM600 from a session but part-time jobs were hard to come by nowadays.

    “One of my children obtained a government scholarship and is studying in Terengganu, but I still have to allocate some money for additional expenses,” he said.

    “My daughter who is studying in a college in Kuala Lumpur is incurring a lot of expenses because the cost of transport is extremely high there,” he said.

    fr:thestar.com.my/news/story.asp?file=/2010/6/15/nation/6472129&sec=nation

  9. Hypermarts offering discounts to ease burden

    PETALING JAYA: Some hypermarkets are “subsidising” and offering discounts on certain items on a weekly and monthly basis to ease the burden faced by the low and middle income earners in the city.

    Carrefour marketing and communications director Low Ngai Yuen said the hypermarket was “subsidising” about 10,000 of its items and it would review prices of the most popular products regularly.

    “We benchmark prices of goods against those offered at the wet markets and our competitors every day. We are consistently on our toes.”

    She said consumers should plan their shopping and should check prices of essential items in all hypermarkets to get the best deals.

    GCH Retail (M) Sdn Bhd marketing director Ho Mun Hao said Giant maintained an “everyday low price” strategy to ensure that consumers could save when they shopped at the hypermarket.

    “Our advertised lines are cheaper than everyone else’s,” Ho claimed.

    Meanwhile, Association of Taxi, Rental Cars and Limousine Operators president Aslah Abdullah said although the country had good economists and planners, there were no comprehensive studies on the actual cost of living.

    He said it was high time such studies were carried out to help the Government formulate policies.

    “People are affected by the rising cost of goods and property as the cost of living is increasing at a much higher rate than wages.

    “Most taxi drivers earning between RM1,500 and RM2,000 cannot cope with the rising cost of living,” he said, adding that they had to work more than eight hours a day to earn some extra income.

    Aslah also said the price of property had sky-rocketed in the Klang Valley.

    “A house that used to cost RM90,000 some years ago is now worth RM300,000,” he said.

    fr:thestar.com.my/news/story.asp?file=/2010/6/15/nation/6472130&sec=nation

  10. Cut down on overheads, says Raja Nong Chik

    PETALING JAYA: Earning RM3,000 a month should be manageable if folks living in cities cut down on overheads such as Astro and cars, said minister Datuk Raja Nong Chik Raja Zainal Abidin.

    The Federal Territories and Urban Well-Being Minister said having cars could be a burden owing to the high cost of maintenance.

    He added that a survey showed there was an average of three cars to a flat unit.

    However, he did not say if the three-car-to-a-flat ratio was due to several tenants staying in one unit.

    Raja Nong Chik said the cost of living depended on one’s lifestyle, adding that even the rich would complain of hardship if they had a RM1mil loan to service.

    “This city is liveable for those earning RM3,000 a month, provided they do not live in luxurious places,’’ he said.

    Raja Nong Chik said this when asked to comment on recent reports in The Star highlighting financial hardships faced by the middle-income group because of the escalating cost of living in the Klang Valley.

    The minister said the overall cost of living in the Klang Valley was not that high compared with other foreign cities because the Govern­ment subsidised many daily necessities.

    Raja Nong Chik added that monthly rental for Kuala Lumpur City Council flats was only RM124 a month per unit.

    However, he acknowledged that the number of such units were limited.

    A high-income model was needed to enable the people to enjoy a good lifestyle, he added.

    “To enjoy high income we need high productivity.

    “For example, if waiters can manage an average of 10 tables each, the restaurant operator need not hire too many waiters and could therefore pay them better salaries.

    “In Japan, for example, one caddie can serve four golfers at a time and therefore they earn a higher wage compared with Malaysian caddies who serve one golfer at a time,’’ he said.

    Raja Nong Chik said dependence on cheap foreign labour should be reduced in order to push the salary scale to a higher level.

    fr:thestar.com.my/news/story.asp?file=/2010/6/18/nation/6498082&sec=nation

  11. ‘Give tax relief to middle-income groups’

    PETALING JAYA: Middle-income groups affected by the high cost of living in cities should be given tax relief to ease their burden, says an economist.

    In view of the shrinking disposable income owing to the rising cost of living, the authorities could look into lowering the amount of tax paid, said Ram Holding Bhd group chief economist Dr Yeah Kin Leng.

    “For example, those earning below RM5,000 and living in Kuala Lumpur will likely feel the squeeze,’’ he said.

    Dr Yeah said this when asked to comment on reports in The Star highlighting hardships faced by the lower and middle-income groups due to the high cost of living.

    Prime Minister Datuk Seri Najib Tun Razak had said the Government would give due attention to the groups’ woes.

    As for employers, Dr Yeah said employees could cope better if the quantum of wage increase exceeded the rate of inflation.

    “They should review the wage structure and find ways to ease the burden of those in the lower category, such as providing transport allowance,” he said.

    Dr Yeah suggested that the Con­sumer Price Index should be provided according to locality, to help employers review the salary according to the cost of living in a particular place.

    On the Government’s plan to restructure subsidy to cater only to the target group, Dr Yeah said it was a move in the right direction.

    “The subsidy on sugar and low quality flour should be revoked in view of health and nutritional concerns,’’ he said.

    Dr Yeah said the Government should instead provide subsidy for nutritious food for school-going children, as practised in some advanced countries.

    Another major concern of the lower and middle-income groups was rising property prices, he said.

    “Prices of properties have gone up by between 10% and 30% over a period of one year,’’ he said, adding that speculative pricing pushed the prices of properties to an artificially high level. “There is a need for transparent and fair business practices.’’

    fr:thestar.com.my/news/story.asp?file=/2010/6/18/nation/6498078&sec=nation

  12. Think twice before spending

    I have been reading a lot of articles about the high cost of living in Malaysia, especially in a recent report “Holding more than one job just to make ends meet” (The Star, June 16).

    Let’s look into the first scenario in the article of a couple with a four-year-old child. They have a combined household income of RM11,000 a month but finds it difficult to keep up.

    A combined household income of RM11,000 is considered above average by Malaysian standards. There could perhaps be some budget planning weaknesses here.

    Most households spend a huge chunk of their income on their housing and car loans.

    What is the consideration one should have before acquiring a vehicle or a home?

    The function of a car is to take us from point A to point B. We do not need to purchase a car over RM100,000 if we cannot afford it. We have to put aside our ego and think twice.

    And those who take up a nine-year hire purchase loan should be made aware that by the time they have paid up for the instalments, they could have bought two cars.

    On purchasing your dream house, everyone wishes to have a spacious property with all the amenities that come with it.

    Proper budget planning for other expenses like maintenance, quit rent, etc, should be taken into consideration. For certain condominiums, the owners would have to pay RM300 to RM500 in maintenance fees, on top of their housing loans.

    They should not be caught in a dilemma of not being able to service our loans at any point of time when the BLR increases.

    And to those who might want to venture into business, perhaps they need to be mindful of several things first before they jump onto the bandwagon.

    I know everyone wishes to be his own boss. Business is like fishing. You will never be able to tell if you can catch any fish that day or how many fish you can catch but you still have to invest to buy the fishing rod, bait, etc, as well as maintaining it.

    Take into consideration the capital you have, how long you can sustain the operation with the capital you have versus the expenses even without business.

    What is your contingency plan in case the business strategy is not right, etc?

    Some will think that there are always bank loans, government grants or funding from other corporations to turn to but there is no guarantee.

    If you are thinking of loans to expand instead of rescuing your business, then you are on the right track.

    Living glamorously is always a dream for every individual. Can everyone afford it?

    We have to grow up and be realistic. Stop blaming the world for whatever that has gone wrong! Learn to appreciate and life will be a lot better.

    Grateful citizen,

    Kuala Lumpur.

    fr:thestar.com.my/news/story.asp?file=/2010/6/17/focus/6485008&sec=focus

  13. Financial literacy vital to achieve high income status
    COMMENT By CAROL YIP

    THE first report on the New Economic Model (NEM) for Malaysia presents a clear message for radical change in our approach to economic development. The stated goal is to enable Malaysia to reach high income status by 2020.

    The National Economic Advisory Council, which came up with the report, recommends that businesses must heighten their appreciation of people as valuable assets that they must collaborate actively with to make Malaysia a sustainable and vibrant nation.

    However, the recent announcement of likely subsidy reductions on essential items has raised the spectre of many Malaysians experiencing an increase in inflationary pressure. While there is much commentary in the media focusing on how to help the poor, the aged and middle-income wage earners, we need to collectively and individually solve the problem so that we can speed up the process and reach these goals as a society. The year 2020 may seem a long way off, but nine years is not a long time to achieve these lofty NEM goals.

    The Government cannot expect Malaysians to continue showing excellent work performance to contribute to economic growth when we experience personal financial stress in our day-to-day lives. Unless we have salary increases that align with living costs and the Government heightens its efforts to work with the business community, things may stall.

    Without the financial security and benefits as envisioned in the NEM goals of “inclusiveness” and “sustainability” to improve the rakyat’s quality of life, the majority of our society will continue to experience a bleak financial future, culminating with an unsustainable retirement.

    Stuck in the middle income trap

    While the Government is trying to put things in order to help us get out of the middle income trap to reach a high level income society, there is still a missing link. We need to start looking into a national strategy to help Malaysians improve their personal financial literacy and develop the necessary skills to keep their personal financial matters in the proper perspective.

    There are several transitions that Malaysians must navigate through as they grow from children, through wage-earner, on to retirement. Each stage requires an understanding of personal financial matters that are sorely lacking in most of us.

    Financial literacy is important to everyone. Financial stress is not biased based on race, age, gender, marital status or different income groups. Just because a person might be below the middle-income group doesn’t mean he or she may need financial education more than others. Just as likely, the children of wealthy parents need to be educated to maintain family wealth. Similar to reading and writing literacy, financial literacy is necessary to all. When a nation has a high level of financial literacy, it is easy to promote healthy financial ethics and values across different generations, from young to the old.

    What other countries are doing

    In 2008, the Organisation for Economic Co-operation and Development (OECD) launched the International Gateway for Financial Education to serve as the first global clearing house on financial education. It seeks to raise awareness to ensure wide dissemination of research, best practices and guidelines and build a worldwide network of government stakeholders on financial education. Several countries, most of whom are members of the OECD, have developed and implemented national strategies on financial literacy:

    Australia: In 2005, the government established the Financial Literacy Foundation (FLF) to implement a national literacy strategy. The FLF worked to integrate financial literacy into the educational system, to develop resources and support for teachers and to provide financial literacy materials for the workplace. In July of 2008, all of FLF’s functions were transferred to the Australian Securities and Investments Commission, in order to consolidate the Australian government’s financial literacy response under the Commission and to strengthen its role in safeguarding Australia’s economic reputation and well-being.

    New Zealand: A crown agency, the Retirement Commission, led the development of New Zealand’s National Strategy for Financial Literacy, in 2008. The New Zealand Retirement Commission also created “Sorted”, an independent government-funded organisation dedicated to helping New Zealanders manage their personal finances, throughout their lives. In 2009 the Ministry of Education also took over all responsibilities for financial education in schools.

    Singapore: The national financial education programme MoneySENSE was launched in October 2003 to bring together industry and public sector initiatives in financial education, to create a long-term sustainable programme to enhance the basic financial literacy of Singaporeans. Through its national MoneySENSE programme, the Singapore government continues to support initiatives that enhance the basic financial literacy of consumers.

    The Netherlands: Under the working title CentiQ (Sensible with Money), around 40 partners from the financial sector, the government, information and consumer organisations and science centre signed an agreement in 2006 to work together on financial education. Together, the partners carry out a strategic agenda that includes programmes and projects aimed at improving the financial knowledge and skills of consumers and stimulating an active attitude, so that consumers can make conscious financial choices and become financially competent.

    Getting our house in order

    Malaysia shouldn’t be left behind. We need a concerted effort to create a national financial education blueprint. Let’s start transforming the nation with a new attitude and mindset by emphasising building a “made-in-Malaysia” financial education programme in schools, tertiary institutions, workplaces, community centres and NGOs.

    There are some stakeholders who are already educating different parts of our society according to their core business objectives. A central regulatory body is required to consolidate existing financial education programmes and be the centre of influence to create a national strategy to improve the nation’s financial literacy level based on sound ethics and core values, and in line with the NEM goals.

    ·Yip is a personal financial coach and also founder and CEO of Abacus for Money

    fr:biz.thestar.com.my/news/story.asp?file=/2010/6/26/business/6532226&sec=business

  14. Life after retirement
    By EUGENE MAHALINGAM

    RETIREMENT. To many people, it refers to the period in life where one should be kicking back, relaxing and catching up on the things they never could during their long, gruelling working lives.

    Realistically, however, not many people get a chance to enjoy their retirement period, usually due to financial constraints that comes once we stop earning a living.

    With the rising cost of living, many retirees are finding it difficult to make ends meet with their EPF (Employees Provident Fund) savings or pension scheme alone and are forced to continue working.

    For the purpose of this article, we’re going to skip that group of people who, during their working lives, were prudent with their expenses and shrewd with their investments and are now laughing themselves all the way to the bank till the day they die.

    For those who still need to earn a living post retirement, embarking on a job can still be fun and need not be a burden. In fact, many of today’s retirees view retirement not as an end, but instead as a new and exciting phase in their lives.

    Work from home

    For a retiree, working from home has its advantages, says Janice Tam, a retired school teacher.

    “You can work at your own pace and avoid the hassle of travelling to and fro to an actual office,” she says.

    Tam today provides tuition classes for kids below 12 years of age.

    “Providing tuition classes is a very popular side income alternative. Baby sitting is also a good post retirement job choice, especially when the parents drop the child at your place and saves you the hassle of having to go to their home.”

    Starting your own business

    Many a times, the experiences of a long career can provide retirees with the confidence and knowledge to launch a successful business.

    G. Murthy used to serve with the armed forces and now, at 57, is heading his own security firm.

    “My experience with the armed forces allowed me to gain invaluable knowledge in self defence and now it not only allows me to help protect people, it also provides me with a decent income.”

    Sometimes, the knowledge and experience could be gained from a family business.

    Growing up, Rashid Abu Bakar, now 67, used to enjoy the nasi lemak his mum sold to the local village-folk to earn a living.

    After serving with the Government, he is now retired and is continuing the family business and claims that it is “good pocket money.”

    “It makes for a good side income on top of the pension that I get every month.”

    Rashid says he enjoys eating the nasi lemak just as much as he does making them.

    “As it’s important to find pleasure in what you do, or else it would just become a burden. I have to wake up very early in the morning to prepare the food but it is something that I enjoy doing.”

    He adds that it is important to understand the demands and dynamics of running your own business, its prospects and needs.

    Become a consultant

    Many people retire from their jobs only to become consultants to their previous employers or advisors to organisations within the industry.

    Says Alvin Loh, 63, an advisor to a local property developer: “Consult-ing provides you with a lot of flexibility and due to the person’s invaluable years of experience, demand for such jobs are good and so is the salary.”

    Go back to school

    It is not uncommon for senior citizens to enrol part time or even full time at a college or university to learn a new skill and take up a new job, says Kajang-based private college tutor Rashid Ali.

    “There are many senior citizens where I teach who are taking up something new. Some of them even come back to do another course!”

    Rashid admits that taking up a part-time diploma or degree can be a huge sacrifice for someone who is married.

    “There are many private institutes that offer night-time or weekend courses to cater to this group of people. There are many genuine courses that one can do online.

    “Having an extra qualification on your resume carries a lot of weight and if it means better job and salary prospects, it’s worth it,” says Rashid.

    Become a volunteer

    There are many organisations out there that are eager to accept volunteers, regardless of a person’s age, says Jacob Wong, a committee chairman for a Kepong-based non-profit organisation.

    “Because we have to constantly keep our budgets down, we’re always looking for volunteers. Believe it or not, a lot of times we prefer to work with retirees because they are less demanding and are quite satisfied with the pocket money that we give them.

    “Many of today’s youths are just interested in making money and are not interested with volunteering. That’s why we prefer to work with senior citizens,” he says.

    Schools, libraries, religious and relief centres and charitable organisations are among some of the places that are always on the look out for volunteers, Wong adds.

    fr:biz.thestar.com.my/news/story.asp?file=/2010/8/21/business/6853557&sec=business

  15. The darnedest money mistakes
    By CECILIA KOK

    What are they and how to avoid them?

    AT 32, single and earning a relatively decent and progressively growing income, Albert Lee (not his real name), should easily be able to afford an apartment in Kuala Lumpur. Or so it seemed.

    Three months ago, his family members began to pressure him to buy a medium-cost apartment in the city centre.

    Lee, an executive with an advertising agency for the last six years, found himself unable to afford the basic down payment for the unit, not to mention those miscellaneous fees that come along with buying a home. That’s baffling to people around him; it’s hard for them to comprehend how Lee, whose monthly take-home pay of close to RM4,000, somehow couldn’t fork out the cash to secure a city pad.

    But Lee knows better. Truth is, he’s been straddled with stubbornly high credit-card debts for several years now. His savings account is in a comatose state due to his excessive spending habit on top of having to meet his monthly obligations.

    “It’s an experience of regret and disappointment, as I realised that I’ve not been managing my finances well; this is certainly a wake-up call for me to re-assess my financial position,” Lee shares with StarBizWeek.

    Lee’s excessive spending, high indebtedness and poor savings, according to financial experts, are some of the most common financial shortfalls faced by young adults. If not rectified, experts warn, these mistakes could lead to further regret and much inconvenience in the later years of one’s life.

    “Money is a huge deal in everyone’s life. It has to be managed well, otherwise one would run the risk of having financial difficulties in the future,” says KH Tan, a financial planner with a local insurance agency.

    And the most basic thing to do, he points out, is to learn from the mistakes of others and stay clear of them. So, StarBizWeek this week compiles five of the more common fortune disasters pointed out by financial advisers in the hopes of helping readers gain a solid financial footing.

    Not budgeting

    As Lee reflects on the financial challenge that he faces today, he realises that the root of his problem begins with his failure to plan ahead and set financial goals.

    According to experts, budgeting is the first step of financial success, as the method helps one to manage his or her finances properly.

    “Budgeting enables one to be in control of his or her own financial affairs. One cannot afford to be ignorant of his or her own financial position – the inflow and the outflow of one’s money; otherwise one’s expenditure can get out of control, and that could probably lead to other problems later on,” explains financial adviser Mohd Yusof.

    Impulsive spending

    Wealth is commonly destroyed because of uncontrolled spending, as sales executive Melissa Lim, 27, could testify.

    Her frequent retail therapies, which involve grabbing stuff that she does not really need, as well as the occasional splurge on fine-dining have resulted in her running into debt problems, not only with credit cards, but also with her friends.

    “Every little thing you spend on adds up, and that could gradually eat up your finances. Unrestrained spending, which can turn into a habit, can lead to wastage, and before you realise it, you see a mountain of debt facing you because your present income just can’t sustain your lifestyle,” Lim shares.

    The 27-year-old sales executive has since repented of her frivolous ways. She is one of the individuals currently seeking the help from the Credit Counselling and Debt Management Agency (AKPK), an outfit set up by Bank Negara to advise individuals on their financial management.

    Debt bondage

    While the invention of credit cards has provided much convenience to modern society, the useful tool has also become a bane as it turned out to be one of the main causes of bankruptcy in society today.

    For instance, in Malaysia, the number of credit card holders being declared bankrupt in 2006 stood at 1,656. The good news is that the number had actually declined to 405 credit card holders out of the total of 3.2 million nationwide being declared bankrupt last year.

    According to Bank Negara in July, 50% of credit card holders who had been declared bankrupt were below 30. AKPK corporate affairs and communication head Devinder Singh said many young adults risk being declared bankrupt because of credit card overspending and failing to observe basic rules in sound financial management.

    He advised individuals who had problems settling their debts to seek help as soon as possible before the compounded interest rates could take a toll on them.

    Depending too much on credit card tempts one to spend more than what one earns, and if there is no check on the usage of this facility, individuals can end up in a financial mess, experts say.

    “It’s fine to have certain type of debts such as home mortgages to acquire assets, but accumulating too much of credit-card debts is not only costly, but can also be debilitating,” says Tan.

    No savings

    The one essential step to achieving financial independence, according to locally renowned millionaire coach Azizi Ali, is learning how to save.

    In his many seminars and books, he’s never failed to advocate the traditional way of accumulating wealth.

    He argued that consistently setting aside a portion of one’s income as savings is one of the habits of a millionaire.

    Financial planners couldn’t agree more. “You can’t squander all that you earn; you’ve got to keep some for rainy days, big-item purchases later, as well as for your retirement,” Mohd Yusof says.

    “If you’ve never saved before, you will find yourself in wanting one day,” he adds.

    No sound investments

    It’s hard to grow one’s wealth through conventional savings. Low interest rates generally do not compensate well due to inflation.

    Therefore, it is necessary to put one’s money into various instruments – such as stocks, bonds and unit trusts – so that the value of one’s wealth would not get eroded by inflation. Which to invest in, says financial planners, will have to be based on one’s age and risk appetite.

    “While seeking to grow wealth, always bear in mind – there’s no such thing as free lunch; so don’t be fooled by any get rich quick programmes, lest you end up losing more,” Tan cautions.

    While many individuals may be well-versed with the mistakes pointed out above, financial advisers say many of them still fall into the same trap. So, it really requires a great deal of conviction, will power and self-discipline to avoid these pitfalls, and by starting soon, one can well be on his or her way to sound financial management.

    fr:biz.thestar.com.my/news/story.asp?file=/2010/9/4/business/6965433&sec=business