FOR THE MAN IN THE STREET: Tips on how to ride out the patchy 2014 economy
This is the time of the year when we shall reflect on the past and the future. A new year is a great time for us to revisit, recharge, recalibrate and reposition our course, be it on personal or financial matters.
Below are seven of my reflections on the 2013 economy that will haunt us in the year ahead.
1. Stick to your budget
A Budget is a tool to plan the ‘in-and-out’ of your ringgit. If you spend less than your income, you will have a surplus that leads into savings and investments. If vice versa, it’s a deficit that requires borrowings. In reality, you will ride a cycle on which you will land on a balance, surplus and deficit budget. But if you continuously sit on a deficit budget, say for 18 years (and prolong it till 2020), you are heading into a big trouble. We need a (fiscal) discipline.
2. Grow your income
When you have so many people to greet in your party, you need to enlarge your cake, larger than that of last year. With a bigger pie to be shared equally (and equitably), people won’t make much noise as previously. If you think a 5% growth is adequate, a 1% drop is to be avoided. Increase your ingredients - floor, butter, sugar - for the cake, and improve your value drivers – consumption, investment, government spending, net exports – for the economy. Growth reflects prosperity.
3. Control your spending
Needless to say, spending depends on affordability and rationality. Cut wastage and leakage. There is a saying, “Too many people spend money they haven't earned, to buy things they don't need, to impress people they don't like.” Do you need an Auditor General to prove otherwise?
4. Save for the rainy days
There are two types of rainy days. Predictable rain is when you know it will fall. When you just don’t know when or how bad they will be, it is the unpredictable rain. By saving each month, you won’t be blindsided when something happens. This applies to our family, and of course, our country too.
5. All going up except the rain
In Malaysia, there are two explanations given when prices increase, profiteering by sellers or subsidy rationalisation by government. Inflation could be due to cost-push or demand-pull factors. An increase in prices will bite into our purchasing power. A RM100 spent today can buy less items than it could last year. RM100 for next year? Your guess is as good as mine.
6. Be honest with yourself
It's your money – it makes no sense in lying to yourself about your money. The only person you hurt when doing this is yourself. If you have no idea on your spending, take a break. And please don’t lie when dealing with others’ money.
7. Integrity and accountability
If you spend your own money upon yourself, it is prudent. If you spend your own money for others, it is generosity. If you spend someone else’s money for someone else’s interest, it is a trustee, and this is what government is. A fiscal policy full of integrity is vital for Malaysia.
As another year ends, another history, another transition, and a new beginning dawns. Malaysia is certainly at a crossroads. A fundamental change is required, not just on economic resilience but also on social justice.
The journey will be long and arduous, God willing, we will succeed.
- Harakahdaily
This is the time of the year when we shall reflect on the past and the future. A new year is a great time for us to revisit, recharge, recalibrate and reposition our course, be it on personal or financial matters.
Below are seven of my reflections on the 2013 economy that will haunt us in the year ahead.
1. Stick to your budget
A Budget is a tool to plan the ‘in-and-out’ of your ringgit. If you spend less than your income, you will have a surplus that leads into savings and investments. If vice versa, it’s a deficit that requires borrowings. In reality, you will ride a cycle on which you will land on a balance, surplus and deficit budget. But if you continuously sit on a deficit budget, say for 18 years (and prolong it till 2020), you are heading into a big trouble. We need a (fiscal) discipline.
2. Grow your income
When you have so many people to greet in your party, you need to enlarge your cake, larger than that of last year. With a bigger pie to be shared equally (and equitably), people won’t make much noise as previously. If you think a 5% growth is adequate, a 1% drop is to be avoided. Increase your ingredients - floor, butter, sugar - for the cake, and improve your value drivers – consumption, investment, government spending, net exports – for the economy. Growth reflects prosperity.
3. Control your spending
Needless to say, spending depends on affordability and rationality. Cut wastage and leakage. There is a saying, “Too many people spend money they haven't earned, to buy things they don't need, to impress people they don't like.” Do you need an Auditor General to prove otherwise?
4. Save for the rainy days
There are two types of rainy days. Predictable rain is when you know it will fall. When you just don’t know when or how bad they will be, it is the unpredictable rain. By saving each month, you won’t be blindsided when something happens. This applies to our family, and of course, our country too.
5. All going up except the rain
In Malaysia, there are two explanations given when prices increase, profiteering by sellers or subsidy rationalisation by government. Inflation could be due to cost-push or demand-pull factors. An increase in prices will bite into our purchasing power. A RM100 spent today can buy less items than it could last year. RM100 for next year? Your guess is as good as mine.
6. Be honest with yourself
It's your money – it makes no sense in lying to yourself about your money. The only person you hurt when doing this is yourself. If you have no idea on your spending, take a break. And please don’t lie when dealing with others’ money.
7. Integrity and accountability
If you spend your own money upon yourself, it is prudent. If you spend your own money for others, it is generosity. If you spend someone else’s money for someone else’s interest, it is a trustee, and this is what government is. A fiscal policy full of integrity is vital for Malaysia.
As another year ends, another history, another transition, and a new beginning dawns. Malaysia is certainly at a crossroads. A fundamental change is required, not just on economic resilience but also on social justice.
The journey will be long and arduous, God willing, we will succeed.
- Harakahdaily
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