MONEY TALK: Don’t be penny wise, pound foolish

Posted on 24 February 2014 - 05:36am

 

I WAS busy reading other financial blogs when I stumbled upon this particular phrase, and it stuck to me. "Penny wise, pound foolish" – an old British saying referring to someone who goes to great lengths to save money, but ends up spending more than what he is trying to save.

It suddenly dawned on me why most Malaysians didn't feel secure about their finances, despite being free from debt – most Malaysians fit this description right down to a tee.
 
If you think you do too, then here are a few things you might be doing wrong:

You Take Advantage of Freebies Who doesn't love free stuff?

Nobody, that's who.

Whenever you feel the need for coffee, you think about that premium latte you can't live without.

But you can't be spending RM10 on coffee, every day, can you?

So you go to the office pantry and drink packets of those premixed coffee.

This happens every time you feel the urge to spend on a pricey cup of coffee.
 
The result? Diarrhoea. Migraines. Insomnia.

In short, your health pays for the benefit of "free" or very cheap coffee.
 
That's the problem with most of us.

We think that free stuff is awesome.

Initially, yes. But in the long term? Not so much.

Treat Your Expenditure Like an Investment. Would you invest in a home at a non-strategic location or a lousy stock just because it's cheap?

No, you would have crappy returns.

It's best to think of quality rather than being satisfied with a "good bargain".

Speaking of Bargains ...
Maybe you've stumbled across crazy cheap deals during your obsessive searches online, and one of your worst purchases happened to be this set of DIY bookshelves.

The set looked awesome in the picture, and fitted so well into your bedroom.

It was so cheap you bought it without second thought!

You were saving so much money compared to buying one from a furniture store.
 
So, the shelves came in. They were pretty easy to assemble – and just as easy to break.

In the end, you didn't use them at all. You bought them just because they were cheap, not because you needed them. 
 
You're Lazy You aren't making the most out of the goods and services you pay for every month.
 
Your health card gives you free general check-ups every year, but you think it's a hassle to go.

You have a tonne of excuses for why you still haven't checked online comparison portals to see if your credit card is the right one for you – just because doing online research seems tedious.

 You'd have come up with better solutions to your financial woes if you'd only stepped out of your comfort zone sooner rather than later. 
 
Change Now If you exhibit signs of being a penny-wise, pound-foolish kind of person, here are a few tips to help you get through this challenging phase of your life:
1) Unlearn your false saving habits. Think long term.
2) Consider quality over cheap replaceable goods.
3) Persist! Just because you don't have debt or you aren't having financial trouble, it doesn't mean you must make careless decisions.

 Practise these steps, and continue to learn more ways to handle your personal finances and, soon enough, you could be confessing you're a penny-wise, pound-foolish person no more!

Andreas Weileris a money-saving expert with Malaysian financial comparison platform, CompareHero, aimed at helping Malaysians save time and money.

For more tips visit www.comparehero.com.

Create Your Personal Finance Plan in 7 Days!

Posted on 3 February 2014 - 05:40am

MONEY TALK
By Andreas Weiler

 

p16 Money Talk
 

A lot can happen within a day: you can set future goals, fix personal problems, earn a living, and essentially make the world a more livable place.

Now, imagine what you can achieve if you had seven days.

If you wish to get your personal finances in order within a week’s time, here’s a plan you might want to consider executing:

Day 1 – Establish your goals
Every important process involves a clear statement of goals.

During this first day of your route to financial comfort, be sure to clearly establish what you want to achieve.

Is it clearing you of debt?

Is it acquiring more money?

Is it starting a significant savings?

A combination of all of those things?

If so, which takes priority?

Knowing specifically what you want is what would ensure you’ll get it.

Day 2 – Figure out where you stand financially and plan accordingly
Take out all your finance-related documentation (bills, credit card statements - all of it) and with these documents, assess where you are financially.

Take a keen look at your financial habits, how much money you make, find out what’s been holding you back from your established financial goal and create a plan with these hindrances in mind, one that is in line with your goal.

By doing this step, you can find out exactly what you need to change and you can more effectively figure out how to do so.

Day 3 – Create a budget Any plan involving money involves a budget.

Create a budget based on your existing income against your regular financial obligations.

Creating a budget will allow you to eliminate any unnecessary expense as you know where every penny goes.

Day 4 – Focus on your income
How much money do you actually make?

Are there ways in which you can make more?

These are questions you need to find answers to when trying to fix your financial plans.

If you find your current income lacking when it comes to the fulfillment of your goals, this is a good time to look into additional sources of revenue.

Day 5 – Start implementing your personal financial plan Even if your first step involves small things, like changing your spending habits in specific areas, it’s a good thing to implement those changes.

By implementing your plan, even the smaller steps of that plan, there’s an added level of motivation as you personally can see that achieving your goals is indeed possible.

It never hurts to give yourself a push.

Day 6 – Start thinking long term Since your initial plan is underway at this point, it’s best to expand that plan to fit a more long-term image of your ideal financial future.

After you’ve achieved your goals, what then? T

hink long term and you’ll be able to shift your general financial behavior to a more positive direction completely.

Day 7 – Prepare for contingencies So, you have your goals, your initial plan, your long-term plan and you’ve even started executing your initial plan.

It’s time to consider the worst-case scenario now.

What happens if the plan doesn’t work?

Anticipate potential problems and construct plans to meet those problems head-on.

A week of financial focus can do wonders for your life.

Take the time to organise your finances and adjust your mindset in line with your goals and you can definitely achieve them!

Andreas Weiler is a money-saving expert with Malaysian financial comparison platform CompareHero, aimed at helping Malaysians save time and money.

For more tips visit www.comparehero.my.

Why every parent should raise money-smart children

Posted on 4 March 2014 - 05:39am

MONEY TALK
By Andreas Weiler

 

IN TODAY'S world, being savvy with personal finances is as important as being able to make a lot of money.

While the amount of money you make is vital to your financial health, how you handle that money and the discipline it takes to make sound financial decisions plays a huge role in that aspect of your lives.

That is why it is extremely important that such a discipline and behaviour is instilled upon people at a young age.

I am a proud uncle of two lovely nephews, and I am happy with how their parents have taught them about money.

At such young ages (the oldest being 14), I noticed how disciplined they are when it comes to saving money and I have no doubt that this will carry over as they grow up.
 
As parents, it is your duty to make sure your child grows up equipped with the specific skill set required to handle money properly.

Here are numerous reasons for this:

Being money-smart has become a necessary skill. As much as hunting and building fires were necessary skills in the old world, now, properly developing a healthy financial life is the vital skill required in this modern, yet at times equally savage, world.

We teach our children on how to survive and being smart with our finances−by starting with a small act of prudence but necessary skill like budgeting our money properly.

We promote the idea of how being money-savvy is essential to survival in today's life and not instilling such a skill is to raise your child at a distinct advantage.

Discipline carries over. Proper management of resources does take discipline, and if you are successful in teaching your child this skill early on, then you can bet that your child will show manifestations of discipline in several, if not all, aspects of life.

Discipline is a hard behavior to unlearn, and by teaching your child early, there is a strong chance that this will be reflected in your child's schoolwork, social and domestic relationships and responsibilities, and general outlook.

In short, teaching your child financial discipline early on can be the beginning of your child's journey to excellence and give your child a solid foundation for the future in terms of professional standards and work ethics. 
 
It improves parent-child relationships. This is something that a lot of people neglect to mention when discussing topics of this nature.

Instilling such an important trait in your child does not just improve your child as an individual—it enhances your child's relationship with you as well.

As parents, you are automatically a child's authority figure, but there is a difference between a child's blind obedience to a child looking up to a parental figure.

Most of us have traits that our parents instilled in us that we tend to greatly respect them for and will forever be grateful for.

This is your opportunity to pass on something your child will appreciate for the rest of his or her life. If the child grows up into a balanced adult, the child will have you and your spouse to thank for.

Build the right attitude towards money. Teaching your child early on about the reality of money contributes in the child growing up seeing money for what it really is: a resource.

 Many people have allowed money to control them in a way that yields negative circumstances simply because they were not brought up with the proper attitude.

Money is a necessity; but not a gateway to happiness.

This will avoid raising a greedy child, and oftentimes, greed results in poor financial decisions.

 Teach your child to be financially savvy today, and you will be paving the way towards a bright future for your beloved offspring.

Andreas Weiler is a money-saving expert with CompareHero, a Malaysian financial comparison platform,aimed at helping Malaysians save time and money.

For more tips go to www.comparehero.com.my

Why you can’t save, and how to fix them

March 4, 2014

Here are some common financial mistakes to take note of and how you can save that money for better use instead.

By Michelle Brohier

There are many reasons why people are struggling to save, from the low salaries to the high cost of living. If that’s not tough enough, there’s always that possibility of you spending more than necessary, or even spending it wrongly due to your own financial decisions.

That doesn’t mean there’s little you can do about it though. You can always take note of the decisions that you’re making with your money and find ways to either put it into saving or to benefit you more.

Here are some common financial mistakes to take note of and how you can save that money for better use instead.

Getting those summons or fees
There are some fees that cannot be avoided, but there may be a few that if you knew how to avoid them well, you could be putting that money to better use. Be it due to credit card fees, late rental fees, or even speeding or parking tickets, all of this could be avoided with careful planning on your part. It just takes some discipline to avoid spending more than necessary on these things.



Buying things you don’t need
It’s hard to resist buying something new; you know what they say about new brooms. But when possible, look into buying used items instead as new items or staving off until you really need that new pair of running shoes. It’s admittedly difficult these days with things being made to wear out quickly so you’ll have to buy a new one but if you don’t have to, don’t toss it out just yet!

Bad stock market decisions
Investing in stock markets are a great way to build your income, but it’s incredibly important to do research or consult a proper fund manager if investments aren’t your forte. Instead of being swayed by popular opinion, invest your money the way you (and your finance advisor) is most comfortable with.

 

Forgetting to use your Reward Points or other benefits
It’s always good to keep track of your reward points as you could be able to save on the items you want to purchase. For example, instead of buying a new blender, you could use the reward points you’ve accummulated to get you one without having to spend a single cent. Which is why if you allow your reward points to expire, you’re letting go of free money in a way.

Investing in yourself wrongly
While it’s great that you’re spending your money on those piano or tennis lessons to make yourself feel better, how about monetizing the skill? Once you’ve mastered the art; opt to teach others yourself. The fee is always useful. If you don’t want to turn it into a job – look to other ways to make the most of the investment. Enter competitions with cash or other prizes to build your reputation. Who knows, you could do well enough to earn a slew of interested students willing to pay!

Depending on the skill you are learning – there are many ways to make money with it. It just takes a wee bit more effort.

There can be certain circumstances where spending more is unavoidable, but it’s always better to take control of your expenses instead. So take note of the decisions that you’re making with your money, and do what you can to save and make the money work for you instead.

This was brought you by MICHELLE BROHIER from RinggitPlus.com. RinggitPlus compares credit cards, personal loans and home loans to help Malaysians get more for their money.

More mums setting up home businesses

Report from The Straits Times (Singapore) dated 3 March 2014 :-

More mums setting up home businesses

Tan Su Ling (centre) and her daughters Vera Zagorodnova (left), 7, and Nadya Zagorodnova, 5 and Alicia Cho (right) with her daughter Sophie and her collection of costumes at their home.

 

SINGAPORE - Factory suppliers and vendors meeting Ms Dorothy Loh to discuss work often find themselves interrupted by her children crying or tugging at the hem of her blouse to get her attention.

"They understand and sometimes when they come over, they end up playing with the kids," said the 39-year-old, who started a home business which sells nursing wear in 2008.

Ms Loh is one of a growing brigade of "mumpreneurs" - mothers who leave their jobs to set up home businesses.

The number of women running registered businesses from their HDB flats has gone up from 6,600 in 2008 to about 7,000 last year.

Social enterprise Mums@Work has also seen a jump in entrepreneurial mothers on its career portal, from 20 in 2010 to about 600 now.ted women who are confident of running businesses so as to create the flexibility that they desire," said Mrs Sher-li Torrey, founder of Mums@Work.

Mothers interviewed said they enjoy the flexibility. Instead of being shackled to a nine-to-five job, they work around their children's schedules and can have "no work" periods.

This allows them to enjoy the best of both worlds: the challenge and satisfaction that come with work, and time with their children in their formative years.

These businesses are not "cottage" ones helmed by the low-income housewives of yore, who baked or sewed to supplement the family income.

Instead, they range from employment agencies and party-planning firms to those offering legal mediation or fitness classes.

Some stay-at-home mothers have even gone on to set up thriving law or public relations businesses.

"Sometimes, the business grows very big but they still choose to work from home because their kids are very young," said Ms Torrey.

These enterprising mothers are part of a trend in home businesses here: Those run from HDB flats alone have risen from 19,000 in 2008 to 20,600 last year.

People who work from home also save on travelling time and expenses and get to spend more time with their families, said an HDB spokesman.

Ms Vicki Heng, 38, took the plunge last year to run her law firm from home.

She used to be a partner at another law firm but rued missing too many of her children's school performances and celebrations because of work.

"They would ask me why other mums were there and why I wasn't around to take photos with them," said Ms Heng of her son, five, and daughter, seven.

Ms Loh said juggling her business and childcare duties has given her new skills.

"We learn to not only multitask, but also to start and stop working at unexpected moments, such as when they wake up from their naps."

Doing well selling baby products online
Pupsik Studio, an online baby products store that Ms Tan Su Ling, 38, runs from her four-bedroom condo home, is doing so well that cartons of prams can be found stacked under the bed or spilling out into the living room and study.

Ms Tan, a former architect, found herself working through the night to meet more than a thousand orders each month.

Pupsik Studio sells baby and nursing products to mainly local customers and overseas retailers.

Its products, mostly designed by Ms Tan and manufactured here, are popular with mothers, and celebrity Martha Stewart even sponsors Ms Tan's parenting blog.

"It got to a point where... I needed help and I needed more space," said Ms Tan, who now employs five part-time and full-time workers.

Her company also has a 3,000 sq ft warehouse in Bukit Batok

Back in 2008, she quit her job to spend more time with her elder daughter.

She went on to set up a business that allowed her to work in her pyjamas after she put her daughters, now aged five and seven, to bed.

"You don't have to waste time dressing up or commuting, and the children always need you at the most unexpected moments."

Love of dressing kids up turns into business
Sophie Loy, five, gets to wear dresses such as the sparkly blue dress donned by snow queen Elsa in the Disney animated movie Frozen.

All because her mother runs a costume rental business at home.

During peak party seasons such as Christmas, their four-room flat in Bedok Reservoir sees about 30 customers a month.

"My children and husband have got used to having people over," said Ms Alicia Cho, 31.

She started the business last year, after giving up her marketing executive job to spend more time with her children, then two and four years old.

"I love to dress my children up and take photos of them, so the costume rental idea came naturally," said Ms Cho.

Her costumes are from the United States and China, and are for sale or can be rented for $10 each.

One of the drawbacks of a home business though is the income, said Ms Cho, who now earns a quarter of her former earnings.

There's money to be made elsewhere

Report from The STAR (Malaysia) dated 1 March 2014 :-

There's money to be made elsewhere



As the inflation rates rise and times get hard, many are finding other ways of adding to their income – from discarded items, selling cosmetics and even offering their services.

With the rising inflation rate eroding take-home pay, experts are noting a trend where working class Malaysians are turning to alternative means to supplement their income.

Financial information and comparison website iMoney.my co-founder Lee Ching Wei said there are easy ways to raise your income.

“A busy parent can earn some extra cash by providing transportation to his or her child’s school mates in the neighbourhood.

“It doesn’t involve extra work and still can subsidise on the petrol cost. For individuals who don’t have the time to earn extra income, try to cut back on spending,” he said.

Lee added there were also sites like elance.com where people could offer services of any kind and charge by the hour suited to their own schedule.

“Most retirees try to help out the family by offering babysitting services. This can be turned into a lucrative business.”

In Petaling Jaya, babysitting a child from 8am to 7pm, Mondays to Fridays, can cost up to RM800 a month.

“Another way to earn some extra cash is to cook extra dinner every night and provide catered dinners to neighbours. Some charge about RM160 a month,” Lee said.
Some working mothers have opted to cook in batches and portion out meals to avoid food wastage. Teacher Elizabeth Colin, 39, says that batch cooking is an economical and time-saving way to prepare meals while helping to save on essentials. 

“Preparing in large batches helps to save time and slash your grocery bills. . Soups can be made in advance too. Try to double the recipe and store in the freezer. It does wonders when your children are in a hurry for a quick meal,” said the mother-of-two who has been preparing batch-cooked meals for over five years.

Scour the Internet for local workshops/classes that provide a platform for experts to share tips. Websites such as Plateculture (plateculture.com) gather likeminded individuals who may be able to share tricks of their trade. One might even find a home to dine in, meet interesting people and eat authentic food.

Besides cooking to make ends meet, there may be other creative solutions.

Retiree Balan Maruathan, 55, and his family have started their own “business” of turning trash into profit to supplement their incomes.

“We’ve been doing it for about three-years now. My son and brother go around in their lorries to flats and collect plastic bottles, newspapers and scrap metal that gets thrown away.

At home, I organise them, take them apart and sell them to different companies. Every week, other family members come in to help when they finish their day jobs,” said the former printing company worker.

Balan said they could earn up to RM6,000 a month collecting and selling recyclables. It has also taught him how to stretch profits.

“If someone throws away a table fan, we can take it apart, sell the plastic and metal for a few sen, the motor for RM5 and the copper coil for RM17. It is tough but it is rewarding and helps us buy food and other essentials,” he said.

For graphic designer Liew Kar Wai, 34, the few hundred ringgit she earns in direct selling cosmetic and skincare products to friends in her free time is a big help in settling her monthly utility bills.

“I started about six-years ago using the cosmetics myself and when people saw improvement in my complexion, they started asking me to recommend products for them.

“So from there I started buying some well-known direct selling cosmetic brands from warehouses at retail prices and selling to friends and their friends at customer price,” she said.

Though her pool of customers are few and varies from month to month, this side venture requires little effort on Liew’s part as she sells whenever opportunity knocks.

“Since I already have a full-time job, this is just something extra,” she said.

When the going gets tough, less is more

Report from The STAR (Malaysia) dated 1 March 2014 :-

When the going gets tough, less is more

Something’s gotta give as the cost of living goes up. You have to make sacrifices to your lifestyle or savings will take a dent.

HIGH electricity bills, rising petrol and food prices could spell disaster for your family’s monthly household budget. More Malaysians are beginning to tighten their belts, thinking that is their only option.

However, by living a more frugal lifestyle and making a few adjustments to your daily routines, you will be surprised at the numbers you could shave off your monthly utility bills.

Here’s how:

Unplug
After charging your tablets and smartphones, you are still wasting electricity by leaving your chargers and power adapters plugged into the sockets.

International electric consumer product standard Energy Star calls them “energy vampires” because they still use up electricity even when not in use. It estimates that an average household loses RM329 (US$100) a month on these vampires.

“Use a power strip as a central ‘turn off’ point to completely disconnect the power source, when you are done using the equipment. Also unplug your chargers and adapters when you are not using them,” Enegery Star said on its website.

If you don’t need it, don’t use it
The seemingly harmless act of leaving the light or the air-conditioner on can really rack up your utility bill, said Water and Energy Consumer Association of Malaysia (Wecam) secretary-general Foon Weng Lian.

“The biggest wastages are due to ignorance in our daily life. In order to cut them down, we need to educate ourselves by using our common sense,” he said.

The air-conditioner uses up the most electricity in the household, according to Wecam, with a typical unit using up as much as 950W.

“You can save up to 30% by simply increasing your air-con temperature by three degrees Celcius.

“If it is too hot, you could install roof-top insulation or open all the windows to promote natural air circulation and paint the walls with brighter colours to cool down the house,” he said.

Next on the list, the Energy, Green Technology and Water Ministry estimate that around 40% of a household’s electrical usage is in the kitchen.

“It’s mainly due to the refrigerator operating 24/7. Change the bad habit of opening the fridge door frequently to save energy. Make sure you clean and make space in the fridge regularly and not put hot items in it.

“Also, leave at least 10cm at the back of the fridge from the wall to promote better heat-dispensing,” Foon said.

Go digital
Restaurant manager Thomas Yap, 27, used to travel back and forth to hypermarkets to buy produce for his business.

The long stretches in traffic jams, finding parking, navigating through aisles and looking for products and waiting in line at the counters took a toll on his petrol bill and more importantly, his time.

Now, Yap gets that all done in just minutes and he doesn’t even have to leave his house.

“A hypermarket started offering online shopping and delivery services last year and it was a heaven-sent! I don’t have to physically go to a mall anymore and be stuck in a jam when I need to buy something,” Yap said, adding that he has now slashed his petrol bill by RM70 a month.

On the hypermarket’s website, Yap simply searches for the products he wants and scrolls through a list of items until he finds what he is looking for.

He can order as many units and in as much quantity, suited to his budget.

A few clicks of the mouse and his items arrive at his front door in less than 24 hours, at the same price he would have paid if he bought them at a hypermarket, plus a minimal flat rate of RM10 for the delivery costs.

“Now I handle most of my payments like bills and bank transactions online. It is just easier and quite safe,” he said.

Communication student Claudia Lye, 19 also uses the Internet to do her shopping. She buys her clothes through Instagram.

“Almost all my friends are doing it. We follow the profile of our favourite blogshops on the app and you can see pictures of their products with the prices and contact details if we want to purchase them.

“I’d message the owners through WatsApp or WeChat and tell them the measurements of the clothes I want. Then, all I have to do is bank in the payment and it comes in a package in about one to two weeks,” she said,

Lye said though most of the clothes were locally produced, most of them matched the quality and look of some famous but more expensive clothing brands, enabling here to save 50% to 80% during her shopping sprees.

Live frugally & plan ahead
“Something’s gotta give as the cost of living goes up. You have to make sacrifices to your lifestyle or your family’s savings will take a dent,” argues Success Concepts Life Planners chief executive officer Joyce Chuah.

In an average Klang Valley household, Chuah said, monthly expenditure has gone up by at least RM3,000 to RM4,000 in the last 10 years based on a family with two working adults and two school-going kids.

“This doesn’t include emergencies, insurance, investments and other miscellaneous expenses etc.

“If someone were to do a retirement gap analysis, ie how much is required to fund their retirement, they might get a fright with their current state of finances.

“With that, one will realise that if they don’t consciously and continuously save, they will need to ‘scramble’ to conserve when they reach that point,” she said.

For Chuah, desperate times call for desperate measures and changes need to be made in a person’s lifestyle to continue saving. This includes instilling and practising frugal habits.

“It could be as simple as consuming less expensive drinks, buy in bulk or buy secondhand, avoid getting new versions of IT gadgets so often, cancel subscriptions which will end up in the trash. You can also find free entertainment on the Internet instead of going out.

“Batching errands and buying in bulk needs pre-planning and organising.

“Decide on a fixed date to do all your grocery shopping and look for bulk discounts.

“How much do we need to save? A simple rule of thumb is to save 1/3 of your salary each month (33%) to meet your living expenses at retirement.

“If you are an EPF contributor, the mandatory deduction already contributes 23%.
 
“You need to top up an additional 10% of your monthly salary into a personal investment portfolio.

“Children can also be taught to be less susceptible to peer pressure to buy branded items.

“Retirees can keep themselves healthy or ensure they have sufficient and proper insurance coverage since medical costs are huge saving killers,” Chuah said, adding that nine out of 10 people who seek her advice have been found to have insufficient savings for their children’s education and retirement.

Chuah also advised people not to be solely reliant on their EPF savings alone to break the bank and look to investing in other long-term portfolios to cope with inflation rates.