Managing yourself and your money


  • Business
  • Saturday, 08 Aug 2009

WHEN do you get the time to do the writing?

That’s a common question that I have been asked often. My short answer is “because I don’t golf!” and I don’t golf because I don’t get enough “credits” from my wife and son to scoot off during weekends to have a few rounds with my buddies.

But in all seriousness, I already do a fair amount of writing, perhaps because I tend to be more introspective and reflective when time permits. In fact, my wife continues to make fun of me, recalling how I used to say that I treasured my solitude too much to settle down (that was when we first knew each other).

When I am alone, many ideas go through my mind and while some get scribbled in random scrapbooks, many were lost to plain forgetfulness. A few may eventually end up on my blog but I have ceased to maintain it diligently, especially after my son came along.

So though I don’t blog now, I continue to make the effort to write, so that I can publicly share and also capture my thoughts on paper, literally!

Finding the time to do things is all about managing time. We will find time to check out one more shop for “best makan”, yet somehow, we never have time to do other real important things. You know what I am talking about, as we are all guilty – our (financial) workouts.

Recently after my recovery from flu and cough, I wanted to resume my exercise. Despite so many years of various exercise regimes, it was frankly very tough to re-start the engine. For two weeks, I resolved to go for a run or a swim in the evening after work.

Every time when I didn’t have a dinner appointment, I would start the day with a clear objective of exercising later that day. But as the day went on, I start to feel the strain from the wear and tear of the day’s work. By the end of the day, just a look at the traffic in front of my office is sufficient to extinguish any fire that is left. It was just easier to head home and play with my kid. Actually, these are only excuses because I could have joined a colleague from the credit team who regularly jogs around the office area.

Nonetheless, I finally got my run! It’s between setting the resolution and actually getting down to doing. And my way is to do it in the morning, the very first thing after waking up. While the day’s schedule can change, nothing can change your first order of the day activity. That is how I get my important activities done.

The same principle applies when it comes to other priorities of life. But the procrastinator in us usually rationalises that they are not as urgent, maybe they can be deferred by a day or till the next birthday. Saving for rainy days can wait since the sun is shining. Our child need not go to university until 18 years old, we still have time. Retirement planning? I’m still young and it is not due until 20 years later!

These are the reasons why people don’t save enough, or never thought of investing for the long-term future, and why people avoid the topic of life insurance. Often this is to their detriment because time lost cannot be recovered.

Asians are already good savers. We have been taught well by our parents. Here’s our current paradigm which is very simple and effective.

Income - Expense = Savings

Savings is whatever that you did not spend from your income, but it is only the residual. Imagine after a dinner, whatever that we cannot finish, we “ta-pao” home. Savings is thus whatever that we did not finish using initially, so it is only the “ta-pao”.

Now I’ll like to introduce another perspective to start off my finance 101 concepts. New Paradigm – since I wrote about exercising, I shall simply call this Money Workout #1:

Income - Savings = Expense

A simple re-order of things, but it is a fundamental shift in idea and priority. In this Money Workout #1, first and foremost, you are to save. After you have saved what you need and want to save, then the balance is meant for expense. This is opposite to spend first and the left over is saved. Simple and concise!

Income (credited into the bank account on day 1 of payday)

Minus         Savings (debited from the bank account at the end of day 1)

Equals Expense (available for you to spend from day 2 to day 30)

This is therefore the true discipline to savings. I have been following this rule very diligently because I need to save for my future which includes retirement, putting my son to university, protection against contingencies such as illnesses, and occasional expensive family holiday or a special gift.

Not only do I save for the future, there is a positive side effect from practising this workout routine. Since my residual is my expense budget, I have over the years lived a life that is comfortable and sufficient, with the occasional pampering, but little extravagance or ostentation, and never spending beyond my means.

This is the life that I choose, which balances between what I spend today versus what I build up tomorrow.

Since I have re-ordered the equations to put savings first, I shall also change the cliché of the past from “Save for Rainy Days” to “Pay Yourself First”.

After all, we are so attuned to the routine of paying bills and repaying loans to others, why not add ourselves to the list of “creditors”? The first cheque to be written after receiving your pay should then be a cheque that is paid to yourself.

Just like giving excuses for not having time to exercise, most still give excuses for not saving and not planning for future. I believe that if you just start by paying yourself first, you would have taken a significant first step towards a total money workout routine.

·Tay is senior vice-president and senior head of UOB’s personal financial services division

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