Learn how empowering yourself with financial knowledge can lead to a more stable and dignified life.
Picture: Ahmad Zulqarnain Onn, CEO of EPF. For illustration only/The Edge Malaysia
Question from Mr. Lee:
Good evening GC folks,
A recent headline from the Star was about the majority of Malaysians unable to survive with current inflation and also young ppl below 30 are falling short to meet the minimum EPF savings. Something that I want to talk about with you.
Most people say you can find money if you work hard. True but it also depends on luck and many external conditions. Look at how frequent inflation happens. If the cost of living keeps on increasing every quarter, we surely cannot make it. People would opt to do illegal money gains just to compete with the inflation rate. People say anything that is too good to be true is usually fake. But inflation is skyrocketing. How can people avoid things that are too good to be true when they become desperate to pay the bills/ If we follow the norm like waiting for bonuses, salary increments etc., we cannot sustain. Jump jobs, right now the market is tough and it's difficult to demand 50%. I have tried, and they wanted to give me a contract job at even 35%. Some people are lucky that they can inherit some wealth from their family (e.g. like father, grandfather etc). At least the wealth is passed down. But what about people whose parents are also poor? I used to play trading. I used to win big but I also lost big at the same time. Most recently, I lost quite a big chunk of money but I am grateful that I am not married so I can manage better. But it won't be easy if it happens to someone who has a family.
The star article for your reading pleasure:
https://www.thestar.com.my/news/nation/2024/09/27/msians-strain-under-rising-costs-and-static-incomes
https://www.thestar.com.my/news/nation/2024/09/27/majority-of-under-30s-fall-short-of-minimum-epf-savings
I look up at some of the complaints and many seem to be about ppl struggling with relationships. Honestly speaking, some of my family members are in the middle of a separation. Many of my friends have also divorced over monetary issues.
I think the issue here is women's mindset on money. They say that they want equal opportunities. They want to close the gender gap but when it comes to money, that gap remains wide. The big chunk of financial burden is usually placed on a man's shoulder without discussing his financial strength. We as a man, try to be a gentleman and would agree to absorb this responsibility which ultimately becomes our doom.
I think there should be a mandatory financial education for both men and women. We are too focused on regulation awareness but not financial awareness. As human beings esp women (not me being sexist, this is based on data), we tend to systematically make cognitive and behavioural mistakes with money. Our own circle of ppl may have problems dealing with their own money but we tend to seek their advice when it comes to financial problems. As people within our circle (close friends or family), they can be trustworthy but their financial competence could be in doubt yet we still listen to them because of our comfort level and also they would give free service.
I believe that financial education must be made mandatory to everyone who is planning to settle down. It's got nothing to do with crypto or stock, but the basics like how do you create a budget, how do you keep track of your expenses, how to build an emergency fund.....
A few days ago, I did a social experiment where I randomly asked 10 of my male friends what they know of the 50/30/20 rule. All 10/10 did not know what it was. I asked them if they track their expenses. 10/10 said they don't.
Out of the 10 friends, 4/10 are divorced. 1/10 is married. 5/10 are single with no plans of settling down because of rising costs. The numbers here are telling that financial education is very important to every man and woman out there. The 50/30/20 rule is the rule to survive.
50 = 50% of your after tax income should be spent on needs and obligations (house, car, utilities)
30 = 30% of your after tax income should be spent on you want but don't really need it - sometimes call impulsive buying (holiday, hobby, shirts, pants etc)
20 = 20% of your after tax income should go to savings (e.g emergency fund, ASB).
If you can't meet the 50/30/20 rule then you are not ready to commit to any rship. That should be the law.
Things like this should be shared to everyone out there because this is financial 101.
I have friends where their commitment increases because they need to pay for an additional house under their wife's name. They are already paying for their own house and now they need to pay for another house. Home mortgages are not cheap. You are gonna be paying an additional RM 2000-3000 per month for an additional house. In this situation, you have the right to say "No". She bought the house on her own so she has to pay for it.
The problem here is, many men after they tie the knot, they lose all the 50/30/20 rule to accommodate the women. This is not about being a gentleman, This is about being bullied by a woman. When the man becomes penniless, that is where the route would lead him to depression which ultimately leads to substance and marriage abuses and ultimately divorce.
Without financial education, you cannot have a strong financial literacy.
Something that I have observed which can benefit your future articles.
