My spending habit-being cheap or spendthrift?

My husband and I were very careful with money spending when he was full-time into church ministry. Our income were 50% less than when we were both holding full time corporate job.  Every cent spent must be accountable.  If we needed to eat out, drinks would be omitted, and cheaper food were ordered. We saved on clothing and entertainment. We taught our children to be careful with spending, and to save money to buy what they wanted. My children were unable to get "more expensive" toys they wanted immediately, but to save money and to wait for their birthday, Chinese New Year or Christmas. We have not brought them to oversea trips as this is not, and not yet, our lifestyle.

Life was not easy when income was limited. However, we were grateful that we were not indebted to anyone during those "cheap" period as God was with us. I said "cheap" because some people would see this as "cheap" when we couldn't spend like others and gave to children for whatever they asked for. I couldn't afford to go to saloon to have my hair done properly, to paint my nails, to pay for massage and to have nice wardrobe. Looking back, all of these were only material things and the importance was all in our mind.

Now that my husband is no longer in the ministry, he runs his own business.  God has been good to us, and we are starting to have excess money to save for our children's tertiary education. We look for reasons to go to buffet. My husband and children love good food and have varieties of them. One thing that our whole family agreed is, you tend to appreciate what you have if at one time you didn't have. If a person has never been lacked of anything in his life, he will not appreciate what he has. In another word, a person is happier if he has what he didn't have.

A friend runs a workshop. He always has the latest phone to show off. When I advised him to put aside some money monthly for his children's education in the future, he couldn't even willing to commit RMl100 per month. He said that he couldn't live like us. He would rather spend money the way he likes. He would worry about that when time comes.

Such behaviour is arrogant. He despises people who are careful with money spending. Should he have financial problem, he would blame others not helping him out.

It is not surprising to meet people of such kind around us. They could be driving better cars, using better phones and eating at better place than us. When I talk to them about financial planning, they will start cursing their low paid income.  In fact, most of their income is above average.

Financial Planning, comes with attitude, and spending pattern our parents pass down to us.

Clear Sky

Returned from Taipei on 11th May 2012. It rained on that day. Quite heavy. After that, for more than 2 weeks, the weather has been unbearably hot. It's really burning hot on my skin even though I try to stay away from the sun in the house. I can't do much productive work. Should I consider installing air-conditional to make my stay in the house more comfortable to produce more productive work?

The sky has been very clear, very often, without cloud. The cloud comes and blown away. My opposite neighbour who retired years ago almost does burning every day, anytime he likes.  This is very annoying, to feel hot and to smell burning smokes, and it makes my clothes hung out to carry the smoke smell.

Should I install air-condition? Or should I live without to save electricity and to be environmentally friendly?

A Penny Saved Is a Penny Earned

I came across this phrase "A penny saved is a penny earned" recently. Isn't this an old teaching from my father? We learned to save by his example.  My father was a petty trader in his life.  He told me how he moved to Kota Kinabalu from Keningau bringing along his 5 schooling children.  I respect and admire my father's hard work and uphold his responsibility as a China man father.  He ensured every child to have school to go to, and enough food to feed every mouth.  He worked as ku-lee （苦力）for a while when he set his foot on Jesselton. After that he went to Keningau, went through the Japanese occupation, got married with my mother (taukeh's adopted daughter, for fear of the Japanese cruelty to chinese single ladies), and came to Jesselton for better prospects for the children, also to start life afresh.

It was just simply logical for him to earn money by selling food he knew how to make, though not so professional. He sold chinese cake on weekdays and iced drink on Sunday horse racing.

Father worked very hard and saved every penny he could.

The story of my father was educational and meaningful to each of us in the family.  Should I have time, I would write down for remembrance.

Life Insurane - Term or Whole Life?

To buy term or to buy life? Even though the premium is cheaper than whole life insurance, term insurance is not  sought after in KK. In general, customers like to see returns on their premium paid. Most of those above 35 yr old would have committed whole life policy. After more than 10 years of paying, they will ask themselves whether it is worth continuing paying the premium when the returns are not attractive and the sum assured is low.

Insurance premium is a payment you pay against the risk of you dying. When a 30 y.o. non-smoking young man buy a policy of RM100,000, the insurance company use statistical data collected over years to determine what are the odds of him dying at that age. Assuming 5000 young man of that age buy the same insurance, and basing on the statistic projection, 10 would die.  Therefore, RM1 mil will be paid out. That means the premium must be at least RM200 + administration cost + marketing cost + agent's commission + profit for insurance company. If the policy offers cash returns or bonuses, the extra money depending on the company's promise to make the policy more attractive will be added to the premium.

If you buy term insurance that don't give you any cash return, and you buy a limited term only, the premium will be much cheaper than whole life policy.  As a person gets older, the chance of dying is higher.  Every one must die one day, therefore, the chance of insurance company paying out to whole life policy is confirmed.  Because of that, premium for whole life is certainly much higher.

When deciding whether to buy term or whole life, the answer comes back to the purpose of committing an insurance policy. Do you buy against the risk of you not being able to see through your children becoming financially independent? Do you buy because you want the returns?

Finally, insurance is insurance. Insurance is not an investment.  If you want investment, invest your money elsewhere.