Recently, I was approached by a young Computer Validation System Consultant to do his financial planning. He’s working in Singapore and earning a very handsome salary. 5 figures salary in MYR. But before that, he worked in Malaysia for a solid 6 years before venturing into our neighbour.
What happens?
At first glance, you did not notice any problem. Why on earth a Computer Validation System Consultant with 5 figures salary have a problem with money? Well, we never know a person’s problem until you check on his cashflow. I was intriguing as well. Actually, his problem was more towards managing his cashflow. He cannot handle a large sum of money.
He did not put a signage to his money. Where this money should be going to. For instance, all his salary was used up every single month. Nothing was left for any of these:
- Statutory deductions like EPF
- Saving like emergency or sinking fund
- Investment for certain objective
Most of this money will go into helping people for instance his family members. As he cannot say ‘no’ to his family member. On the other hand, he loves to spend time lepaking with friends and he will pay all the expenses for them! That’s how his money went into. Yeah. He is a very kind of man type.
How did he turn up like this?
Financial planning is all about Behavioural Finance. How do you approach money from your own upbringing? It will define you. The same goes for his. Here is his story.
He was brought up in PPR flat in Selangor. Where he lives with his siblings and a parent with 700 sqft of area. Their house is packed with family members. The life was not very easy back then. They are living paycheck to paycheck. His parent open up a stall. Running a stall in a food court.
Within this vicinity, the customer demographic contains B40 salaried people. Their purchasing power is not as high as M40 and T20. They are concentrating on living a life. The daily goal is to survive and fill up their tummy. Nothing more than that. So life is very difficult for them. Making ends meet is a priority.
Therefore, his parent decided to sell items which is selling at much lower prices compared to the market. It is like his parent is a doing a charity from their business. Due to this, they are struggling to meet the end meet. This affected the household as well.
So, he was trained from a very young age to be this way. Following in the footsteps of his parent. Fighting to survive! He told me that, most of his friends, have this kind of mentality. Once they finish school, they will start to look for employment. Continuing study was a privilege for them. As their life was so difficult.
Starting a career
Before starting his career, he was glad that he was able to finish up his undergraduate. He struggled so much during those days. Setting his intention straight up. Whatever it is he needs to finish it. As he was very determined to change his life and get out of the poverty cycle. Fortunately, he managed to graduate and look for a good career.
During this time, he was offered a career in Melaka. With a fairly unknown company that intended to open up a business in Malaysia. So he needs to build the company from the ground up. No facilities were erected back then. So, he was an Executive tasked to look after Bangladeshi who is doing hard labour.
Prior to accepting this career, he only had 1 day to accept it and find a place to stay in Melaka. Coming from a B40 family, these kinds of hurdles are not so difficult to go through. He replied to all approved candidates and asked for their help. He was lucky. As one of them replied and was willing to help. The rest was history.
When he arrived in Melaka, he stayed in a rented house with his officemate. While all his officemate has a transport to move, he just bought a bicycle to go to work. The distance was about 5 km. He rode the bicycle. To a certain extent, his colleague made fun of him for riding a bike to work. He was so tough within himself. After 6 months of working, he bought a car, an Axia. The car that he holds dearly until these days.
Migrating to Singapore
His life started to turn 360 degrees upon accepting his first overseas assignment. Specifically in Computer Validation System Consultant role. This is where huge sums of money came in. The salary was a gross salary. Without any deduction inclusive of statutory. He was enjoying the life of being a King in Malaysia. As he staying in Malaysia. Commuting on a daily basis. The money is so huge. He can afford so many things in Malaysia. Thanks to a currency exchange rate that is in favour of himself.
He’s so kind
I personally think that his parent brought him up very well. He was so kind hearted and generous to his friends. Whenever they ask him out, he will treat them all very well. Not only that, he will pay up all the expenses. His friends didn’t want him to pay their bills but he insisted.
This is the biggest portion of why his money went away. Without the budget, he cannot trace where the money went. Most of the time (month to month), his money just goes like that.
Start to take charge of his financial affairs
He comes to the realisation that, he cannot live like this for a long term. Something needs to be done. As he no longer has a desire to work until his retirement. But since he has bought a property that is equivalent to 1 million ringgit, he needs to settle this one first before retiring. As he found out that commuting took a toll on him.
Meeting a Financial Planner
Now, he needs to start to find somebody who can help him to manage the cashflow. Someone that he can look up to when it comes to financial planning. As he felt that financial planning was too overwhelming to understand. Saving is easy but he did not know his numbers really well. He looked on Twitter and finally found us!
Planning to settle his property
Being a Financial Planner, our role is to help and guide people with their money. Specifically evaluating, analysing, recommending and planning their cashflow to be better than before. So that they will know what to do with their money. Particularly their numbers. For instance:
- Saving ratio
- Retirement amount, duration and years to sustain
- Amount to protect the asset
- Amount for your emergency saving
- Amount to distribute to your love ones
and many more. Aside from knowing your numbers, the client may plan for complex planning such as:
- Taking a break from work
- Considering an MBA
- Buying a big ticket purchase
- Settling and managing debt
- Open up a business
Planning for loves one
Since he is the wealthiest person in the family, lots of family members are now depending on him for family support. Se still has siblings who are studying in university, a sister in secondary school and an OKU brother to look after for his retirement.
So, his financial affairs are quite complex here. This is aligned with the SC mandate [1] to hire a Financial Planner. At the same time, he will try his best to avoid any failures to his family members by engaging and hiring a Financial Planner to guide him through with complex financial circumstances.
Source:
- SC Capital Market Masterplan 3 (2021 to 2025)