Managing budgets and saving for the future - Part 2

Continuing where I left.

Now that I thought about it, my sister's advice of "sikit2 lama2 jadi Gold Rolex (when it should be jadi bukit) was the advice that got me into this savings paranoia.

I have survived so far by :

• Not dabbling in new issuances or the secondary stock market


• Not borrowing to invest


• Managing my monthly cash flows with discipline


• Save or forecast need for something so that I can pay cash, usually vacations, certain targeted items


• Use of credit cards, albeit some time foolishly i.e. usually clothing, toys, wants but not needs, but managing the usage (ie never pay groceries or petrol with cards)


• Major expenditures paid with bonuses (for as long as there are bonuses, otherwise just duduk diam2)


• Separate bank accounts for MrM and I


• Designated household expenses between the two of us, except for groceries, where we split 50:50 or sometimes 60:40

I would hardly say that my method works for everyone, especially the part about using credit cards. I think I tend to charge wants but not needs on my credit card(s) and have been the victim of the exorbitant interest rates charged by issuing banks. One thing that I know for sure is that whenever I travel, all claim monies goes back into credit card payments. At least I have that discipline not to squander away money from claims for desired items. Even when the claims are more than what was charged to the card, I would just dump all the money into credit card payments.
By the time Aliah was born in 2000, and subsequent promotions where I work as well as MrM, financially we began to get better. We were still living paycheck to paycheck with little nest egg built from earlier years accumulated savings here and there. I still have that cash flow spreadsheet and planned expenses through forecasting again. If I spent more this month, will this impact my cash flow for next month or next few months, then that would mean tightening our belts for the next month or months, depending on size of purchase.
Fast forward 2006. We made plans to renovate our existing home to make more rooms for each of our kids, whom at that moment were sharing one room. MrM took to the task of designing the renovation layout and communicating that to the architect to draw up the plans. The house was under my company loan needed to be refinanced and MrM will take up a bank loan for that. The refinancing gave us some money for the renovation but was not enough for the entire cost. Again my cashflow management, in my view, helped. It was through the monthly cash planning and forecasting again how many months is required to be able to buy all the house accessories that enabled us to pay via credit card first and making full payments later.
In terms of responsibility for making payments, MrM is in charge of :

• People carrier installment (fixed )


• House loan (fixed)


• Toll and petrol (fixed)


• Cukai pintu and cukai tanah


• Wet groceries (fish and meats - fixed)


• Dry groceries (Fixed to variable, 50% of it)


• Education endowment for no 3


• His own credit card (variable to fixed depending on balance)


• Car maintenance


• Insurance and road tax for people carrier

While I am in charge of :

• Two other car installments(fixed)


• Education endowment for no 1 and 2 (taken at a younger age)


• Utility bills (fixed including education loan payments to MARA)


• Kids tuition, piano and ngaji (fixed)


• Maid and driver's salary (fixed)


• Credit cards (variable since it will be what was charged in the past month)


• Wet groceries (vegetable - fixed to variable)


• Dry groceries (fixed sb memang kena buat, variable depending on purchases, 50% of total)


• Some parts of car maintenance (like buying Syntium not fixed monthly)


• Insurance and road tax for the cars that I am paying (annually)

Now that Harith is born, MrM is given charge to buy formula and diapers....
And somehow this works for us. In terms of decision-making, MrM makes the major ones, like deciding on moving here to Sban, the recent renovation, while I tend to decide on the use of money that gives me short-term satisfaction. Needs would be kids clothing, school supplies, computer equipment and of course the wants such as jewelry (costume jewelry not gold or diamonds), shoes and bags and oh yes, house decor stuff....I make the travel or vacation plans, run it by MrM and if he agrees, I would arrange for the tickets, hotel, transport etc. If it is local travel, MrM would pay for food and petrol, while I take care of accommodation. Not to the exact dollars and cents but about there....
Suze Orman says that you should have savings of at least 8 months salary and that is a lot! At this age, I tend to relax a bit and spend. I would like to think that I am conservative but not frugal anymore. We do eat out, it is just that the places we go here in Sban are quite reasonable for a family our size. Occassional treats for kids would be McD or KFC or Sate Hj Samuri. Or Cozy in KL. Or Pak Lang Kopi Tiam in PD.
In some months I do save 40% of my salary. My approach is a fixed income earner approach or in other words, makan gaji punya cara. The stability of income from the organizations both of us work for helps in enabling us to manage our cash flows the way we have been.
What do I think about our current expenses? There is a lot of fat here and there and if one of us stops working, there will be major adjustments to be made. With a bit of planning on my part, we could cut our grocery bills. Harith could use cloth diapers. As a household, we could use less electricity, especially air-conditioning, and discipline the kids on switching off lights and fans after use. I do tell my kids to do that but kids will be kids and the fan in the bedroom will be on when the owner has gone to watch TV and switching on the fan there too! I have been reminding my kids that money do not grow on trees but let's just say, that it is still a journey and most times I am too tired to nag!
Much as I wish I could do something else for a living, for now I am accepting the fact that I need to continue working where I work today and try to see the positive side of things. But this would warrant an entry on its own and certainly has no relevance to managing budgets! Getting to do what I want vs. being responsible and continue working in order to be able to provide financially for kids education is always a dilemma. Aarrrghhh!
In retrospect what my mother said was true. Do not worry about money, there will be time when you will have money. I don't know. Perhaps that was her prayer for me or with her saying that I was more determined than ever to save money. A lot of money or not that is relative, I believe so. To her I think she meant having some money saved, knowing my mother. And sometimes I can't help but think that my mother does know a thing or two about these things...