THERE are some wealthy people sitting atop their respective family food chains who honestly think it is acceptable and perhaps even appropriate for them to control others through the power of their money. It isn't.
Many years ago, while on work in East Malaysia, I had a fascinating conversation with a successful professional will writer in Sabah, who told me about an unnamed rich client who visited his office in the heart of Kota Kinabalu often — every few months — to change the terms of his will depending on which of his beneficiaries upset or pleased him!
This ageing patriarch held the threat of cutting out some of his adult children and their spouses from his will based on how they recently acted towards him (Licensed financial planners generally advise our clients to update their wills once every three to six years to account for significant changes in personal and external circumstances — not twice or thrice a year to keep younger clan members in check).
I don't mean to come across as judgmental, but I will say that components of a healthy bedrock for familial relations are nurturing guidance and unconditional love on the part of parents and grandparents, which tend to engender unforced filial piety within their younger family members.
But you can't teach an old dog new tricks, so what I will do for the rest of this Money Thoughts column is focus on helping poorer, younger readers lay personal foundations to:
1. Manage their own finances better; and thus
2. Grow financially stable to gain personal fiscal independence.
We'll explore the value of a budget and the freedom it can buy, some truths about debt, and the allure of starting a business.
WHY BUDGET?
Since none of us has an infinite amount of cash to fund our ever-expanding unbounded set of wants, we need to make choices about what we do with the money we have flowing into our lives.
Author and speaker Zig Ziglar once wrote: "Money isn't the most important thing in life, but it's reasonably close to oxygen on the 'gotta have it' scale."
So, to ensure we don't end up with "too much month left at the end of our money", use a written expenditure plan known as a written budget.
Note: A mental budget is better than no budget, but a written (or typed out) budget is — based on my professional observations — more than 10 times more effective than a mental budget.
Nonetheless, some people rebel against the wisdom of budgeting. Irish playwright and author of the fabulously chilling novel The Picture of Dorian Gray Oscar Wilde stated: "Anyone who lives within their means suffers from a lack of imagination."
There is great entertainment value in Wilde's statement, yet it doesn't alter the truth that living within our means now, and saving and investing the surplus for a long time will permit us, later, to expand our boundaries of experience far beyond what we can currently dream of today.
TWO SIDES OF DEBT
As we aim to get our finances in order, we should look hard at our array of liabilities — the debts we have accrued but not yet fully repaid. Good debts, by definition, cause excess cash flow to stream into our pockets. Bad debts suck us dry.
If you've ever experienced a sense of dread at a fast approaching scheduled debt repayment, you'll appreciate this observation I stumbled upon by an anonymous wit: "Car sickness is the feeling you get when the monthly payment is due."
A slightly different spin on debt comes from the late Peter Ustinov, an actor, author and recognised genius: "The only reason I made a commercial for American Express was to pay for my American Express bill."
Ustinov's words, humorous as they are, contain a profound truth. Working hard to pay down or to pay off our debts is wise. Obviously, no one works harder than business owners.
DARE I START A BUSINESS?
I don't know if you prefer the relative safety and stability of a job or if you aspire to start a business. On the downside, be aware of an oft-quoted statistic: 90 per cent of all business start-ups fail. Can you live with such initial odds stacked against you?
If so, a previous column I wrote on establishing an appropriately sized EBF or Emergency Buffer Fund might prove helpful. Read it here: www.nst.com.my/lifestyle/sunday-vibes/2022/08/820075/money-thoughts-buil...
If you decide building a business is right for you, count the cost, prepare well, and understand that rejection and intermediate failures are par for the course. You may fail but that does not make you a failure. Get up, dust yourself off, learn the salient lessons, re-calibrate your approach and try again. And then again. And yet again.
When you eventually succeed — which, while never guaranteed, should grow in likelihood with each intelligent attempt — you'll wield substantial financial muscle.
When that occurs, have fun with your money. But never give in to the temptation to use it inappropriately to manipulate others or to bend them to your will.
That's not cool.
© 2024 Rajen Devadason
Rajen Devadason, CFP, is a securities commission-licensed Financial Planner, professional speaker and author. Read his free articles at www.FreeCoolArticles.com; he may be connected with on LinkedIn at www.linkedin.com/in/rajendevadason, or via rajen@RajenDevadason.com. You may also follow him on X@Rajen Devadason and on YouTube (Rajen Devadason).