I recently read an article that resonated with me.  It was a young man named Adam, (name changed for confidentiality) who faced a lot of challenges in trying to keep pace pace with the high cost of living in Kuala Lumpur.  Adam earned a fairly decent income of RM4,000 per month, but he found himself living from paycheck-to-paycheck.

I was once in Adam’s situation.  I once earned RM 3,000 after deductions; had more or less the same expense structure as Adam, and was living from paycheck to paycheck.  I contemplated on various options to cut down on my expenses. Adam pays rental for a condominium (RM1,000); he has a car loan (RM550), transportation costs  which include petrol, toll and parking (RM440), food expenses (RM500), insurance (RM150), Internet & phone bill (RM200) and contributes to his parents (RM500).  The sad financial reality is that his net pay of approximately RM 3,500 barely covers his expenses of RM3,340 above.  He does not have enough money for entertainment and maintains a simple social life.  Adam is also in a precarious situation because he does not have a contingency fund for emergencies.

At the same time, I felt great a burning anger with my situation.  In all humility, there was room to reduce expenses, but Adam and I were not exactly living a ‘Paris Hilton-inspired’ extravagant lifestyle.  Firstly, buying a motorcycle could potentially be riskier in terms of safety.  Why should I also be a miser on my food expenses and spend RM2 per day on potentially less nutritious food? My food budget of RM500 seemed modest and didn’t even include luxuries like fine dining.  Perhaps moving from my condo to a room would probably save me an additional RM500 or so.

I then asked myself a hard and candid question.  Can an additional RM500 in monthly savings improve my quality of life in a profound or significant way?  Yes, the virtues of disciplined savings are good and the value of RM500 shouldn’t be underestimated.  But let’s face it – RM 500 in savings isn’t going to present you with a lot of options.  As such, I refused to be practical.  I refused to accept the conventional wisdom to take a more ‘realistic path’.  I refused to embark on an austerity drive to further cut down my expenses, which I felt were not excessive to begin with.


What did I do? I allocated 0% of my efforts to cost-cutting and devoted 400% of my energy into improving my earned & investment income.  I embarked on the following initiatives:

  1. I dedicated my time to improve the technical skills for my career in banking.  I read manuals, memos and bugged my seniors to help me improve my job knowledge.  As such, I found myself wanting to take the LRT to work early to get a head start in the day, as I wanted to avoid the horrendous traffic.  I didn’t mind starting early and leaving office late too.  I was motivated to do so.  The next thing I knew, my commuting and travel costs dropped significantly.
  2. My bosses encouraged me to take a Professional Accounting qualification as I was in the Finance department during that stage of my career.  I spent the next 2.5 years without any social life.  I was glad to spend most weekends at home because I needed to study and prepare for my exams. The next thing I knew, my expenses on food and entertainment dropped dramatically.  I was happy to eat simple & healthy meals at home because I wanted to maximise my study time.
  3. I built good relationships with my bosses who eventually became my treasured mentors.  I went to them regularly for feedback and advice, and they were vested in my success.  That year, I was humbled to be rated as the top performer in the division.  I received a promotion while my salary increased from RM3,000 to RM4,500 in a single year.
  4. My Bonus that year was about RM20,000; which was pretty decent considering my original salary of RM3,000.  Whilst I do appreciate savings as a virtue, it would have taken me close to 3.5 years to save that same amount via regular monthly savings.  I used my bonus as a down payment for a cash flow generating apartment and was able to build my portfolio more efficiently.

Moral of the story? Sometimes, being ‘realistic’ is the most commonly travelled road to mediocrity.  Sometimes, it pays to be unconventional if you want to be better.  In other words, the ‘realistic’ approach to both Adam’s and my predicament would be to attack and cut costs diligently.

However, I made income improvement the foundation of my habit and a priority over cost cutting.  I made it my sole purpose and burning desire.  As described above, I then found that my lifestyle needs became simpler and I spent less money, because I was just so focused on improving my skills and income.  Please don’t get me wrong – I do advocate the values of savings diligently and not spending exorbitantly.  However, wouldn’t it be a better option to cut costs and increase your income as well?

It seems that being ‘cheap’ is now a new social dogma propagated by some gurus and experts.  At the same time, spending on luxuries and wants is viewed as nefarious.  Hey – if eating cheap ‘economy rice’ every day or not having car rocks your boat, I respect that.  But let’s not impose our own lifestyle habits on others.  In all humility, I’d like to recommend a life of abundance, instead of limitations.  If one likes eating RM50 gourmet meals every day – go for it if you can afford it and if it makes you happy!  Just make sure you earn a lot of more to fund that kind of lifestyle.  Also, make sure you also invest regularly with your increased income to have a solid financial base.

Lastly, don’t be intimidated by people’s opinions, mine included.  Only mediocrity is sure of its self, so take risks and do something unconventional.  Don’t be afraid of being different; of doing things in a different way.  Rather, we should be afraid of being the same as everyone else.

By Mark Chua.


Source : http://propertyinsight.com.my/featured-properties/tough-times-what-should-we-focus-on/

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