HOW do we manage our finances in the Year of the Ox, which arrives on Monday? This year and the next appear to be tough, with half the world already in recession and the other half seriously affected by the fallout.
For the average Joe, meeting financial obligations during tough times like these requires more discipline where family finances are concerned. There is a need for cooperation among family members to limit unnecessary household expenses.
Banks have also come up with various products and financial solutions to help people manage their finances better. For example, several weeks back, AmBank (M) Bhd launched the “Family First Solution” to meet a family’s financial needs.
This product allows families to manage their day-to-day finances with a transactional account called “Everyday Account” and allows them to open up to 10 “Special Savings Accounts” linked to the Everyday Account for savings towards a purchase such as buying a car or going on a holiday.
The Family First Solution also has features such as family insurance and will-writing services, investment advice through “Life Guides” and other financial tools to plan for the medium to long-term.
At a time when people are trading down for everything from ordinary household items to where they eat, lavish lifestyles such as a particular Singaporean senior civil servant’s S$46,000 five-day trip to learn fine French cooking with his family are out of fashion.
As the new lunar year begins, the news on the macroeconomic front remain mostly negative and continue to affect the real economy with people cautious about prospects ahead.
Abacus Advisory Sdn Bhd chief executive officer Carol Yip says “its time to go back to basics by working to produce important needs and building a strong financial foundation.”
“We can’t change the world to improve the economic situation but we can do something better for our personal finances because it is within our control,” she says.
“You need to be patient and practical with your financial situation. It is a process and a journey that you need to take to gain better experience in managing your own finances that last a life time,” Yip says.
She says the Ox’s main characteristics are fortitude and hard work as well as courage, resilience, determination and endurance. Yip says just as oxen often work in pairs or even larger teams for heavier work, there is a “need to support each other as a team to manage personal finances for the family.”
“It is advisable for husband and wife to have similar, if not the same, financial philosophy to have financial peace at home. Otherwise, both will have to come to terms with mutual understanding of good family financial practices,” she says.
Yip says it is good for both parties to agree on how the income will be saved and spent.
“If only one spouse is working, the non-working spouse can help to manage money effectively with wise spending for the home and teach the children good money management skills,” she adds.
Yip says it is a time to be “creative” where working harder is concerned. “Working harder means taking up extra or part-time work, restructuring debts and loans with better repayment terms and monitoring existing investments for better or safer returns,” she says.
Yip says working harder also meant practising micro-money management such as spending less on a daily basis and thinking of ways to recycle and avoid wastage as well as keeping a lid on utilities bills.
Whitman Independent Advisors Sdn Bhd managing director Yap Ming Hui says there is a need to put things in perspective in one’s financial management.
“Many people will have their new year resolutions or other plans for managing finances but while they enjoy making plans, these are often not carried out or they often dream of financial freedom but they’ve no road map,” he says.
Yap says “not taking action is the biggest obstacle so there’s a need to work hard to build the discipline.”
He says there is no need to set “very high goals” but there is a need for action. “Be a leader in practising good money management, set the directions on where your finances are going,” Yap adds.
“In the kind of economic environment we’re living in, we need to be practical where financial management is concerned. Look long-term and don’t take risks or follow trends blindly; have a sound intellectual framework to work from before investing,” he says.
At the most basic, Yap says “we need to know the right savings rate for ourselves and know what to spend on.”
Ultimately, he says, money is just a means to achieving an end, it’s not an end in itself and that is something to remember even in a downturn as the Year of the Ox begins.