(The Story of Your Money is the ultimate beginner’s “for dummies” introduction to Personal Finance principles. This series is a primer that will walk you through the very basics and set the scene before you dive into the world of personal moolah management – I highly recommend you start with Part 1 [it will make more sense] even if you’re a pro!)
Mamat’s story is nothing unique – most people are subject to this tug-of-war between Income and Expense as soon as they leave school and enter the workforce.
Our children know the drill: to do well in life you stay in school, study smart. And then one day you will graduate, enter the competitive pool of young jobseekers and hopefully emerge victorious – a job offer, clutched tightly in your fist!
And then what?
Oh, um.. Car, marriage, house.
Buy a car. Get married. Build a house.
Oh. But how?
It’s wonderful how much human effort and endeavor (and money) gets poured into education, on both a national and global scale – we’re talking pre-school syllabi, special-needs assistance and care, detailed classroom planning, education streaming exercises, examination standards, policy guidance across the board for primary, secondary, vocational, university levels – all the way from the day a child starts walking till the day s/he walks off the graduation stage.
But then it just drops off, doesn’t it? Bleep. Bleep Bleeeeeep –
And then Nothing.
Strip away the training wheels, no more diapers, get a spoon and feed yourself, dammit!! Congratulations, you survived the first twenty to twenty-five years of your life – here is a piece of paper proving your shiny new credentials and a bag of optional bragging rights (please do not take these; just leave them by the door before you exit).
And then what?
You just spent the last two decades of your life learning how to tell the time on a watch strapped to your wrist and now you find yourself clutching a stick in an open field and it looks like it’s going to rain.
You’re not going to admit you don’t know what you’re doing, that you suddenly can’t tell the time – not after all those years in school! How embarrassing. Nobody’s going to admit they haven’t a single clue, goodness no – Not when you’re now a, gasp, dare I say it: adult.
Pfft. No textbooks, teachers, no step-by-step instructions on what to do next? That’s okay. I got this, I mean c’mon – I have a job now. How could someone who doesn’t know what they’re doing get a job. …Right?
And so here we are. Even if you sucked at math in school, you (like Mamat) probably understand the concept of Income and Expense.
Got a job, aw yisss. Someone gives me money. I use the money to buy what I like. End of story.
Wait – WHAT! I qualify for a new credit card??!!1! Well that’s great news! Someone’s offered to loan me some money! My wallet can suddenly stretch a little more: I can buy things even if I don’t necessarily have all the money just yet – and then pay it off in the future. Sama jua tu. After all, I have a job. Just because I don’t have the money right now doesn’t mean I can’t afford it – I’ll have that money in the future. The fantastic benefit is that I don’t have to waste time waiting. Here’s an example: look at this car. I’ll just buy it now, and then in seven years I’ll be done. If I had to wait till I had all the money, I’d be waiting forever – and c’mon, what am I supposed to do in the meantime, walk 15km to work everyday? Hitch a ride like a child? What a joke.
Well alright, so that’s set. Got the car. Next step – marriage. Or specifically, a wedding.
I’ve already started saving up for that. I’m sensible so I’ll try kumpul duit as much as possible, use it to buy smaller things like the wedding dress, the door gifts, the décor. But oh man I don’t want to wait forever, I’m getting old! I’ll just take out a loan for the rest of the amount; like 15k that won’t be too bad. Plus, I’ve already paid off a good amount on my car so that’ll be done soon anyway. Yeah. Problem solved.
And what about starting a family? Children unfortunately don’t work like bulk-order discounts – no buy one free one deal! Each one is pretty much as expensive as the next (let’s not get into the hand-me-down argument right now). Will you be buying baby formula on your credit card? Will you still be paying off the loan you took out to buy pampers when your child is halfway through primary school? What about that house you always wanted to get? (??!!)
Let’s pause right there.
You’ve suddenly found yourself ensnared in this vicious cycle. Every month a nice, clean paycheck is dropped into your bank account, the balance shoots upwards like a rocket and spikes (momentarily) into the sky – before it plummets straight back down with a resounding crash, because all your monthly payments devoured it like it was a free Ramadan buffet.
Where did you go wrong? All the benefits of not having to wait to buy, saving time, paying for it in the future – where did it go? Suddenly all your Income; the precious golden nuggets you are rewarded with after spending 8 hours a day, 5 days a week, year in, year out, hunched over your cubicle desk – they’re going straight back out to pay for Expenses you don’t even remember making! Where is that designer bag I bought last year; I’m still paying for it and I haven’t seen it in weeks!
(It’s probably buried under all your credit card debt somewhere. Ouch. Sorry, I had to – I’ll be nicer now.)
I mean this – well this is torture, isn’t it? Is there an end in sight?
Personal finance people, they talk about this problem in many colourful ways:
You’ve dug yourself into a big hole (no, a big CRATER) of debt. You’re SPIRALLING downward into inevitable bankruptcy. You’re struggling to make ends meet. You are drowning in interest from all your credit card bills and loans. You have no disposable income – what this means is, like the rocket example above, even if you’re still earning a monthly salary – it gets cut away like meat off a bone, and you’ve only got a few bucks left after the carnage is over. You can’t withdraw any physical money from the ATM. Your Income is bleeding out in the form of bills and bank transfers – you never see it! Just numbers on a screen, numbers on a page, sealed up in an envelope and poked into your mailbox.
Let’s pause again for another second. Alright, take a deep breath and slowly – release.
Does any of this sound familiar? Anything even a tiny bit relatable? It’s not a great story. But I’m not here to be self-righteous about it and bask in your feelings of guilt and shame.
Hey. Chin up. It’s not too late.
But we need to make a change. A real change. Not a “I promise to shop less next month and if I’m a good girl, I’ll reward myself with a trip to Singapore/new watch/more stuff!” change. Not a “I’ll stop buying lattes, I’ll just make Nescafe at the office” change.
I’m talking a real change.
(Warning, tough love: Hate to break it to you, honey, but don’t go crawling to the government for help, don’t go playing the blame game “gaji inda cukup“, “XYZ paksa membagi bantuan” “aku ani bukan jua org kaya, inda mampu” – snap out of it, you big baby, grow some BAWLS and take ownership over your own situation! If you got yourself into it, it’s probably your fault to some extent. And y’know what, even if it wasn’t your fault to begin with… you’re the only one who can help yourself. Everybody got their own problems to deal with, sweetie; stop the dependence, the spoonfeeding, the breastfeeding. Can you imagine if you needed someone to wipe your bum every time you needed the pooper? What happens if you accidentally soil yourself then – is it their fault or yours? Forgive the language but Y’ALL GOTTA HEAR IT FROM SOMEBODY. It’s time to take matters into your own hands and take control!)
But it’s not just about saving money.
It’s not just about spending less.
It’s not just about paying off your credit card and starting from zero debt.
Don’t get me wrong, all these things are very important. But before we get down to these “actionable” doable, changeable, check-list, New Years Resolution-worthy bullet points… We need a conversation about why we need to do all this, why it’s important to seize control of our finances. What do you get out of it? What is the purpose of Income, Expense – in fact, what is the purpose of money at all?
We need to start rethinking this whole money business – turn it over on its head, flip it inside out. As cliche as it sounds, we’re going to need to fix a mindset: how we look at money. What money is, and what it’s good for, and why we need it.
Sure it’s a material good, and we definitely can’t take it with us to the grave – but don’t be fooled into thinking “money isn’t everything”, “money isn’t that important”, “the best things in life are free”, “I’d rather be happy than rich”. It’s not everything but it is the currency of the modern world. It’s not healthy to obsess over money but don’t be fooled into thinking it’s not important. It is important, that’s why the number one cause for stress in adults is money.¹ Money troubles are also one of the main causes of fights in marriages (and divorce)!²
And if this something (that isn’t “everything”) can have such a big impact on the parts of your life that actually do matter (your health, family), that’s all the more reason to handle it properly.
¹ This is a fairly well-known factoid but if you want actual statistics to back it up, a quick google gives me these:
What stresses Britons out most?
Top sources of stress in the US (2014)
I can’t vouch for how credible this statista website is but c’mon I’m not exactly writing my PhD thesis here.
² Snore, let’s make this an interactive exercise. If you really want a source, look for statistic yourself. Maybe I made it up. Prove me wrong (with a credible source, not Cosmo mag) and I’ll buy you a cookie.