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We had provided Financial Literacy Program at D’Home Mental Health Association (Penang) at 6th Jun 2015.
Proactive Financial Planning, Happiness to Family

How to deal with your finances at this critical time?

During this difficult time, we have taken many precautions to take care of our health and hygiene. But it is as crucial for us to deal with our finances as well. We might not know what will happen in these coming months or will there be any recurring events. For better or worse, we must prepare ourselves and our assets to go through this time.

Here are 6 simple ways that you can follow to ensure you have a healthy financial management and provide security to you and your family.

Review your income & expense

• Be prudent. It is always better to be safe than sorry. Whether you have any income loss or not, this will be the golden rule as sufficient cash is vital to maintain basic living necessities for you and your family.

• Only spend on necessary expenses and cut off any unnecessary spending in this time being, especially if you are suffering from a salary cut or decreased revenue.

• If things were to turn better in the future, well then you can start to spend on what you wish to, but if things were to turn worse, at least you have enough cash to sustain.

• If you have always been recording and keeping track of your cashflow, great job! Please continue to do so. But if you have not, this is the best time to start!

• Use an excel spreadsheet to categorize you expenses and see where you are spending your money

• Set a cap to each category and FOLLOW STRICTLY

• So the next question will be, how am I supposed to know whether my cash flow is healthy? This is a subjective matter and does not have a compulsory benchmark as it differs with a person’s financial situation and dependents that they have. If you wish to have a more accurate advice you may engage with us, while in the meantime we given a generic method to measure, not as accurate, but it will be easier. If you fulfill both of the criteria, you are safe to go, failing any of the 2 you will need to promptly relook into your cash flow and make adjustments for healthy financial management.

• 20% surplus after deducting all necessary expenses

• Sufficient emergency fund to sustain 3-6 months living cost (we will talk about this in detail later)

Review your current emergency funds & financial management

• Emergency fund is a certain amount of cash that is used to support unexpected events that require a lump sum of money.

• Here we have categorized 2 types of emergency fund, minor and major emergency.

• For minor emergencies, we will need at least 6 months of your income to be kept in cash. It is meant to be used for unscheduled events like car repair, replacement of gadgets, temporary loss of income/job that are still not devastating to our assets. For self-employed individuals, it is recommended to have at least 6 months of your income as to cushion any fluctuations in revenue as a healthy financial management.

• Cash for minor emergencies are recommended to be placed in instruments that is capital guaranteed, offers high liquidity (able to be withdrawn with 24 hours) and still able to provide some interest while the cash is kept there. Most of us would always think of fixed deposits as our tool for emergency fund, yes, no doubt it suits the profile, while there are some alternatives that we can look at to diversify it as well. Tools like money market are a very suitable tool for this purpose too. Though it is not often heard, it still often has higher interests, offer daily rest interest, lower capital and higher liquidity, than fixed deposits. While for corporate usage to keep cash, money market has a higher advantage as it is TAX FREE.

• While for major emergencies are situations where the amount of cash will not be sustainable to cover, even it is sufficient, it is not meant to clear up a big portion of your cash solely for this purpose. Unfortunate events like accidents, illnesses or any loss of working capability due to the mentioned reason are something that people often forget. Taking advantage from insurance planning may just save you from burning a hole in your assets or having the possibility to increase your loans. This part of the planning will be explained further in details later part of this post.

Make full use of government incentives during Covid-19

• For individuals that are under B40, M40 category and businessman, there are plenty of benefits that the government has launched to get everybody through this difficult time.

• Once again, be prudent and make full use of the incentives to build up your cash and fulfill the shortfalls of your living cost or your future goals.

Details on incentives in the link below: Economic Stimulus Package

Review your insurance planning/major emergency fund

• In actual fact, insurance review should be done at least once every 2 years to get an update and align your planning with your current financial situations.

• But in a health crisis like this, it is clearer than ever that this virus outbreak excludes no one, healthy or sick, rich or poor and how our health is so vulnerable to these uncertainties.

• Whether your review is overdue or not, be sure to look back into your insurance planning. Ensure that your major emergency fund is sufficient to at least cover current medical costs and living cost for more than 5 years if uncertainties like accidents or illnesses were to happen.

Look out for investment opportunities

• If your cash reserve and emergency funds are sufficient to sustain the uncertainties mentioned, it is always good to look out for investment opportunities. Especially when market has been the lowest in a decade.

• Each investment tool has its pros and cons. So be sure to match your investment portfolio with your risk profile and the tenure of your investment goal.

• Invest gradually in this volatile market to cushion of the risk and in the same time optimize your returns while doing that.

Get ready for your distribution

• This is also a segment which people most of the time put aside or treat it as a taboo. Thinking that we are still young, while uncertainties lay in hind side. It is a vital procedure to ensure that we ourselves and our loved ones will get the security that we deserve during unfortunate times, so do consider a will writing service during this crisis.

• Take this as a security like putting on your seat belt while you drive. If the drive is safe, there is no harm done, but when unpredicted events happen during the drive, you safety belt might have just saved you from the damage.

It’s always a dilemma for a lot of people when it comes to the question of how much cash or investment one should have. If you have too much cash, it might not be beneficial for a long term planning. While having sufficient cash is crucial for times when you need it quick! Especially during this pandemic crisis where some are having difficulties with maintaining their cash flow while the market has been the lowest in the decade now! So what should one do?

Should we keep cash in bank or invest during this COVID-19 crisis?

Here are the 4 steps to determine whether you should keep your cash or invest and financial instruments are suitable for the different scenarios:

1. Can you afford to stop working for at least 5 years?

If today you were forced to retire from work due to health reasons or accidents, can u afford to stop working for at least 5 years without having financial worries? Can you be certain that your household expenses and all the monthly loan repayments can carry on as usual? If the answer is No, then one is not fit to start their investment journey but should focus on income and wealth protection. Insurance will be a good vehicle to suit this need.

2. Healthy cash reserve

Make sure that you have healthy cash reserve in your bank account…..an amount that is sufficient to sustain your loans and living expenses between the period of 3-6 months. This is essentially important during economic crisis where a lot of people went out of job. Besides, having a healthy cash reserve ensures one has the financial cushion to pay an unpredictable expenses such as parent’s medical expenses, sudden breakdown of car, etc… One who has no cash reserve may fall into unnecessary high interest debts in the event of emergency.If you have always been recording and keeping track of your cash flow, great job! Please continue to do so. But if you have not, this is the best time to start!

Cash for minor emergencies are recommended to be placed in instruments that is capital guaranteed, offers high liquidity (able to be withdrawn with 24 hours) and still able to provide some interest while the cash is kept there. Most of us would always think of fixed deposits as the tool for emergency fund. However there are some alternatives such as money market which is very suitable too.  Though it is not often heard, it does offer similar interest to Fixed Deposit. Interest is calculated daily and depositor has the option to cash out anytime without loosing off the interest. This is unlike Fixed Deposits where one must hold till the maturity date to be paid the interest. Money Market is very suitable for corporate to keep cash as it interest generated is Tax Free, unlike Fixed Deposits where Corporates need to pay Tax on interest earned.

3. Investment goal and tenure

Cash for minor emergencies are recommended to be placed in instruments that is capital guaranteed, offers high liquidity (able to be withdrawn with 24 hours) and still able to provide some interest while the cash is kept there. Most of us would always think of fixed deposits as the tool for emergency fund. However there are some alternatives such as money market which is very suitable too.  Though it is not often heard, it does offer similar interest to Fixed Deposit. Interest is calculated daily and depositor has the option to cash out anytime without loosing off the interest. This is unlike Fixed Deposits where one must hold till the maturity date to be paid the interest. Money Market is very suitable for corporate to keep cash as it interest generated is Tax Free, unlike Fixed Deposits where Corporates need to pay Tax on interest earned.

Accumulation for any goals with tenure of less than 24 months should only be placed in short term deposits like fixed deposits or money markets like stock market. In that way one may be able to gain some interests over a short period while avoiding any risk of losing the capital. Investing money which is needed in a very short period renders you in high risk of having to cash out at a loss, in the event market condition is terrible, like this COVID-19 Crisis.

3. Investment goal and tenure

Cash for minor emergencies are recommended to be placed in instruments that is capital guaranteed, offers high liquidity (able to be withdrawn with 24 hours) and still able to provide some interest while the cash is kept there. Most of us would always think of fixed deposits as the tool for emergency fund. However there are some alternatives such as money market which is very suitable too.  Though it is not often heard, it does offer similar interest to Fixed Deposit. Interest is calculated daily and depositor has the option to cash out anytime without loosing off the interest. This is unlike Fixed Deposits where one must hold till the maturity date to be paid the interest. Money Market is very suitable for corporate to keep cash as it interest generated is Tax Free, unlike Fixed Deposits where Corporates need to pay Tax on interest earned.

Accumulation for any goals with tenure of less than 24 months should only be placed in short term deposits like fixed deposits or money markets like stock market. In that way one may be able to gain some interests over a short period while avoiding any risk of losing the capital. Investing money which is needed in a very short period renders you in high risk of having to cash out at a loss, in the event market condition is terrible, like this COVID-19 Crisis.

4. Risk appetite

Risk appetite is referring to the acceptance of an investor to capital looses in their money. Those with high tolerance can accept looses up to 30% or even higher while those with low tolerance can barely accept 5% losses.

Each savings or investment instruments like share have its pros and cons, thus understanding your own risk appetite is very important to determine the suitability of different financial vehicles to your risk tolerance. Diversification into different vehicles will be very helpful.

There are many factors that determine your risk appetite:

• Income and expense

I may start to sound like a broken record now, but the higher is your income and the lower is your expenses, the higher the risk you are allowed to tolerate in your portfolio management. This is because any setbacks in your investment portfolio will not affect your ability and capability to invest further. With high level of cash flow, one will have more bullets to take advantage of the low market… the ability to dollar cost in investment is essential to average down the cost of investment.

For those with very tight cash flow, it is best to keep cash.

• Nearness to your goals

But if your goals are near to you, you may want to stay secured and reduce your risk to as low as possible while maintain a better rate. Hence Fixed Income or Fixed Deposits will be the suitable instruments.

The time left for the realization of your financial goals also determines your risk appetite. If you still have plenty of time from meeting your goals, you are allowed to expose to higher risk investment allocation. This will help you to build up your wealth over a long term, if invested in the correct sector.

• Insurance coverage

Cliché, but true. Your risk appetite will be dependable on whether your coverage is sufficient. When major emergencies happen like we mentioned earlier, with sufficient coverage, your portfolio will remain sustainable as you do not need to withdraw any of it while your wealth continues to accumulate.

Those without any proper insurance to leverage and protect their assest, they should keep cash. While those who has sufficient coverage can invest their money without worrying of having to cash out at loss during health emergency.

• Age

As we mature, our risk appetite will generally decline too. If one is still young, one will have large number of working years to invest and build up our wealth, thus relatively younger ones can be exposed to higher risk vehicles. While if one is more mature and approaching retirement, a more prudent portfolio will be more suitable as a slight dip in the portfolio will have a great impact in the overall retirement fund.

• Knowledge and experience

When one has more knowledge on certain investment tools, the more comfortable one is with the exposure. By understanding more about the pros and cons of each investment will increase investors’ awareness and thus increasing your risk appetite.

Investors that has gained great returns with certain tools will generally be more keen to stick to the particular investments while those who got burnt before have a tendency to keep cash. However, getting burnt should not stop one from investing their money. Instead one should seek for professional advice and understand the investment philosophy well.

We will update some Financial News & Tips on our website or on our SKiWealth Facebook Page. Please feel free to follow our page so you can get the latest information.

A lot people think cash flow management is something simple that everyone will know how to start and monitor. Well, it is just between Money-in or income and Money-out or spending, isn’t it? However at the end of each month, many individuals are surprised that they spent more than they thought they did. In the long run they create debts and will think financial independence is just for minority and not for everybody.

The main reason people struggle financially is because of the total absence of financial literacy in their progression in educational institutions. This result is in people learning to work for money, but never learn to have money work for them, say Robert Kiyosaki, the author of Rich Dad, Poor Dad. Hence I would like share my professional view with you in the hope that you gain basic concepts and ideas to allow a change in your ways of managing cash flow.

2 cash flow tips on managing money-in or income

1. Income – reinvested
Each month before you allocate your money to spending you invest a portion for another you – your future, which is retirement where you may not have any income. You may allocate it to be invested in Non Taxable Income or Non Taxable Assets for purpose of retirement funds, children education fund and etc. You should treat this investment as an expense – as an alternate to splashing on expensive lifestyle. After all, it is not about how much you earn but rather how much you save and invest – that will make you rich! If you have any concerns on the margin of savings and investment while worried over necessary liquid cash and risks in investment, then do seek advices from a professional.

2. Create new skills for future income streams
The pandemic forces people to rethink their normal lifestyle and possible future challenges. Many face pay cut, taking unpaid leave and even lost in business income, among others. This global destructive event may have allowed you time to develop online marketing or engage in your bakery hobby which may generate a small passive income. In any case, it is critical to have alternative skills which may be the platform for earning passive income in the future.

3 cash flow tips on managing money-out or expenditure

1. Simplify and Prioritize
Undertake activities that can brings you income rather than engage in spending on the usual stuff to keep pace with lifestyle and indulgence. We are aware of this issue and need to act upon it. Example, inviting a friend to enjoy a cup of coffee at home cost RM3 while the same in a cafe cost more 150% more. These negative addictive habits extend to cutting off savings for building emergency fund or long term acquisition of non-taxable asset for retirement fund. This short sightedness will cost us severe financial woes over time.

2. Wise Credit Card usage
Credit cards, common in all our wallets, can be a doubled edge sword. If you are foolish and unrestraint it will create a huge hole in your financial flow and foundation, on the other hand, if you used it correctly and responsibly, it will help to facilitate cash flow. Use credit card as your debit card to spend within the budget in the bank account. Use credit card for fixed and periodic payments e.g., insurance premiums and utilities bill. Use it also as an auto billing from active bank account to settle monthly credit card due – this is to avoid settlement delay which will draw a late payment interest.

3. Cap Travelling expenses
Avoid using year-end or performance bonuses for travelling expenses. Meanwhile, many companies are cutting down on year-end bonus and other monthly financial perks. It would be better to have a monthly saving of RM300 set aside each month for the next 2-3 years which will yield a substantial amount for several overseas holidays. This disciplined savings allow for a healthy cash flow while allowing you to engage in your travel pleasure.

The way we manage our cash flow today will determine our future financial status along with what we wish to achieve. The outcome can be most rewarding – owning a property or having a comfortable and worry-free retirement lifestyle, for example. In brief, planning ahead is much more productive and enjoyable than having to solve a list of financial issues and disasters later. The choice is yours in either having a healthy or negative cash flow. When you make a choice, remember, you are also choosing the consequences.

We are here to help you if you need guidance and coaching. The pleasure is ours – give us a call (016-4818308) or WhatsApp Us NOW.

SK-iWealth will be having a Women’s theme for 2021 and invite you to read, inquire and share our vision. It is all about – Financial Literacy, Action and Independence for Women.

We humans are supposed to be born equal irrespective of gender, race or religion – in the context of rights and opportunities. Somehow, things turn out otherwise, especially for women, and this has impacted majority of them negatively throughout their life. This is most unfortunate but true.

This does not always mean that society abuses women and make them victims. On the other hand, it could also mean that women are richer in the qualities of kindness, nurturing and self-sacrifice and often these beautiful qualities are taken advantage of. The solution is about finding BALANCE – sustained the rich EQ while nourishing their equal rights and opportunities.

One of the fundamental needs that will help Women to be more equal and respected, independent and liberated is through financial literacy and subsequently financial action. Given this dire scenario we hope to contribute through targeted financial literacy and financial actions for various phases of a women life to ensure greater financial independence. Yes, our objective is to promote, engage and grow Financial Independent ladies – or Finlady, in short.

The financial literacy provides self-awareness and strategies for women to be better prepared to face financial hurdles and constraints, expectations and obligations imposed upon her mindset via education, environment and culture. It will also give her a roadmap, choices and options to be financially empowered. Our Mission statement for Finlady is – Engaging, Enabling, Empowering and Enriching Women with Equal Opportunities and Choices for Financial Literacy and Action, Financial Abundance & Independence.

 Our Mission statement for Financially Independent Lady (Finlady) is: 

Engaging, Enabling, Empowering and Enriching Women with Equal Opportunities and Choices for Financial Literacy and Action, Financial Abundance & Independence.

1. Beauty. Naturally, female take hygiene and beauty seriously and as such they spend more on grooming be it clothing, skin and hair care, or yoga and gym classes. Guys tend to spend on gadgets – which though more expensive but the total spend in a year favours the lady.

2. Taste. Studies show ‘Men Buy, Women Shop’. Men have a goal and just get what they want and off they go. On the other hand, women prefer to go for current fashion, latest outlet and tasty ambience – where personal spending is concern. This is more obvious for those who are climbing the corporate ladder. All these translate to higher cost and spending though it may not be frequent.

3. Company. When it comes to shopping women seldom shop alone. They prefer company and to them this is a luxury, as a compensation for office work and family sacrifices, and this promote fancy and fantasy, peer shopping and entertainment. Again, this means a fatter budget is necessary each time they shop – which can be often!

4. Cultural Roles. In Asia, the traditional role of women is homemaker and that of men are bread winner. Though most women are working these days nevertheless this value system is entrenched in the women’s mind. As such their inclination or rather expectations are for the men to engage in property and investment, once they are married, while theirs are practical provisions.

5. Money equals Independence. This is almost universal. Women, who engage actively to accumulate and invest, while they are single or married, indicate their need for financial independence. This often translates to more say and equal decision making in the home or family, either married or otherwise.

6. Goals and Growth. Women perceive money as a means for better education and health, survival and security for her or the family. Her goals and growth are closely related to nurturing. This applies to debts too, if any are contracted. Men’s perception is about house, car, business expansion or a vacation. It is also about status and luxury, competition and growth. This is also true for their debts.

Women and money are about being practical, having provisions and gaining security while luxury is about a compensation for her sacrifices in nurturing others. Going forward women must leverage financial literacy and planning to ensure these goals, priorities and values are met soonest possible. Join us for more sharing on how Women can be more Engaged, Enabled, Empowered & Enriched.

1. Society Biasness. Women often have lesser take home pay compare to men and are seen to play supporting roles. Subsequently, they lack support and opportunity. The difference of take-home pay can be as high as 25%. This inherent discrimination is almost universal culture except for a few Scandinavian countries. This inherent disadvantage creates lesser savings for women and impact their retirement plans.

2. Roles & Duties. Women tend to take time off for their children and family matters. This instinct means a drop in their cumulative income and consequently their savings. When they do return to work, they lag their male counterpart in terms of income, savings and retirement plans. This compounded her opportunity for promotion in the long run. This set her total savings and retirement funds back by as much as 25%-35% compare to the men.

3. Long term Outlook. Investment for women is often for family and children especially for health and education. As such their investment is often small and incremental, long term and low risk, stable and committed. This mindset also saves women from over trading and brokerage commission, sales taxes and consolidated returns and dividends. Of course, because of the wonders of compounded interest the yield is often higher than their male species.

4.Back to Basics. For practical stuff like food, grocery and daily necessities women tend to go for seasonal sales, privilege coupons and store brand. They are truly competent in squeezing the most out of a dollar and consequently their savings adds up to quite a bundle annually. Of course, this means extra money to her savings and retirement plans – which she rightly deserves.

5. Financial Literacy. Women are lacking across the world in financial literacy. This means lack of confidence and interest in savings, investments and other key areas in financial planning. This often result, along with other financial constraints and disadvantage, adds to lesser bargaining power for women which will be obvious during their retirement phase and beyond.

6. Value Systems. Women contract a debt for critical and essentials needs which include a home or children education. If they are single the needs for loan are for education and health. Meanwhile, women tend to squeeze their expenses to settle their debts sooner, if their savings and capacity allows, as compare to men. For women it is best to live without debts and to use savings to offset any, while for men debts are a necessity for growth.

Women earn less and therefore save less. But their savings competence is higher while their expenditure control is better. Women are less familiar in investment but more prudent and obtained higher returns over time.

Therefore, women must leverage a Financial Integrator to continue their power in squeezing money. Join us for more sharing on how Women can be more Engaged, Enabled, Empowered & Enriched.

1. Don’t overindulge in Beauty. Often, women continue to spend on expensive self-care even though they are dead broke – and this may include expensive fitness classes and related accessories and diet. This misplaced priority and obsession indicate a less than healthy self-esteem. Beauty can be minimalistic especially when it is strongly anchored in inner values. Be elegantly simple and not simply elegant. Choose and wear the ultimate beauty – self-confidence.

2. Don’t Chase the Big Fishes. This mindset in woman reflects their dependency. On the other hand, it is about having a rich partner to pay for all the luxury that woman wish to enjoy. In this context, if women are able to earn more, being practical, and functional, conduct as minimalist as regards to spending – then going for the big fish is redundant and along with it all the risks that comes with the big fish.

3. Don’t leave Financial Planning to Men. Too busy and too complicated are some of the excuses that pushes women to empower their hubby, brother or dad to be the financial guardian. Be participative – at least do know the content, tenure and motivation of any shared financial involvement and investment taken. Men priorities in investment are really quite different from women and this may compromise your financial goals. A short initial engagement will go a long way for your future.

4. Don’t Compromise your Rights. You have a right to your priorities and dreams, savings and investments – and it must not be trivialized. This does not mean the entire family have to bend backward to accommodate you. It just means that you recognize that finance has leverages that is crucial to your survival, security and safety in the long run – and you need to preserve it. It boils down to learning how best to apportion your finance effectively.

Women need to be more aware of changes in the fabric of society and its impact on her role, responsibilities and priorities.

This understanding is needed to drive how she can be more outwardly engaged, enabled, empowered and enriched as a financial independent lady, while maintaining a fine balance with her inner feminine qualities, roles and priorities.

1. Back to Basics. Instead of luxurious beauty and expensive fitness classes learn and master health regiments like yoga and qigong – kind of paying a one-off module to learn a skill set. Alternatively, subscribe to many low cost self-development courses , but high end, available in the net – as part of the virtual learning that spring from the global Covid19 pandemic issue.

2. Investing – Women Secret Weapon. Women would rather save than invest due to several factors. But women must build a diverse savings and investment strategy. Though man is keener and more knowledgeable with investment, but woman is more focus and opt for long term tenure. These two essential qualities impact the investment outcome tremendously and women should continue to leverage on these two power values.

3. Seek a Good Financial Planner. Take charge is the key word and be your own CFO while you are single. Given the multiple roles and responsibility, competency and complexity, the easier option is to explore and acquire a competent and trusted woman FP. Work with your FP to build a secure reservoir where you can incrementally add your financial resources – especially, after getting married which tend to blur the lines of finance for yourself, spouse and family.

4. Making Retirement Top Priority. This is regarding retirement funds and planning. With this there is an overarching goal that will give you clarity over other immediate financial needs for yourself and family. With this long-term priority and insight – many sacrifices, negotiations, decision making as regards to money and your men can be clear and focus. This also offer you plenty of solace and security – especially, when women longevity rate is higher.

Women must step forward to acquire financial literacy, explore and establish a partnership with an experienced financial planner and start to incrementally save and invest on a long-term basis. 

This will help her build a cosy financial nest and home that she can always turn to for security and safety, solace and support, either in retirement or in deep hours of need.