The Art & Science of Managing Your Finances [Contributed]

Ever thought that finances could be able artsy and scientific? This contributed article by Agnes is the first in Reinvention Journey’s new Art & Science series. The team at Dermagold have always been intrigued by the intersections of art and science in the various aspects of our daily lives and hope to explore this theme in interesting ways in the Art & Science series. Through this humble initiative, Reinvention Journey hopes to bridge the gap between art and science, revealing how the two disciplines are not simply two ends of a spectrum,  but have managed to meld seamlessly and harmoniously together in our everyday.

Having spent my childhood years growing up in Johor Bahru, I witnessed how my parents had to work hard by commuting daily across the causeway to work to support the family. My Dad spent 30 tenacious years with the same printing company till his retirement in 2008; my Mum too journeyed 26 years with the same healthcare company till her retirement this year in 2015. Through their hard-earned savings and sheer frugality, they became proud owners of properties across both regions. My Dad used to tell me how they had to break open my piggy bank to make up for the shortfall when they decided to purchase their very first property for investments. I am very proud of my parents for having achieved their well-deserved financial independence, with such little financial knowledge.

Having learned from them and from my own personal experiences, being in charge of your finance is not simply about knowing your numbers – there’s an science and art behind managing finances:

Afford only if you can. Never resort to borrowing money.

This was the most powerful lesson my parents taught me. When I started working, I heard stories of how one should sign up for as many credit cards with different banks as you can. If you have “maxed-out” one credit card through unnecessary spending, this is not a problem as you have other credit cards as your disposal. I was bewildered at how one should even entertain the thought of owning credit card debts! If you cannot afford something, why not save till you have enough to do so? Bottom line: Spend within your means.

(Of course, in the context of a businessman or an investor, you need to leverage on bank loans to make superior returns which will cover the loan. Experiment within your means!)

Always SAVE for the rainy season

My first foray into the financial industry was in 2004 – I had a good mentor who taught us all there was to know about the investment world, how banks made money – equities, dual-currency deposits (DCDs), investment-linked products, private equity investments etc. We were investing private clients’ money and experienced a bull run for a few years, till the Lehman crisis hit in 2008. I was retrenched at the age of 30 years old and my son was only a year old then. That experience taught me the reality of an emergency fund. The golden thumb rule was always to keep at least six months of your expenses as savings at all times.

Explore other sources of income

Managing finances shouldn’t be restricted to rigid, ‘scientific’ rules. You can also tap onto your creative side. As you increase your savings nest, start thinking about how to make your money work for you. It could be a long term asset such as a second home which you can rent out and plan for your retirement income (like my parents), or it could be an investment into a short term or long term index fund / mutual fund / equities etc. To navigate yourself amidst the complicated world of financial products, talk to peers, learn to read financial statements, attend investment seminars, read books about savvy investors such as Warren Buffett.

Managing your finances is really no rocket science – you will be surprised at the many free money management apps available in the market. Toshl Finance, GoodBudget, Mvelopes, Pocket Expense are a few of the apps which can help, or you can be like me – I created one using 3 columns in Microsoft Excel [Total Credits ie. your sources of income (Column A) minus Total Debits ie. Your expenses/commitments (Column B) will determine if you are in surplus or deficits monthly (Column C)] years ago and have been faithfully updating it like a hawk monthly. Take charge of your own finances today (:

Contributing Writer (Agnes Siau)

Agnes SiauA proud mother of one. A dreamer till this age.

I started to cook only at the age of 35, simply because my curiosity in cooking was not piqued till my later stage in life.

My accompanying life motto has been Sun Tzu’s “Minimum Effort, Maximum Result”.

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