The Rules Of Money Have Changed! Have You?

The rules of money have changed. In the past, if you just followed mom and dad’s advice to save 10% of your income for the future, you’ll be financially stable. Today, if you just did that, you are ahead of the crowd but not by far. You can’t get rich doing the thing your parent did. The same thinking that gave them security 20 years ago, will likely sink you today.

Look at this article I saved up from The Star on May 2007.

In 1981, when Azman graduated, he got a job in KL which paid him RM1,800 a month. He bought an imported Mazda at RM17,000 and months later he put down money on a RM78,000 single-storey terrace house.

Today, 25 years later, Azman’s daughter has just finished university. Her starting pay is RM1,800, just like her father’s two and a half decades ago. But unlike her father’s time, imported cars cost over RM100,000 today. So Latifah has opted to buy a Proton for RM45,000 (more than double what her dad paid for his first car).

While her father could afford to buy a house early in his career, Latifah can’t. Houses in KL these days cost at least RM200,000, so she has to work for a few years first before she can own one.

In years to come, many people will find it hard just to retire, let alone think about getting rich and wealthy. So savings alone won’t help. You need to let your money make money. The most important thing is a change in mindset when it comes to making and managing money.

How do most people handle this inevitable trends? Most people just ignore it thinking it will solve by itself. So in order to live today, they get into debt. How much debt?

Credit card debts as of October 2007 alone stood at RM21.6bil, with non-payment of credit card loans amounting to RM591mil, or at an NPL ratio of 2.7% - via TheStar 27, January 2008

If you are already in consumer debt, you have to change your lifestyle. There is no other way. You got yourself into this mess by choosing a lifestyle you cannot afford. Now, you have to live a lifestyle that you did not choose.

So, what are the chances of a graduate living in KL making it? What do you think. Can a fresh graduate survive on just RM 1,800 or so? Well take a look in the next article.