Sunday, March 21, 2010

Money Skills

All of us know how to earn money. But, how many of us know how to save or grow money? From what I see, there are a few types of money skills people which I categorized as below:

1) Earn $2000 and spend $2000
For those who just earn their first few incomes, they tend to belong to this group. Because they feel like they deserved to spend their first hard earned money. Many who just received their first paycheque especially graduates students who had been living in limited cash and gone through long hard way always spend most part of their first few income.

Other than young graduates who just joined the workforce, there are also some who feel like, 'there is no need to worry about tomorrow'. To these people, tomorrow will take care of themselves. So, they will just spend all they have.

2) Earn $2000, spend $500 and save $1500
Not many people manage to save 75% of their paycheque. And it is not easy to do that in the current economy situation. For those who managed to do it, most of them are practising frugal living. They are very cautious in their spending and most of the time, they are very good in planning for their spending.

3) Earn $2000 and spend $2500
For this type of people, they are spending their future money. If they are lucky enough, they are getting the extra money to spend from someone else (parents, spouse, other sources). For those who are not so lucky, their extra spending is paid by credit cards or personal loan or worse, money lender @ loan shark. After certain period of time or some tough and hard learning, some of them might be able to drag themselves out from this harmful spending pattern.

4) Earn $2000, spend $1500 and save $500
I believe most of us belong to this group. Maybe not saving exactly 25% from our income but more or less around 25%. Which I consider is quite healthy money skills. To some, 25% is not good enough, but if this 25% is properly managed, within a period of time, it can grow in huge some of money.

For us to lead a healthy lifestyle, money skills is important. We should save some and spend smartly. Which money skills you belong to? Feel free to share you opinions.


  1. Yeah. A lot of people are not frugal especially young people. They don't understand that it is direct albeit slow path to financial freedom.

    But i do know some young people that saves up alot to invest :P I guess it boils down to a person's mindset for the future.

    I think 25% savings (excluding EPF) is quite okey. With car,house loan commitments, it is hard to save more than that.

  2. Hi Kris, you are absolutely right. It boils down to a person's mindset and also the exposure he/she receives + the willingness to think and plan ahead for their future.

    25% from net income (exclude EPF) is good enough. With proper and smart investment, will generate a money growing tree :)

  3. People should understand that being rich is not the matter of how much you earn but how much you save and invest. If a high earner who lives in a big house and drives a big car but have no money leave at the end of the day, a low income worker who manage to save, say 25% of take home income, is richer.

  4. hi LSC, absolutely agree with you. looking at the current trend, many are willing to use their future money just because their neigbhours have it, so they must also have it. it's like a never ending catching game. at the end, these people will suffer due to unsettled debts or no fund for emergency matter.