Sunday September 25, 2005

Putting the ringgit to work

STRETCHING THE RINGGIT

Stretching the ringgit is the buzz these days, what more in Penang which is well known for being kiam-siap (thrifty). We sent out our 20-something writer, AJA NG, to discuss the issue with her 20-something friends. This is her candid report.

I WAS being served in the Coffee Bean outlet when my phone rang. It was my girlfriend, May. She started off as though we were already in mid-conversation.

“People like us are never going to get rich because we spend more than we earn,” she stated in a matter-of-fact tone.

“Okay,” I said, waiting for further explanation.

She said that she’s reading the book Rich Dad, Poor Dad by Robert T. Kiyosaki.

The book states that middle-class working individuals like us never get rich because we spend approximately what we earn or more each month, even before we get paid.

“We’re part of the rat-race; we’re working harder so that we can pay off our debts so that we can afford to spend more. We’re working for our money, not having our money work for us.”

“How true,” I said, nodding as I painfully handed over RM10 for my coffee to the cashier.

“We have to do something to stretch our ringgit,” she stressed.

That really got me thinking.

I then set out to analyse my own financial standing. For one week I asked friends between the ages of 21 and 30 probing questions about their financial status.

How has the rising prices of fuel and toll affected you? Do you have any savings? What is your biggest expenditure each month? How much is your credit card bill each month?

An alarming trend came to light. Almost no one under the age of 27 had any savings at all.

The same questions were posed to friends in their late 20s and early 30s, and I found out that they have a bigger propensity to save. But had they begun saving in their early 20s? No.

“At 25, I was owing, definitely not saving,” said Hin, 37.

Adam, 29, said: “People in their early 20s, who have just started earning their own money, tend to spend frivolously. Then you hit a phase where you become more concerned about your future, start focusing on your job, party less, start thinking about settling down, and start saving.”

Is it that we’re earning too little to save right now, or that we’re just not trying?

Jean, 26, and living with her parents, said large chunks go to paying her parents for housing, food and shopping each month.

Nick, 25, said that after he has settled with rent and his car loan, there’s hardly enough to live on, let alone save.

When it comes to the rising costs of fuel and toll, most say they don’t really feel the pain.

Petrol and phone bills are subsidised by the companies that we work for; a majority live and eat at home so they don’t bear the direct costs of rising raw food prices or rent and utilities; and those who live on their own are subsidised by their parents or places of work.

As Malaysians – with shopping and eating being national pastimes– it’s only natural that food and shopping top our expenditure list. For others, it’s paying off home and car loans.

Fion, 29, said that once she’s done with paying off her apartment and car loan each month, there’s hardly anything to live on.

Then there’s the plastic. Because we don’t actually see the cash going out, we don’t feel the pain, so we spend more than we realise.

A few months ago, a friend called me, shrieking about her credit card bill, which at over RM7,000 was more than double her monthly salary.

The rising number of credit card promotions and credit transfer options doesn’t make saving, since the first chunk of our salary immediately goes to paying off credit card debts.

In this day and age, where everyone wants the latest in everything, from mobile phones to high-tech gadgets, the biggest house and car, its hard to turn a deaf ear on those chants.

The lepak-ing session comes next, hopping from one coffee-joint to another, wanting to be seen at the latest bars and late night parties.

Then there’s the kiasu culture. These people won’t be caught dead in a mamak store or eat in coffeeshops; they will only buy branded goods and are always on the lookout for that latest gadget to show off.

The future is looking gloomy with savings at the bare minimal. Asking all these questions was a reality check not just for me, but for my friends as well. So we made a pact to try and manage our money better.

And so we walked out of the Coffee Bean, knowing that would be the last we saw of it, for a while that is. And that’s how ‘Operation Save Money’ was born.

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