Sunday, February 10, 2013

Leaving a financial and parenting legacy

BEING a parent is a challenging job. It's a job that requires lifelong commitment, and you cannot resign from it even if you feel you can't cope. And what's more, parenting requires skills that are not obtainable from school, college or university. Parenting and managing money are the two most important skills that we learn from our parents or adults with whom we grew up, be they our grandparents, nannies or guardians.

As you go through the process of considering how to communicate with your parents and siblings about managing family wealth, you will realise the need to teach your children about money so that you are able to leave your own legacy behind for your children to communicate and manage money harmoniously as a family.

There is really not one proven or standard method of parenting and teaching children about money because of different personalities, behaviours and attitudes. We teach children about money based on how we were taught about money by our own parents or guardians, and from the environment in which we were brought up. Recall your childhood days, and how your parents taught you about money. Were you taught to save your pocket money or to spend it wisely?

Think about the environment you grew up in. Were there times when your parents had money problems and you often heard them argue about it? Or did your parents hide the fact that money was hard to come by in the family? Or were you pampered by your parents with toys, clothes and going out for fun activities and holidays?

Some parents have told me that because of the poverty they experienced during their own childhood, they now try their best to give their children a better life by lavishing them with the material goods and experiences that they themselves never had. By indulging their children, they are not allowing their children to experience financial responsibility.

Different parenting styles
While most parents learn parenting skills from their own parents or by observing others, they will accept some practices and discard others. Effective parenting requires interpersonal skills that can create some emotional demands. Experts in early childhood development say an important dimension of parenting is the style parents adopt when they interact with their children. According to Maccoby and Martin's parenting style typologies, there are four different parenting styles. Depending on the child's character, different parenting styles lead to different results:

1) Authoritarian parenting is a restrictive, punitive style in which parents exhort the child to follow their directions. The authoritative parent places firm limits and controls on the child, and allows little verbal exchange. These parents tend to be very strict and may control the children by limiting their wants and desired wants. In this case, the children may either grow up to rebel' by spending beyond their financial means to fulfil their childhood desires, or they may become very good at managing their money.

2) Nurturing parenting is a style that encourages the child to be independent but still places limits and controls on the child's actions. Extensive verbal give-and-take is allowed, and parents are warm and nurturing towards children. These parents often communicate and teach their children to spend their money wisely by explaining to them the importance of money.

3) Neglectful parenting is a style in which parents are uninvolved in the child's life. Children whose parents are neglectful often develop a sense that other aspects of their parents' lives are more important than they are. Children who grow up in this environment are often deprived of parental love and a sense of belonging in the family. As a result, they may grow up spending lots of money to fulfil their need for love from friends, and from their life partner. Or they may spend money to boost their self-esteem because of the lack of parental love.

4) Indulgent parenting is a style in which parents place few demands or controls on the children. These indulgent parents will let their children do what they want. Children with indulgent parents may often be spoilt by a variety of material things or an impressive lifestyle. The spending behaviour of indulgent parents may condition the children to spend more than they need or more than they can afford when they grow up.

Imagine a situation where the father is indulgent towards a child and provides gifts, toys, fun and pleasure, while the mother, on the other hand, is a disciplinarian with strict rules about gifts, toys, fun and pleasure. Who will the child prefer to be with, and who will the child learn more from? You and your spouse should decide on a best way to handle your children's money expectations. It is important to be consistent and fair to lessen potential family strife.

According to experts of child psychology, even from a tender age of 2 or 3 years old, a child learns by observation, and from conversations and experiences they have with adults. Hence, effective parenting warrants a tremendous amount of proper learning methods and communication skills. Understandably, today's parents are faced with more issues compared with their parents; the fact that today's younger generation is growing up in an era of media influence, technology advancement and the Internet makes parenting an even more challenging job.

It can be painful for parents to discipline and teach children about saving money, particularly when their children are easily influenced by their friends even as pre-schoolers. This is further compounded by the barrage of advertisements on television and online media that tempts your children with attractive toys, pretty clothes and accessories.

It does not really matter how much money you have or how much joy you derive from showering your children with material things. As parents, you have got to show some restraint and boundary. You don't have to feel guilty about scaling back on spending for your children. Your children may already have more than they need more clothes and shoes than they can wear, toys and games than they have time to play with.

Be mindful that while you are conscious of good money habits for your children, you need to ensure that your children's grandparents, godparents, aunties, uncles, or other adults around them do not indulge them too much with gifts. This may send your children the message that if they cannot get what they want from you, they can get it from them.

Family values
In some situations, a couple may bring different views and values about money and parenting to the marriage. Because of personality, character, family and life experience differences, couples do face conflicting personal and family issues where money is concerned. Therefore, teaching a child about money really begins with teaching your child about the importance and meaning of life values as a family.

Honesty, integrity, teamwork, helpfulness, trust, love, family support, accountability, unity, filial piety, commitment, communication, sharing, spending time with parents and siblings are some of the most important family values that your children ought to know, even if they may be younger than six years old.

Constant messages to your children about how good family values are important in life, and that money cannot buy such values, are more important than parental love expressed in the form of material things for your children.

Teaching them important life values and let them know that money is a means to an end, and not for self-gratification.

Other than sending them to school to gain knowledge and social skills, the money skills that you teach your children from an early age are the most important life education you can provide them with and it actually starts at home. It is as simple as how you and your spouse manage money and communicate about money at home. Your good money skills will rub off on your children.
May this be your new resolutions for teaching your children good money sense!

Carol Yip/Thestar

Tips on preparing your retirement plan

I would have more faith in your retirement master plan if not for this small item here: “Win RM10 million lottery one month before retirement”. I would have more faith in your retirement master plan if not for this small item here: “Win RM10 million lottery one month before retirement”.
Will your golden years be golden? “O Time, Time! Wherefore art thou?” Is this going to be the lament in your golden years? How often have we ignored or dismissed the advice of our parents to save for our old age? Do not delay the preparations towards a secure retirement, advises Lynette Lim
Lynette Lim Lynette Lim
LET us look at the research conducted by The TransAmericaCenter for Retirement Studies, which found that a delay of just two years in starting to save for your retirement shaves off a remarkable 15% of your retirement nest egg over the life of an average career. An illustration drives home the point further.

Joe starts saving RM5,000 a year for his retirement nest egg at 28, whereas Jane starts at 30. Assuming they both make 7% return on their savings, at 65, Joe will have RM801,687 while Jane will only have RM691,184!

Their studies have also emphasised that not only are many largely unprepared for retirement, but that relatively few have a back-up plan in the event they are forced into retirement earlier than planned.
What then can you do to increase your confidence in having economic security in your golden years? Don't just worry about your financial future, take action to rebuild some measure of a secure retirement. Increase your level of preparedness by taking an interest in your finances. Take the following steps:

■ Start a saving habit
■ Increase your financial literacy with easy to understand educational material, talk about it to raise awareness
■ Set goals; determine how much you need
■ Take decisive measures and strategise
■ Seek advice from professionals

Learn to take on more risk with investments, as leaving all your money in cash will not help in combating the ravaging impact of inflation in the long term. Learn about the power of compounding, diversification, asset allocation; building up an investment portfolio.

Most of all, start when time is your ally, not your foe; decide to put aside a fixed percentage of your income towards your retirement nest egg to prevent having to resort to catch up contributions at a later stage.
It is now or never, as the song goes. My advice is START NOW!

Lynette Lim/TheStar

Do you dream of early retirement - when you are still young?

To be able to afford to retire young is a dream held by many as it is an indication of financial success. Early retirement usually does not mean ceasing from work but freedom from having to work due to financial needs. So where can we start? Grace Chuah writes:

Decide on the life-style you wish to have in retirement.
Some have a simple lifestyle − walking, gardening, and local holidays − but for others, enjoyment means overseas holidays, fine dining, living in high end condos. One consideration is also whether or not you want to continue working and earning active income during your retirement years', though at a more relaxed pace.

Calculate how much you need in order to fund your retirement lifestyle.
Mortgage repayments, children education and living and medical bills (ideally covered by medical insurance) are major expenses. If you need RM5,000 spending money per month, a capital sum of RM1mil (retirement nest egg) at a consistent dividend yield of 6% per annum will be simple enough to cover retirement costs.

However, one needs to factor in inflation. At 7% inflation rate, RM5,000 becomes RM7,000 and at 6% inflation rate, a RM200,000 education fee becomes RM335,000 in five years' time. The only way to overcome inflation is to invest.

Work out the strategy to meet the gap between what you would have and what you would need during retirement.
To close the gap, you need to build up your nest egg, readjust your desired retirement lifestyle or postpone your retirement to a later age. Cut down on unnecessary spending. What matters more is how much you save, not what you earn. Pay yourself first every month and increase this amount as your income increases. Invest your retirement savings in a long-term portfolio and rebalance it annually.

Take action now.
A retirement age is an artificial finish line but nonetheless serves as a goal-post. When we start planning early, we have the advantage of time to enjoy the effect of compounding returns over time and to fine-tune our investment strategies and recover from mistakes early.
Remember the quote “Someone's sitting in the shade today because someone planted a tree a long time ago”. Plant the tree for yourself today.

Joyce Chuah/Thestar

How to save when you’re broke

Saving money is not impossible when you're in financial dire straits
SAVING money can be a tall order for a lot of people but it becomes near impossible when you're broke or financially challenged.

Still, it's not a position you can't come out of.
Here are some simple steps to follow to help you save despite being broke.

Set up a budget plan
If you're broke and trying to save money, than it's best to come up with a budget plan, says Standard Financial Planner Sdn Bhd's Jeremy Tan.

“If you're broke, then you need to evaluate what you're doing wrong.
“Have a budget plan. Look at what assets you have?

“Perhaps you could try liquidating some.
“But even before you're broke, you should have contingency or emergency funds,” he tells

Keep working
MyFP Services Sdn Bhd managing director Robert Foo believes that if a person is broke, it's imperative for one to continue working or seek a new form of employment - as soon as possible.
“If you have a job, then you should continue working.The experience that you already have would be invaluable.

And what happens if you've lost your job or unemployed? All is not lost, says Foo.
“Don't feel hopeless. You've got skills and should be able to have contacts that can help you find a new job.

“If you have a job and you feel it's unstable or that you might lose it, then you should ensure that your resume is with headhunters, to ensure your income position remains as stable as possible.”
Tan also points out that age can be a factor

“Of course if you're young, you'll be able to take on multi-tasking jobs. If you're old, then you might need to go easy on the job load,” he says.

Compare prices
Self-confessed shopaholic PS Tan says that when she's “a little bit behind on her credit card payments” and needs to cut down on her spending, she decides to be a little bit more “choosy” with her shopping.

“When I know I need to cut down on my spending, I go several hypermarts or supermarkets and compare prices first before eventually purchasing.

“Also, if I have been using items that were expensive, I just choose to buy ones that are cheaper.
Be open to new brands and products,” she says.

Eliminate costs
While trying to save, also try to rid yourself of whatever debts you have.
“If you're broke, ask yourself if you have debts or not? Find out how you can restructure them,” says Tan.

Tan meanwhile says now would also be a good time to evaluate and consider eliminating the unnecessary financial obligations that one can do without.

“If you have a gym membership for a gym that you've not been going to for a long time, or perhaps a year's subscription for a book or magazine you've been hardly reading, just cut it off.”

Live within your means
If you're broke, than you're going to need to need to change your lifestyle - immediately!
“If you're broke, then you're not going to be able to sustain the lifestyle you've been living.
“The fastest way to solve this is to cut down on your expenses,” says Foo.

He reiterates that one could find a part time job or even a second one to curb debts quickly.
Eric Lee (not his real name), a marketing executive who was laid off for six months, says he was forced to cut down on his lavish lifestyle when he had difficulty finding a job.

“I had to do a lot of things differently.
“My car got repossessed and I had to move out from where I was staying because I couldn't afford the rent.

“I moved in with my parents and also had to rely on public transport to go where ever I needed to, especially for job interviews.

“If I was lucky, sometimes I could drive my parents' cars.
“When I did get a job, I initially still had to live within my means as I was still unable to stand on my own feet. This meant taking home-cooked meals to work.

“Initially, I also had to use t-shirts from friends as I couldn't afford new ones.”




有人以为政府财政赤字,没有钱了,只好向人民借钱,所以,私人计划就是政府的向普罗大众筹钱的计谋。这种想法已经不新鲜了,就在政府公开发售政府信托-Amanah Saham (ASM, Wawasan1 Malaysia 等等)给予大众抢购时,就已开始了,可能政府在管理人民的钱方面,已经恶名昭彰了,人民不信任政府,难怪这种想法会出现。有人甚至想尽办法提出公积金里的钱,对公积金的投资和管理没有信心,干脆自己管理自己的血汗钱好了。其实,这有点冤枉政府了,其实,这个计划主要是补助公积金的角色,提供多一层的退休/老年保护网,人民不该只依赖公积金,也为国家进入老年人做准备(老年人占人口比率高,国家财务负担高),而是私人退休计划的私人基金公司Unit Trust Company是管理您的钱,和政府没有关系,更不用说政府会动用该私人退休的钱。私人退休基金的作业和投资方向都蛮透明的,只要您对现有的信托公司不满意,一年后,可以考虑把资金移去其他的公司。



“老板已经帮我缴交或我(自雇人员)已经投资于公积金,不该同时投资于私人退休计划”是错误的。事实是,政府不但鼓励个人同时投资公积金和私人退休计划,也鼓励雇员/公司也为员工投资于私人退休计划,作为员工奖励和留在人才的措施,毕竟老板/公司为员工缴交公积金和私人退休计划的总额,不能超过薪金的19% 是可以扣税的,而目前普遍雇员为员工只是缴交大概12%员工的薪金,还有7%没有被善用。除此之外,员工和自雇(个人)同时投资于公积金和私人退休计划可以得到总额9千税务回扣。

所得税率-Income Tax Rate



注明:PPA-Private Pension Administrator退休计划行政