Father Sez

From and to parents - parental advice to our children on personal financial management and life.
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Am I qualified to blog about personal finance?

Monday, February 16th, 2009

I have been thinking quite a bit about this lately. I am not referring to the standard disclaimers most personal financial bloggers put up on their blogs. My doubts go a little deeper than that.  

This blog is merely a channel of communication between my elder children and me on learning from the pf and life mistakes I have made. It’s not intended to be a forum for professional advice from a legally qualified pf guy. So I am not worried about the rich widow who ploughs all her money into gaharu trees, based on an article she read in this blog and then tries to sue the pants off me.  

Then why the doubts? 

My doubts have been triggered off firstly by the fact that I am now at an age when I would want and expect my children to be happily living off their passive income. And I am not.  

And secondly, and in fact more powerfully, by Moneymonk’s recent article on his getting fed up with personal finance gurus’ advise. 

What if my elder two daughters ask me why is our family not rich if I am supposed to be smart enough to advise them? What if they start questioning my suggestions?  

I have tried to justify by comparing myself with the giant investment banks who are now hanging around Washington D.C. with hat in hand. They should have had all the McBrainy people with every possible forecasting model known to man. And the best of their best advice should have been reserved for their employers. And we all know what happened.  

But this is a lousy comparison.  

My daughters know that whatever story I am telling them is based on my true life experience. Backed by total sincerity. So if I ask them to do something that I had not done or done the opposite, at least they’ll know that I am asking them to do something that is not a clear no-no.  

This is what I am clinging to. 

So I may not be qualified. So what, big deal!  My daughters know that no one will love them and want the best for them more than their Mama and me. This is what I am banging on to support my intending to give advice to my kids.

I am sure they can live with this logic. And if I feel it’s good enough for my kids, I sure feel it’s good enough for you, my dear reader.

Does your family make consultative decisions on major issues?

Wednesday, February 4th, 2009

Last week, I had a meeting with a person who had, in the last few years, built up a fair sized oil palm plantation. My family also has a piece of land not far from his plantation and the meeting was on a possible collaboration. During the course of the discussions, I mentioned that once he had made his written offer, I would have to discuss it with my “partners” and only then could I revert to him. Later I told him that my partners were my wife and my 2 elder girls.  

He expressed surprise and told me about how he single-handedly made decisions in his company. (He had earlier told me his two sons were involved in his business.)  The thing did not work out and on the way back I mulled over what he had said about decision making.  

Many years ago, I read an article in the Accountancy magazine about the pros and cons of companies that made their moves based on the decisions of one person as compared against companies that depended on checks and balances in their decision making. The article concluded that whilst those single driver kind of companies moved fast and were agile, they ran the grave risk of making that one fatal mistake that would sink them forever.  

This statement has stuck in my mind all these years. 

My wife and I have long decided that major financial decisions should be jointly discussed. Our two elder girls are also directors of the family company and I often inform them and seek their views. It has nothing to do with shareholdings or the like; its just that such consultations make plain common sense.  My daughters and wife may have a point of view that I had not thought about. They may have knowledge that might be very relevant to the issue at hand. And I have absolutely nothing to lose by consulting them. Not even pride! 

One of my former bosses had a policy. To every money decision that anybody insisted that he should make on the spot, his answer would always be “no”.  

I have many examples of personal bad decisions I have made without serious thought or consultations. I have thrown away that habit for good now. After all I am not an open heart surgeon or a elite commando who might have to make such decisions as part of their normal day. 

Consultative decision making does not have to involve lengthly meetings and pages and pages of minutes. It may be just a tea time talk or a five minutes kind of thing. I would wager that a normal person’s life seldom, if ever, involve having to make a split second decision.  

I urge my two elder girls to practice this. So far they have consulted their mother or me in their major decisions. I suppose a time will soon come where parents might not be their choice of sounding boards. Still I urge them to seek someone out and most probably a better decision would be made.

My two elder girls’ net worth computations as at the end of 2008. Now it’s all up to them.

Wednesday, January 28th, 2009

Recently I read a fascinating article on a 25 year old lady’s thoughts on where her net worth would be without her parents’ help.  With this present entitlement generation made up largely of “the gimme, gimme, gimme types”, the article was a refreshing read. I was pleased that the lady deeply appreciated the efforts made by her parents to give her a head start. 

I am a father of five children, 4 girls and a boy. Like so many parents out there, my wife and I, too, want to give our children a far better life than the one we started off with and are going through. Still there was always a lingering fear that the children might just fritter away whatever little we gave and keep on stretching their hands out for more.  

Well, by the grace of the All Mighty, it looks like my two elder girls have their heads screwed on right. My wife and I have never had any problems with the girls coming back with requests for the “expensive, everybody has it!!! kind of thingamajig”. We have recently completed the net worth calculations for my two elder girls. Their first. (I have also done mine, which is essentially the family’s. But that is another story.) Their net worth is not going to put them up in any Forbes list. Still, the fact that their net worth is positive should put them ahead of many of their peers. 

I know that my girls read this blog fairly frequently, or at least I think so. Perhaps these  statistics will let them know where they stand. 

As per EPF 2007 Report, page 101 

As at the end of 2007, the average savings of a Malaysian male employee at age 54, was RM138,895, whilst the average for the ladies was RM84,596. My girls should be able to compare their net worth and see how they stack up against Mat Average and Minah Average. 

And these are the savings statistics for Americans when they reach retirement age.  

My wife and I have no intention of gloating or to tell our two elder girls that we have made supreme sacrifices so that they could start off their lives in a favourable position. We do not want our girls to feel guilty in any way. Where there are now financially is also a function of their relatively reasonable childhood. And after all, no one will ever love them like their Mama and Papa.  

Now it’s all up to them.  

They can live responsibly and frugally and follow the rules that FMF has listed on how to become a millionaire. And grow their net worths steadily. And grow up to be respectful and respected members of the community we live in.  

That’s all my wife and I want of our kids.   

Unemployment numbers looking grimmer and grimmer for Malaysians

Wednesday, January 21st, 2009

On Monday the 19th, one of Malaysia’s more influential blogs posted an article titled “1 million Malaysians could lose jobs this year”.  

This forecast had been made on the basis of estimates by the Malaysian Employers Federation (MEF) and news reports on expected job losses for Malaysians working in Singapore.  

Current official Malaysian unemployment statistics are at 3.1% or an estimate of 343,700 people. Increasing this by even another 300,000 people is going to cause a terrible strain on the Malaysian people.  

The highest unemployment rate that I could find for Malaysia was for the year 1986 when it was 8.3%.  Though I had already been working for a few years when this 1986 recession hit us, I was quite blissfully ignorant. There were no retrenchments done at my workplace and I did not know anyone who had been affected. I wonder how my mindset would have been affected had I been retrenched or suffered some set back this early in my working life.  

My two elder girls have just started working. The eldest is doing some part time work teaching an autistic child, and my second girl is in a fairly recession proof industry. At this stage in their lives the parental umbrella is still available to them. In addition, their expenses are still low and they have yet to be burdened with car loans, housing loans and such. 

I have my doubts if my girls will truly understand the difficulties faced by many others in the work force. They might if some of their peers have been affected by the storms in the job market.  I hope that my girls will hear, learn and try to understand the flimsiness of the job markets and the resultant devastating impact this can have on incomes and lifestyles.

This would be one of the best lessons one can have for maintaining a frugal lifestyle and always earning more than spending.

There was a time when wealth was measured by the number of children one had……

Friday, January 16th, 2009

Times have changed. Now it seems people are concerned about the wealth draining effect of having children.  

The Simple Dollar recently asked his readers “Do children really cause financial burdens?” Trent’s question had been triggered by a comment he read on LifeHacker that said “Having kids is one of the most expensive poverty-inducing things you can do right now” Trent’s gave his reasoning and numbers and concluded that we should not be scared into not having children - or delaying having children for years – just by the huge costs bandied about. 

Steve also had a recent post telling us that we would be richer if we did not have kids. He did make it very clear though, just in case he was misunderstood, that all he wanted was for people to think ahead about the costs involved. So that people could make informed choices. As for him, he loved his son and daughter most dearly and did not mind the costs.  

Both the articles were very actively commented upon. Mainly pro and some others against. 

I have serious reservations about looking at the question about having children by looking at a list of expenses that would arise immediately and in the future once we had children.

Having children, like Mike, commented to Trent’s post) (#36) enriches our lives. Mike says that he was motivated as a new parent to further his career in ways he’d previously overlooked. Parenthood gave him the nudge to live up to his potential in his career. It’s been an enriching experience that made him a much better person.

I, too, started being more responsible, financially and in a number of other ways, after having children. I only started saving after the kids arrived. In fact, I say that I am “richer” in every sense of the word, after having our children.

Having children cements and makes for stronger family bonds. In our case at least, the petty quarrels and disagreements that almost all husbands and wives have, have not degenerated into break up situations because of our children. We have been forced to take a step back and reassess our disagreements because we want a happy household. 

And can any value be placed on the “no strings attached smiles, laughter and love” given us by our little ones? I don’t think any words can ever do justice to the feeling you get when the little ones smile and look adoringly at you. I must admit that I do feel sorry for those of us who have never experienced this feeling.  

Some people have likened having children as an investment and that we should work towards getting “a decent return”. I believe, as I have written before, that having children is not an investment, rather it’s an act of paying it forward. Even if our children do not pay us back, they’ll in turn pay it forward to their children.

Whether we should have a child or not is a lifestyle choice. Yes, costs may be one consideration, but it is only one. Don’t let ourselves be consumed by this one factor.

After all, wives, husband, girlfriends and boyfriends also cost money. In fact living costs money!!! And where would we be if our parents had done some financial modelling before deciding to have us?

Do you think I like to do this?

Wednesday, January 14th, 2009

This is a statement that I have lately found myself repeating often to my younger children.

Children are quite forthright when it comes to listing their likes and dislikes. And the problem is that quite a number of good things are usually in their list of dislikes. 

Take for example, washing their shoes. They wear white washable canvas shoes to school. And by the time the school week is over, the shoes look as if they have been in a concrete mixer. Getting them to wash their shoes is a hassle. All they have to do is to soak the shoes in soap water on Friday night, clean the shoes with a brush on Saturday morning and dry them. And on Sunday, apply a coat of shoe whitewash and the shoes are as good as new. Maybe all-in a 20 minutes job spread over 3 instances. 

Yet it is not so easy to get them to do it. Because they don’t like it! 

My younger children are at an age where I feel that I have to reason with them and win them over. (I remember those days when I would be given a nice clip on my ears if my shoes were not as good as new on Monday morning.)  

So now my mantra to them is “Do you think I like to do this?”  

I mention things like : 

-         Driving them to and from school,

-         Taking them to the doctor when they are ill,

-         Buying them stuff they need for school on Monday, that they forget to mention all weekend and remember only on Sunday night, 

as things I do not like to do. I also mention that I would much rather sit at home and watch TV. I tell them that I still do these tasks anyway because I love them and want the best for them.  

I follow up with the statement that some things have to be done even though we do not like to do it.    

This mantra seems to have some effect. Their spirited arguments falter somewhat and they nod in agreement. Whether my mantra would sink into their unconscious minds remain to be seen.  

But for the time being, this is the best retort I have. 

Note:  

Doing things that we don’t like to do (and by logical extension, others most probably don’t like to do) seems to be rewarding for adults too.

Read how: 

- Brooke saves time by taking the earliest appointments possible.

- and in fact this habit is acknowledged as a “common denominator for success”. 

Continuing a goal set in 2008 – low cost fun filled family picnics

Wednesday, January 7th, 2009

I have mentioned that I am a little shy or maybe even embarrassed about publicly displaying some of my goals. One goal that I am not at all shy about is having low cost picnics or outings with my family.

The exact wording I used when I crafted this goal in 2008 was:- 

“To have at least 5 family outings in 2008 – cheap and enjoyable- Ulu Bendul like” 

Hutan Lipur Ulu Bendul is a recreational park about 16 kms from my home. It is a protected forest area and the waters of the stream that winds round the park are cool and refreshing. We visited this park when I was recovering from the bout of malaria contracted during my travels in West Africa in early 2007. 

My wife, the 3 younger children and I went for this picnic. The eldest girl was then still in Wales and Azah was in her University. Since we had chosen a working day (though it was the school holidays), there were no crowds and we had the place almost to ourselves. We enjoyed frolicking in the cool waters (the streams at the foothills are quite shallow and the only swimming is done by some small fishes). It was then that I made a promise to myself that I shall have the goal drawn up. 

Alas, in 2008, this goal was not met. And I listed back this goal for 2009.  

We have plenty of these recreational forest sites all over the country. In Negeri Sembilan alone, where we live, the Forestry Department has listed 12 such sites. (The website is in Bahasa Malaysia.) These places are at most a couple of hours drive from my house. It would be easy to pack some food from the house, mix some drinks and have a frugal fun filled few hours frolicking in the streams and rivers. 

In addition, I had also bookmarked this great website on “Nature Escapes” where Rick has listed lots of quick nature trips that could be made by a family with young children. 

On the 1st January 2009, we took a drive to Hutan Lipur Sungei Gabai, about 35 kms from our home. Our intention was to go for a drive in the countryside and see the waterfalls.  

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The day was cool and the view spectacular for us city folks.      

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We passsed the Semenyih Dam on the way to Sungei Gabai.

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As you can see quite a number of people seem to have had the same idea. After all it was a public holiday.      

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Finally, we arrived and received a warm welcome.    

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The place was too crowded and we could only find a place really downstream. Still the flowing waters were cool and refreshing.              

Though we were not able to get to see the waterfalls (it was far too crowded), I enjoyed myself. In addition the children were also on their best behaviour and there were not too much “lets go home now” mumbles. And as expected the youngest, Ain, had the best time.  

We do not get quite the same feeling when we accomplish a goal like this as compared to, say, meeting a goal of paying off a loan. Meeting this goal is not an end. It is just one step in the long journey of building a stronger bond within my family. Still, I do relish the fact that I have taken that one step.

Conserving water in the household – it’s all a matter of attitude

Monday, December 22nd, 2008

The Simple Dollar wrote a nice post titled “5 simple water conservation methods – Do they save real money”. 

Of all our utility bills, our water bill is the cheapest. So even a 50% reduction in water usage would probably not result in a big deal in terms of real savings. Still, I feel that the thought process that goes into conserving water is a very strong and fundamental part of overall frugality.  

I was born into a household that had no tap water. We were lucky. My mother(and us once we were old enough to carry a pot ourselves) had to walk only about 300 yards to bring back water for cooking and drinking from the village drinking well. Occasionally we had to tag along to carry a pot or two ourselves. (My mother could balance one on her head and carry two more. It was usually about 2 – 3 trips a day. So conserving water was an issue drilled deep into our minds from very young. 

A tap in full flow. It would do its work just as well at half or less the flow. 

Not so for my children. They are used to the house with taps all over the place and gushing clean water coming out each and every time the tap was turned on. So my children do not have the same attitudes with water. 

The Simple Dollar has pointed out 5 simple ways to conserve water, one of which is to install a low flow shower head. I prefer to use low flow all the time we turn on the tap, when washing our hands, washing vegetables or anything. Turning the tap on full blast and washing just wastes lots and lots of water. If the tap were to be on low flow (i.e. turned on low), then the task might take a wee bit longer but save a ton of water. 

Muslims have to pray 5 times a day and each time they have to take ablution to cleanse themselves. And this process often results in tremendous waste of water. Just imagine the waste in a household such as ours with 5 children plus the 2 adults. In Ghana and Sudan, it’s the norm to use just a little bottle of water for one’s ablution. I think the Ghanaians and Sudanese and others from the dry Middle East regions probably think that Malaysians are amongst the most wasteful characters on earth.  

I yell at my kids every time I see them running the tap full blast. Imagine washing a spoon with the tap water running full blast. It’s enough to make a strong man cry!  

3 months of water gathering this way should be enough to instill good water conserving habits, don’t you think?

As I said earlier, saving water is not going to add big bucks to our savings, but it drives home the point of generally not being a wastrel. This attitude will play a very pivotal role in shaping our future lives.  

Picture Credits: Google 

Seeking bargains for everything – movies

Wednesday, December 10th, 2008

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Bond in his latest outing. A lot of shooting and killing. I went to see this movie alone. 

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We loved this movie about the scientist’s assistant who finally achieves his dreams of inventing the most diabolical invention ever. And then finding out that it is better to be a little good than being the best bad. Or something like that.

I remember getting the shock of my life when my wife, the 2 elder girls and I went to see a movie in Perth, Australia way back when we took our first overseas trip as a family. I could not believe my ears when the girl at the counter asked me for what I considered a fortune just to see a movie.  

Movies in Malaysia were cheap those days before the invasion by video cassettes, CD’s, DVD’s, internet downloads and cable TV. There were plenty of theatres all over town, some quite dingy looking. There were also matinee shows which were even cheaper.

These movie theatres died off and a new breed, the so called Cineplexes took their place. More upmarket, much smaller and grouped together, they offered a different kind of experience. And they came with a higher price for the tickets. 

We have a Cineplex not too far from our house where my two younger girls and I see movies once in a while. I did grumble (though only to myself actually, since the requests from the girls were not really that frequent) but the girls enjoy the movies and it’s a really great feeling to see your kids enjoying themselves. 

Until I mentioned this to my frugal but well living friend, KC Lim. He told me that I could get to see the movies at cheaper prices on Wednesdays. Like my eldest girl says, Duh! The same movie, the same Cineplex, the same experience, but at a 33% cheaper cost. 

It seems that Wednesday is the “cheap” day. This information is available at the Cineplex’s website, but who checks?

So I saw the Bond movie “Quantum of Solace” a couple of Wednesdays ago and last Wednesday, Nana, Ain and I saw “Igor”.  

Hmm, wonder what other bargains are out there and not being used by me yet?

My final letter – its still in draft form

Monday, December 1st, 2008

My wife and I did our wills a couple of years ago. We have appointed our executors and have also in a family meeting informed the children the identity of our chosen administrators. We used the services of an Islamic Estate Planning firm in drawing up our will, As Salihin Trustee Berhad. The firm is also storing our wills and has given us bar coded cards which uniquely identify our wills. My wife and I and our two chosen executors have one card each. 

Still, I have sometimes felt that the wills would not allow our children to have complete access to the details of our affairs, especially financial. I keep most of our information in my computer (backed up every fortnightly). There are passwords and one has to understand the manner of my filing to easily unlock the information. Hence an urge to write another letter to my children to explain this.  

Ever since I read Madison of the Dollar Plan’s “Dear Husband, what to do if I die?”, the urge has grown stronger. Madison’s post was way back on the 28 February 2008.

Mrs. Micah came up with an “alien abduction package”. As she is the more engaged of the Mr and Mrs. Micah duo in the finances of the family, she has worked out a manual to walk Mr. Micah through the intricacies of the family finances in the event she gets abducted by aliens.  

I started on my first draft of my version of the final letter on the 30th October 2008. I want to take a little time to prepare this letter as I want it to be as complete as possible. I have prepared the various headings and am slowly completing the various blank sections.  

Details such as our bank account numbers (though listed in our wills, this is a dynamic issue and the computer records are more updated), insurance policies – types, and policy   numbers, passwords etc. 

A major item would be the issue of “side promises” if any, I make with any business partners. Though this is never done without consulting the “boss” of the household, my wife, the children might not be aware of all of them. 

Then there is the issue of passwords and user IDs.  I don’t do too much of internet banking, though we do have automated payment of most of our bills. I don’t want to disclose the passwords now, as our information might be compromised. Madison mentioned the creation and use of a “Masterkey for passwords and user IDs”. This is something that I am totally blank about. I am not sure if anyone has written any posts on “Masterkeys for Dummies”. I have to do some research on this. 

This final letter is going to be one of the goals for 2009. Not a major one though as the outline is already there.

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