Father Sez

Much has been written about how finances are treated in families. Some have joint accounts, others have 3 accounts - mine, yours and ours and others just have yours and mine accounts.

Some of the more “careful” or “risk mitigating” types may look ahead and consider financial consrequences in the event of family breakups and try to structure something now to minimise issues later.

In our family, we have the “all or nothing” structure.

My wife was working in a bank when we met. She continued to work after we got married and had our second girl.  A near tragic incident involving the second girl, when she was 3 months old, made us review the situation. As I was earning more, we decided that my wife would stay home whilst I would continue working.

At that time, we still had separate accounts, though I paid for all the household expenses.

When I started work overseas, she became an additional signatory to all my bank accounts, hence having powers to withdraw any amount she chose. Now all our assets are in our joint names though most of the liabilities are under my name.

This structure is one that may self destruct if there are ever irreconcilable rifts between us.

I have thought about this. But I want to give an iron clad guarantee to my wife that whatever happens there will be no significant negative impact on her or the children financially.

I think for the sacrifices my wife has made in giving up her career for the betterment of our family, the support she has given me in my business ventures, the support that she has given me in my personal life, this is well worth it.

I have been inspired by some of the pf bloggers doing a review of their 2008 goals, now that about 8% of the year has passed us by now.

And the goal under review is “Imparting to my children the two most important  PF lessons that I have learnt“.

a) Goal 1

To get my elder girls to join a peer group that has pf as a core subject.

My idea was for them to start reading the pf blogs. Over time, hopefully the useful advice given(especially since they are mainly real life experiences) will have some effect on them.

The good thing is that the two elder girls are reading my blog and also the links that are being provided. The both of them have occasionaly commented on my blog.

They have also told me that Mrs. Micah’s mom is cool. The eldest once sent me a text message saying that she had read and commented on “Millionaire Mommy sumthing sumthing”

I have also forwarded them some of the oustanding career tips that can be found in Free Money Finance. 

Some of their friends are also reading my blog. This is a very promising step.  

I think this goal is being on its way of being achieved.

b) Goal 2

Teaching the younger children to “pay themselves first”.

In late November 2007, the two younger children signed allowance agreements with their mother. (I signed as a witness). They would both receive weekly allowances, they had to save at least 10%, and maintain accounts of their allowance.

This has gone on well for the past 2 months. Somethings to note:

 -  the boy just had two entries in his accounts ledger everyweek, the receipt of the allowance and the out to his piggy back. Basically he spent zero. It seems that he had stashed away the cash gifts received during our festive holidays and was spending them.  His mother and he have agreed to bank in this stash and we should now be better able to track his spending.

- Nana, (our fourth girl), is a little more lavish. She maintains the 10% (in fact, it is a lot more that 10% savings), but she also spends on stationery etc. I have talked to her about her seemingly lavish ways. I have to see how this develops. Nana also had her stash and this has also been banked in.

The weekly ritual of them presenting their accounts books for inspection and getting their allowance has had an effect on our youngest girl. She gets her allowance daily. I think she is also a little more careful with her spending, because my wife says that I am not giving her enough.

Anyway, she has also asked for a bank account and this has also been done.

In conclusion, I think this goal is progressing well. 

I like the way, D4L has weaved a story around the pf lessons to his children. I must do the same. Perhaps something from the “Richest Man in Babylon”.

Our “little girls” are adults now.

Along, our eldest will be 22 in April while Azah, our second will be 21 in May. They are now both busy planning their careers. My wife and I shall do our best to help by guiding them not to make the mistakes that we had made. There is however, one issue that the children would have to decide on by themselves. Choosing their spouses. Early Retirement Extreme wrote a post on “How to be happy in the long run”, which included a section on choosing a spouse. My understanding is that he has suggested “stress testing” the potential spouse to ensure that we end up marrying “a survivor” as he puts it. I am not so sure if I can suggest this advice to my children.

(more…)

On December 17^th, 2007 I helped bury a dear friend. 

He was a gifted fellow. He had handyman skills that MacGyver himself would rate an “A”. He had great skills at raising flowering plants of any sort. He reared colorful fishes. He built a “koi” pond in his house and raised the koi fishes until some of them wee almost as old as my youngest child. 

He was careful with money. Not cheap, but careful and frugal. 

As an employee of our National Oil Corporation, he had been sent for all kinds of training courses. Corporate equivalents of the ones people like 007 go through. 

He had the uncanny ability to break down complex problems into little sub problems which were then solved systematically. 

He had traveled literally the roads less trodden, the Silk Route, the jungles of Myanmar and the villages of Surabaya amongst others. Very well read and well traveled, he would regale us with stories such as those of the uncanny skills of the Indian hermits, like how he had seen them sleeping on a branch of a tree without falling off. 

He was the one I called my “wisest friend”.  

He died at 10 am on the 17^th December 07 at our General Hospital. His wife and all his three girls were with him when he breathed his last. 

As the funeral arrangements were being made, (as a Muslim, he had to be buried as soon as possible), my mind wandered on what were the really important financial things that I had to do as the head of my family. 

i)                  Write my will 

Islamic law has different views on distribution of assets, if the deceased did not leave a will. Brothers, sisters, parents and even grandparents get included and it may become quite a complicated matter. It seemed that no one knew if my friend had left a will. So in addition to the grief, there was also concern about the family finance over the coming days. 

ii)                Make sure there is a house to shelter my family 

My friend had already paid off whatever mortgages he had on the house. However, the charge on the property by the financiers had not yet been removed and the title was still under his name. This would bring the issue of the “family house”, being included under the heading of “pool assets” to be distributed under Islamic Law. Hence putting some worries in the minds of the bereaved family.  

iii)              Sufficient and easily accessible cash in hand 

I have no doubts about my late friend’s emergency fund. However, the funeral and immediate expenses needed cash. Whilst the amounts may not be big, cash was still needed.  Financing the family expenses over the period until the issue of the will, the distribution and insurance claims etc. are sorted out is another major matter of concern.  

Zen Habits featured an article titled “Big Rocks first, double your productivity this week.”   

To quote Leo,  

The Big Rocks are the major things you want to get done this week. A report, launching a new website, going to the gym, spending time with your spouse and kids, achieving your dreams. These Big Rocks get pushed back from week to week because we never have time to do them — our days fill up too quickly, and before we know it, weeks have passed and the Big Rocks are still sitting on the side, untouched. 

He was referring to our planned output for the week, and how the big rocks represented the important things that had to be done. 

Extending the same principle to my financial life, I should get the big rocks out of the way first. And these big rocks are, in my view:- 

The Will 

My wife and I have done our will. We have appointed administrators should anything untoward happen to both of us. This matter has been discussed at a family meeting. All our children are aware of the administrators that my wife and I have selected.   

So this big rock has been taken care of. 

House 

The house we live in is under a mortgage. It has a MRT assurance attached, so that in the event of any untimely event, the loan would be paid off, by the insurance.  The house itself is under the ownership of our family company, whose shareholders presently are my wife, the elder two girls and me.  

Another big rock out of the way. 

Sufficient and easily accessible cash in hand 

The funeral expenses are quite small. So I am sure, this will be sorted out without any problems. For the subsequent period say, till the insurance claims etc., are sorted out, the family living expenses should be catered for.

In our family I am the sole breadwinner. So this is a major big rock. Whilst most of our assets are in our joint names, some of the unit trusts have been shifted into my wife’s name. This should be sufficient to take care of family expenses in the interim. 

I only wish it had not taken the death of a dear friend to get me to check up on these.   

Sometime ago, I wrote about the 5 stages of a child’s life and how it relates to their financial and life education. 

I listed the stages as : 

a)    My Mommy knows everything stage,

b)    My Mommy knows most things stage,

c)     My Mommy does not have a clue stage,

d)    Maybe I should ask my Mommy stage and

e)    I wish my Mommy was here, she’ll know what to do stage. 

My elder two girls are now in the 4^th stage. Thankfully the 3^rd stage of their life went by without any major disruptions in our family. 

The younger three were in the 1^st stage, until recently, very recently.  

And this is how I found out. 

Since 2005, it has been a yearly practice for me to sit with our three younger kids and together draw up their goals for the next year.  These goals are some things the children and I agree as important. We review them about 3 times a year and the children will promise to try harder to meet the goals and life goes on. 

This year, the youngest two girls, Nana and Ain drew up their goals, after our usual discussion.   

Not so Abang, our only boy who turns 14 this January 5^th.  When he and I first started talking about the goals for 2008, (sometime around November 07), he asked for additional time. He then kept on postponing.  

Today, he came out and told me that he has his own goals.  

It looks like my little boy, our Tuan Muda (“Young Master”) has now moved on to the 2^nd stage of his life! I am part sad and part happy. My son has just come of age!  

Am I worried about my son’s seeming lack of interest in goals? Not at all.  

Last year, as part of his English improvement exercise, he read Anthony Robbins’ “Notes to a Friend”. Every Saturday and Sunday, he would write about 4 – 5 pages down and them read them to me. He has finished the book now. Now he is going through Sean Covey’s “7 Habits of Highly Effective Teens”. 

I am sure some of the points in the books are seeping into him steadily.

And besides, he has told me that he does have his goals. 

My son likes, as so many other boys his age, to play video games. This activity is taking up an inordinate amount of his time, and has been the subject of a number of scenes of displeasure with his mother. Other than this little thing, our Tuan Muda is a great young man and I have every faith in him.  

In fact, whilst working in India, a business acquaintance who was also an amateur fortune teller, told me that one day, my wife and I would be looked up to and become famous as being “Our Tuan Muda’s parents”. (When I told this story to my wife and my much younger son then, he beamed with pride).

Well, at least my son has agreed to write down his goals and also agreed to show them to me, but much later. So for now, he has managed to get me off his back. 

Thankfully, I am aware of this subtle but so important change in Abang’s life. Now that Abang is entering the second stage, I have to treat him a little more as an equal. The treatment when he was in the “My Mommy knows everything stage”, may no longer be suitable. 

And for now, I have to get used to my son now being a young man!    

This will be a question that my wife and I will be asking ourselves quite soon. 

Our two elder girls should be graduating next May, and will be looking to join the rat race. 

We have friends who run businesses or are senior level executives in some of the bigger companies in town.  

Should we let our children go through the process of writing a proper resume, apply for jobs, practice selling themselves at the interview and find their first job by themselves?  

Or as parents, should we lend a “helping hand”? 

My wife and I have decided that our helping hand will be limited to helping the children pick up (in necessary, through additional formal education) non academic skills that may assist them in their careers. 

After that, Along and Aja have to do their best to sort themselves out. 

My wife and I, believe that in asking a “friend” to employ our children, we may in some way, compromise our relationships. Our friends, just like any other employer, would have to screen all applicants and chose whom they think are best suited. 

My wife and I just have to focus on guiding and preparing our children as best as we can, so that they fall within the “best suited” or at least “better suited” category

We (blush) have a written Family Mission Statement. This was done in June 1991 after reading Dr. Stephen Covey’s “7 Habits…..” 

Our Family Mission Statement is not as “deep” and “save the world- ish” as Johnson & Johnson’s credo, or catchy and with “umph” as Rich Dad’s  “To elevate the financial well-being of humanity”. 

Our “good enough for us” FMS talks about our values and our ultimate objectives in all areas of our lives.  

And this is what our FMS says about money. 

“Seeking FINANCIAL security and independence, and make our money work hard for us instead of us working for money. The sources of our wealth must be capable of being revealed with pride and dignity.” 

As you can see, this money part has 3 main pillars. 

a)    Pillar 1  

We want financial security and independence for every member of the family. For my wife and myself as the parents and as current adults in the family. And for our children when they grow up to be adults in their own right. 

We do not want to be enslaved to some master and be made to work according to his or her wants, whims or fancies.  

This Pillar primarily is intended to make us seek knowledge on means to secure financial independence. 

This Pillar is also aimed at making us frugal, to save, to invest wisely and to seek increases and diversification in income streams.  

b)    Pillar 2  

This Pillar is, in a way, a reinforcement of Pillar 1. The wording was copied, (though I prefer to say, inspired) by Robert Kiyosaki’s frequent repetition of this phrase in his books. 

This Pillar is also, I feel, a good representation of what one of my role models, Arkad, the Richest Man in Babylon himself said so many centuries ago, i.e.,   

“Make thy gold multiply or To put each coin to laboring that it may reproduce its kind even as flocks in the field and help bring to thee income, a stream of wealth that shall constantly flow into your purse.” 

This Pillar encourages me and my family to learn to invest wisely so that our money will “labor and work hard” to create additional income streams for us.  

c)   Pillar 3 

This part emphasizes integrity in our financial dealings. We must be able to explain with “pride and dignity”, how we got our assets and wealth. 

I admire the way, some of the pf bloggers candidly explain their investments and the returns they obtained. They go so far as to list their net worth and the progressive growth etc., for all to see.

This is exactly what we mean in Pillar 3.  Though I am still shy about revealing specifics of our family’s finances here in my blog, my wife is fully aware of exactly how we got to where we are. The elder girls, too, I believe.  

I think, Dr. Stephen Covey expressed it best.  Being principled means “Never having to worry about being caught.”  

My country can do a lot more to improve our reputation for integrity and transparency. In an environment like this, financial temptations abound. We hope Pillar 3 will keep us away from these temptations.  

Wikipedia, defines MS as a “brief statement of the purpose or values of an organization”.   

Well, this is our statement on the financial purposes and values of our family.  

We try, plan and hope to live with this credo.

This post is inspired by an article I read many years ago. I think it was in Readers Digest, but I am not sure. I am trying to remember as much of it as I can. 

This is not a psychological thesis, so please do not treat it as such. Children go through 5 phases as they grow up to become adults. Let’s begin. 

“My mommy knows everything” stage  

I am sure all parents will remember this stage with some nostalgia. The children who fall into this stage are those from the time they are born to about 6/7 years of age. 

What ever Mommy says is followed and accepted without question. Brush your teeth, go to sleep at 8.30 pm, do not play in the rain, etc. There may be some resistance, but it is negligible and usually, Mommy gets what she wants. In the event of any trouble, the kids can always be easily bribed.  

Mommy could also be depended upon to resolve any issue. How to heal a sick cat and or even to take on the 6’ 7”, 300 pounds ex-boxer father of Harry, who had said or done something nasty etc. 

All arguments between kids would have the mandatory, “My Mommy said so!”.  

“My Mommy knows most things” stage 

The kids are a little older now. Maybe between 8 to about 12/13 years. Other influences have now come into their lives. The older, “cooler” kids in school, their internet chat companions, etc. Mommy’s influence is still formidable, but now there are avenues to seek “second opinions”.

This is the time when the kids shy away a bit from being kissed by their mommies in school. 

Being called Mommy’s boy or girl in school would be an unmitigated disaster. 

“My Mommy does not have a clue” stage 

This is the stage most dreaded and feared by parents….the teens to late teens stage. The children are now aged maybe between 12/13 to about 20 years or so.  

They have their own minds, their own sources of information like the internet and their peer groups in school are now entrenched. Not quite adults and not quite children, they are sandwiched. There is a feeling of wanting to rebel and try out adult things, but are somewhat restrained by ties such as monetary support, place to stay, etc. 

Boys go through the girls stage and girls go through the boys stage.  

Money is expected from parents and not much thought is given to the hardships the parents may have to go through to earn it. Conversations with Mommy would be monosyllabic whilst phone bills on their conversations with friends would be astronomical.  

This stage is very crucial and may define some make or break situations like running away from home, eloping with their “loved ones”, etc.

Generally a stressful period for Mommy as well as the children.  

“Maybe I should ask my Mommy” stage

Here some stability is setting in. Also some acceptance of the real facts of life. Facts like we need money to survive, and that we have to work to get money and getting money by some “easier” means may result in punishment from Authorities etc. 

This would be the stage straddling college, graduation, first jobs and maybe serious relationships with the opposite sex and marriage. The children would now be in the early to perhaps mid /late 20’s. 

There may still be some anger over some perceived “ill or grossly unfair treatment” during the earlier stage of their lives, i.e. the “Mommy had no clue stage”.

Slowly they see two sides of the situation and some understanding of their Mommy’s way of thinking dawns. 

“I wish my Mommy was here, she’ll know what to do” stage 

Most probably our children now have children of their own. The antics of their kids make them nostalgic of their own past and there is a lot more appreciation for Mommy.

The child has now completed the circle and become an adult.  

How does this help us in giving our kids financial education?  

It appears to me that the best time to start teaching our children on pf or life would be during the 1^st two stages, i.e. “Mommy knows best and Mommy knows most things” stages.  

During these stages, the kid’s minds will be most receptive. The lessons learnt, even if discarded during the next “Mommy not having a clue” stage, will remain in their minds. Ready to be awakened during the “maybe I should ask my Mommy” stage. 

Unfortunately these 1^st two stages coincide with the time when the parents are inexperienced, may have to work extra hours to cope with the extra expenses of the kids and “quality” time with the kids are not as much as it should be.  

This is perhaps, where we, as parents lose out. 

We then try to catch up during the “Mommy does not have a clue” phase, and the stage is set for countless arguments, slamming of doors and sulks. 

And all Mommy can do is to wonder, what have I done. 

Naturally, they’ll be exceptions to the rules above. From hyperactive children to those who read “War and Peace” when they are only 4 years old.

This post is just meant to show a different slant to the issue of parenting and the teaching of good family and life values to our children.  

And I do think it makes sense.

For the first time in our married lives, we have done our family budget. And after only 23 years of marriage and 5 children. Whilst this may not be exactly Speedy Gonzales’ style, at least it will give us a chance to find out if the old adage “Better late than never” is indeed true. 

I must admit, I was pushed into this by some great posts that I read in the blogs on preparing for self employment.

Posts from blogs such as:- Get Rich Slowly,  Redomestication and  The Digerati Life. 

Then we sort of stress tested our budget. I thought we had it pretty much pared to the bone, when along came Clever Dude’s three parter on “What could you give up if you were in financial trouble”. 

The Dude classified the expenses as luxuries, semi luxuries and essentials. We can guess which would go, if push came to shove. The surgical, practical and unemotional cuts suggested by Clever Dude made me wonder if I could cut more. 

I also like Moolanomy’s useful idea to apply the Pareto Principle to rank our expenses and direct our focus on the bigger hitters. 

So it is back to the drawing board.  

Another 2008 financial goal is going to be cutting down our monthly budget. How, by how much and by when will have to be agreed upon after discussions with my better half. 

After all, we now have some great “how to” guides.  

Ribuan terima kasih, guys. (This is how we offer a thousand thanks in my country).

The concept of “Paying it Forward” is really powerful. 

You do something good to someone and in return you ask her or him to do something good to another, with the same conditions. So the good keeps spreading and spreading. 

Zen Habits has written an outstanding and moving article on this, titled “Faith in Humanity……” 

This article attracted an astounding 167 comments, as I write this. It is really gratifying and comforting to know that doing and spreading good is a favored interest in the blogosphere.  

Here, I want to talk about a twist to this “Paying It Forward” concept. 

A dear friend, Angie, emailed me some great quotations about children. One of them was particularly thought provoking, especially since Angie’s mail came soon after I had read Zen Habit’s post. 

Quote 

You don’t pay back your parents. You can’t. The debt you owe them gets collected by your children, who hand it down in turn. It’s a sort of entailment. Or if you don’t have children of the body, it’s left as a debt to your common humanity. Or to your God, if you possess or are possessed by one.      

Unquote

Lois McMaster Bujold,

A Civil Campaign, 1999
US science fiction author

This quote has made me think quite a bit.  

When we do something for our children, we are actually “paying it forward”, and it’s the up to our children to then “pay it forward” to their children, or to humanity or God, as LM Bujold says. 

It follows then, that if we do good to them, i.e. instill good moral values, give them a sound education, teach them useful living skills (including managing themselves financially), we are paving the way for our children to do the same for our grandchildren. 

It should also follow that if the children (especially the older ones)   make the lives of their parents easier, they can expect the same from their children in turn. 

So whatever shenanigans our children come up with, my wife and I shall just have to keep on “paying it forward”. And we hope that our children will grow up as well rounded, principled, respected and respectful people.  

And one of my advance New Year wishes is for the two young ladies featured in Mrs. Micah’s, “If this were your daughter…….”  be made aware of this concept of “paying it forward”, and see their father in a completely different light.