My Financial Planning Experience (Part 2)

I was wondering how could I make a fortune of RM1 million when I began to work 10 years ago. What can I do to achieve the target? How would I execute plans to achieve the target? Should I work my ass out to be a top executive in a company so I would be rewarded high income salary and bonus? Should I become an entrepreneur in doing my own business or become an active investor? I had no idea at that juncture.

During the time I was staying at Wangsa Maju, I used to visit my best friend who was still studying his diploma at Kajang during the weekend. We always talked about what would be our future and 1 day he shared me a book and told me that this could be our future. The name of the book is ‘To be an intelligent investor’ (做个聪明的投资人) written by John Mark (麦青远). This is the book where I came to know Berkshire Hathaway, its CEO Warren Edward Buffet and value investing, to realise that I can be financial free by investing into good companies and to find out long-term investment holding is far more superior than short-term trading.

As I came to click with the idea of investment as a way to achieve financial freedom, but I didn’t have any capital to roll for an investment portfolio. Then I came across to books related to financial planning. "The Millionaire Next Door" by Thomas J.Stanley and William D. Danko is one of the many books that shaped my philosophy in financial planning.

I did try to explain and educate my friends about the the lifestyle to live below our mean. For example, if I have a salary income of RM3,000 so I can afford to buy a local 'Proton', I'd still keep using public transportation such as LRT. If my income is RM6,000 and I can afford to buy a foreign branded car like 'Vios', but I choose to own a local 'Myvi'. Indeed, I had only bought a car when I turned 30 in year 2012 (which was 10 years after I started my first job) and changed to a job that requires me to drive for meeting at outstations. Having said so, I will only drive my car for meetings that not beyond 300 KM away from my PJ house otherwise I'd demand the company to pay me to take on flight, and I still regularly take LRT with free shuttle GO KL to my office. I only pakai my car when I need travel outstation, going back hometown or meeting friends. Even until today after 18 months I bought the car, the mileage of my car is lower than 9,000 KM.

Another practice I adopt to manage my finances is to 'pay myself first'. Whenever I get paid of my salary, I will put aside a portion of my net salary in a different savings account from the account that I use to receive my salary. When I start to apply this practice, the portion I put aside was 10% of my net salary, I adjust the percentage according to the scale of my disposable income. Currently I'm working in a non-profit organisation and thus getting much lesser income, but I still practise 'paying myself' with 30% out of my current salary income. Should I still continue to work in the commercial, I'd have higher disposable income up and hence would be able to 'pay myself' up to 50%.

With these practices, I nurture a habit that allow me to save for future spending or investment disregard I'm earning high or low income. When I save enough emergency fund which is about 6-month of my monthly expenses, the subsequent savings would be allocated to another savings account just to get myself prepare to grasp any investing opportunities. When we have the bullet, it's time to go for hunting.