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Getting your money’s worth

by Patsy Kam
6 December, 2007

Following a financial plan will keep us from spending unwisely.

MONDAY: feeling down, had coffee at Starbucks. Tuesday: bought new gown for this weekend’s party. Wednesday: my turn to buy the gang lunch. 

Sounds like an ordinary week that you and I might have. But, if you look closer, the journal is an indicator of the person’s spending habits.  

Carol Yip: ‘The real rate of inflation isn’t the one set by the government or the economy. It’s created by us as we adapt and change our lifestyles accordingly.’
The question we need to ask ourselves is, do we really need to spend money on unnecessary stuff? It takes a brave soul to answer that honestly, as most of us will justify our spending habits by saying, “Why not, I can afford it”, “It’s just this one time,” or “I can choose to spend my hard-earned money any way I like.” 

Successful financial planning, says Carol Yip, is not just a matter of balancing the chequebook but an emotional decision. 

“Women shouldn’t be stressed over how to find money or keep up with the Joneses. Of course, you need money to survive but the key is finding a satisfactory level. Most companies have a corporate mission or plan. Why shouldn’t we have a personal financial mission, too?” says the financial consultant.  

Yip, 42, feels that women are mislabelled as shopaholics but in reality, there is no marked difference between the spending habits of men and women.  

“Women may spend more on things like fashion or make-up but men too have their weaknesses for gadgets or expensive boy toys. Men are not necessarily better planners either as I know many women who handle their money very well. However, men tend to be more objective whereas women can sometimes be ruled by their emotions,” she explains. 

A lot of it has to do with one’s psychological make-up. It depends on how girls are brought up and the kind of lifestyle they’re exposed to. Society dictates that one should look good so there’s peer pressure and a craving to live up to other people’s expectations. Women like hanging out together and chatting (for example, having tea with the girls) – it’s a girl thing – and friends and relatives affect their expenditure. 

“The different roles that women play – as daughter, girlfriend, wife and mother – also have an impact on how money is spent. Everything is money-related, be it self-esteem, attachment (to your husband or parents) or biological (health). We are also conditioned by our environment, which assails us all the time with sales and promotions, fashion changes, subtle advertising messages and reward systems that tempt us to buy what we don’t really need. 

“However, the only way to generate money is to have a career or business. So it’s a matter of focusing on the right things and having the right priorities,” says Yip, who started out as an auditor with an accounting firm. She later joined a local conglomerate as a management consultant as she wanted to be in touch with the commercial world. 

After obtaining her masters in finance and accumulating a wealth of knowledge and experience, Yip, who was in her 30s by then, felt the need to be independent and be her own boss. She started her own company, AbacusForMoney, and now gives money management talks and consultancy. She also self-published the book Smart Money-User which looks at how young adults can better plan their finances. 

Yip has since come to realise that finance and psychology are inextricably linked and is in the midst of completing a masters in the latter field.  

“In reality, the real rate of inflation isn’t the one set by the government or the economy. It’s created by us as we adapt and change our lifestyles accordingly. Outside factors can also affect our personal financial fluctuations, for example, if a woman becomes a widow or remarries, or goes through menopause/mid-life crisis. Then there are business cycles, man-made cycles (such as money scams) or natural disasters (flood, tsunami),” says Yip.  

There’s nothing to stop a woman from achieving financial literacy. However, many obstacles are self-imposed and emotional, rather than based on earning capability or money management.  

“Some women have this micro-view of themselves (‘I’m only a woman, what can I do?’). Money can be an emotional crutch or replacement, when the husband or loved one is not around to spend time with the woman.  

“Others feel they have extra roles to play as daughters or mothers. They end up being over-responsible for their elderly parents or taking on the small bills of the household (buying groceries, breakfast, etc) which can all add up,” explains Yip. 

“I’m not saying that it’s wrong to be filial or share the marriage finances. But, you need to know when you’re taking on too much. Communication is crucial. A family discussion to talk about where the money is going is important. Often, the woman doesn’t even bother to speak up as she feels bad or that it’s no use voicing her dissatisfaction. A lot of it is also cultural behaviour.” 

One of the groups that are often the hardest hit financially are single mothers who think they need to be both parents to their children and end up feeling emotionally drained. And often, they try to make it up to their kids by spending and buying things. However, you can teach children to understand money management – they’re smarter than we give them credit for. 

“Part of it could also be denial as some women think, ‘Oh, it won’t happen to me,’ and they’re devastated when their husbands desert them,” comments Yip.  

One of the first steps towards taking charge financially is to track your cash flow every day. Start a spending journal and analyse your credit card statements. Sounds easy enough but the hardest part is probably accepting yourself and being confident enough of who you are so that you don’t succumb to desires and impulse spending that’s dictated by others.  

In fact, Yip’s take on relationships is pretty harsh. She says a woman should have a verbal pre-nuptial agreement on finances before taking the plunge. And if the man baulks at her financial independence, then she should seriously reconsider whether he’s the right man for her!  

“Financial freedom depends on whether women can change their mindset. Then only can they view their spending objectively and plan for the future. It is possible for women to achieve financial empowerment,” Yip concludes. 

Female magazine article - What My Money Journal Reveals

Prudential article - Plan, Prepare, Protect with Carol Yip

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