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.
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
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.’
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
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
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,”
“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.