Smart Investor Malaysia


How To Improve Your Financial Situation?


Acquaintances of mine often say that “there’s no replay in life” and that we all have a finite time to do something while we’re alive and well. There are also others who like the motto, “you only live once”. 

This idea that “time is a luxury” is a fair and reasonable take on life, and an optimistic person will probably be propelled by this mentality to take massive action to ensure he or she will have minimal regrets in life.

But if you have absolutely no plans for your life, then the YOLO mentality will prompt you to live a colourful life.

Over time, one who has gotten too used to enjoying life may actually forget that we all have a purpose and higher calling in life and it is up to us to make it happen for our story to be worth telling and really ‘make it count’. 

I believe it’s crucial for us to set goals and work towards achieving them. While it’s alright for a person to take the conservative approach when it comes to planning for the future, I think we should take on challenges and keep trying to improve.

Things can never be too comfortable as change is the only constant in life. Just take this year of 2020 as an example – many have learned this lesson the hard way thanks to financial surprises! 

Goals Are Important 

A famous study conducted by Yale University back in 1953 supports the idea that goal setting is very important.

The study supposedly found that 3% of 1953 Yale graduates who set clear, written goals amassed more wealth than the other 97% combined.

Whether this conclusion is fact or fiction, I’m certain I’d want to be in the 3% minority!

Generally, we can segregate goals into short-term, medium-term and long-term goals. When making preparations or investments to accumulate funds for a short-term goal, you should take a more conservative approach to ensure your capital can be preserved to a certain extent, so that potential losses (if any) can be minimised.

As the time frame is shorter, there is less room for error in scenarios where you may make losses on your investment. 

Alternatively, the longer timeframe afforded by a long-term financial goal makes volatility your friend. If losses were recorded, there’s probably enough time to catch the upside again, offering you more flexibility in terms of investment options.

A medium-term approach would see a mixture of both safe and risky investments, with any losses theoretically covered or mitigated by the returns of the conservative approach. 

Dealing With Life’s Financial Surprises 

Apart from the risk of capital loss in investments, it’s also important to acknowledge that life tends to throw up financial surprises when you least expect it.

These can occur at the macro level, such as change in interest rates, drastic weakening of currency, catastrophic events, and more, or an individual level (eg. illnesses, accidents, losing your job, divorce). 

When these financial surprises happen, you’ll have to make adjustments to your personal life goals. Generally, there are three alternatives: 

  1. Extend our deadline (but we instinctively like immediate gratification); 
  2. Forgo the goal (then we may have more regrets in life when we look back later); 
  3. Restart from scratch (how many times can we afford to restart and reset?) 

You can’t run away from unexpected events or financial surprises so you must be prepared to deal with it. The main purpose of financial planning is to make effective decisions and manage your personal finances in order for you to pursue your life goals.

The very foundation of healthy personal finances is always having an emergency buffer fund ready, so you can tackle these external events without destroying your plans. 

It’s not uncommon for people to fall into cash flow problems and debt that is very hard to get out from.

The reason or cause of this debt or cash flow issue may be identified, but you might not realise that the root cause is due to a lack of emergency funds. If you’re happily spending all of your take-home income, or investing all the surplus of your monthly cash flow or savings, this is taking excessive risk. In the event of an emergency or financial surprises, you may have no choice other than to look for help desperately. 

A Personal Experience 

Not too long ago, my iPad Pro fell out from my bag and its screen was cracked. The cost of replacing the screen was RM1,600. As I use it daily for work, I had no choice but to send it for repair as buying a new one would cost about twice as much! 

Obviously, this wasn’t a fun financial surprises but it could have been worse. If I didn’t have an emergency fund, I may have to look for money elsewhere to pay for this repair. If I didn’t have strong savings, I may have had to dip into my investments, or withdraw from fixed deposits to find the cash required.

Alternatively, I may have had to put the device away and save money month-over-month in order to accumulate the money needed to fix it, at the risk of greatly affecting my productivity. I could also have borrowed money to fund the repair, or turned to my credit card for help, and risk paying back high interest later. 

However, my emergency fund put me in a great position to deal with this setback, and the problem was easily solved. If you know that a strong foundation is in place to deal with emergencies, your mindset will also become more positive and you’ll have more courage to pursue a life worth living. 

I hope my little story sheds more light and I hope you’ll see that it’s absolutely crucial to have emergency savings, no matter who you are or what you do for a living to avoid being caught out by financial surprises. In the meantime, do stay safe, practice social distancing, and wear your mask each time you go out, unless your emergency savings will take care of the RM1,000 compound! 

About the author 

Kevin Neoh is a NextGen Money Coach who works with people to help them transform their relationship with money to improve their lives with the money they have. Kevin can be contacted at and

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