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learn the secret of a Millionaire:

Financial Adviser 

A mansion overlooking the ocean, a collection of luxury cars, purchasing anything to everything without worrying about its price; if there is one goal in life that is oblivious to the distinctions of race, religion, and geographical location, it’s to be abundantly wealthy: A Millionaire. 


However, achieving millionaire status is as good as praying for money to rain down from the sky if one does not forge a determination to shed old habits and mindset, and the discipline to do something about it. 
For those who want to realise their dream of becoming a millionaire, it is not entirely far-fetched.  


How do I become a millionaire? 
 

“You can’t have a million dollar dream with a minimum wage work ethic.“ ― Stephen C. Hogen 
 
To be frank, the process of becoming a millionaire is simple, but not easy. Just like how the answer to becoming fit is simple: healthy diet and exercise, but not easy. 
The very first decision you must make is to consciously decide to manage your personal finance and become your own financial planner. The most important realisation is that to become a millionaire, you’ve got to become your own financial planner. 

 

But why even is becoming your own financial planner important? 
 
For better or worse, money touches all areas of life. And Financial Literacy can definitely help. 
Financial literacy is important because it equips us with the knowledge and skills we need to manage money effectively. Without it, our financial decisions and the actions we take—or don’t take— lack a solid foundation for success.  
To put it simply, Financial literacy involves being proficient with financial principles and concepts, such as financial planning, compound interest, managing debt, profitable savings techniques, and the time value of money etc. 
 
And according to the 21st edition of its Malaysia Economic Monitor,  

• 60% of bankrupt borrowers were within the age group of 25 to 34.  

• About 40% of millennials admitted to spending more than they can afford.  

• 60% of Malaysian adults were not covered by the EPF, adding that although more than 89% agree that their EPF savings were insufficient, only 38% have started planning for retirement.

• High rates of bankruptcy because of borrowing for consumption rather than for wealth accumulation. 
 
You might think that you’re definitely not part of such absurdity. And yet so many Malaysians lack the financial discipline and humility: purchasing an IPhone 11 Pro on instalment to fit in; buying a bigger house than you can afford; struggling to pay off your 8-series BMW car loan; going on expensive holidays when you barely have any emergency funds. Sometimes, the worst financial mistakes are the ones that slowly eat away at your wealth.  
 
It’s been found that Malaysians have low confidence regarding their own financial knowledge. 1 in 3 Malaysians rate themselves to be of low financial knowledge. 75% of Malaysians understand that inflation means that cost of living is rising, but only 38% can relate the effect of inflation on their own purchasing power.  
This is a major concern. Financial illiteracy contributes to people making poor financial decision and causes many to become victims of predatory lending, subprime mortgages, fraud, and high-interest rates, potentially resulting in bad credit, bankruptcy, or foreclosure. 
 
Given so, you should see clearly that if you don’t become your own financial advisor and achieve financial literacy, the idea of achieving financial freedom would be absurd, let alone becoming a millionaire.  

Financial Planning Basics

 

Protection 
 

Protection in financial planning simply means insurance. Buying insurance is the very foundation of a strong financial plan, because it ensures that you are financially secure to face any type of problem in life.  
Insurance differs in their purpose, coverage and premium.  
 
Hence, it would be wise to have some awareness on your own personal insurance needs before seeking professional guidance. 
 

Evaluating your insurance needs Your insurance needs will be dependent on many factors: 
 
Number of dependants and whether you’re the sole provider of the family. Given that you have many dependants, taking into consideration the age of the dependants, it would be advisable to obtain a life insurance and income protection plan of higher coverage. This is even more so, if you are the sole breadwinner of the family. 
Most insurance companies say a reasonable amount for life insurance is six to 10 times the amount of your annual salary.  
 

Inflation. Insurance is a protection against uncertainties of the future, it would go without saying that inflation i.e. the cost of living, should be taken into account for when considering insurance coverage.  
 

Medical Inflation. Malaysia has been experiencing one of the highest medical inflation rates in ASEAN, with 2019 at 13.1%, as compared to Australia’s 4.6%. This is important when deciding on the amount of coverage for health insurance. 

To give a general idea of how expensive healthcare (private) in Malaysia can be, Dengue costs RM1K-RM3K; Hip Replacement RM24K-RM55; Stroke Treatment RM35K-RM75K; Coronary Bypass RM25K-RM80K. Although it is true that public hospitals would be cheaper, the long waiting list in public hospitals means that it is not a guaranteed option. 
 

Your debts. Upon death or critical illness or disabilities, the fact remains that these debts will still have to be paid off. 
All your debts must be paid off in full, including car loans, mortgages, credit cards, loans, etc. If you have a RM500,000 mortgage and a RM20,000 car loan, you need at least RM520,000 in your policy to cover your debts. And don't forget the interest.  
 

Insuring others. It is also important to take out insurance for other people that’s important in your life: parents, spouse, children. 
 
Awareness is important. But just as important is to seek the advice of trustworthy insurance agents. Insurance policies differ by different companies, and would be much more time-saving and effective to get help from those who are already familiar with the policies.  

 
Savings and Investments 
 
“Do not save what is left after spending; instead spend what is left after saving.” ― Warren Buffett 
 

A 2019 report by the Financial Education Network, said 52% of Malaysians have difficulties raising RM1,000 as emergency funds. While only 24% of Malaysians are able to sustain living expenses for at least three months or more if they lose their main source of income. And 1 in 5 Malaysian working adults did not save in the previous 6 months. 
 
Savings i.e. budgeting is crucial for various reasons such as emergencies, retirement, down-payment for a house, child’s education, buying a car and to be able to take calculated risks. 
​
How to budget Like a Millionaire 
Enhancing the already popularized 50/30/20 budget rule by Senator Elizabeth Warren in her book, All Your Worth: The Ultimate Lifetime Money Plan, we have the 50/30/10/10 budget rule.

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