BANDAR SERI BEGAWAN

Thursday, August 5, 2010

Saving money does not necessarily mean that the individual should not spend money, said Carol Yip, founder and chief executive officer of Abacusformoney.com.

“Every one of us handle money everyday, and there isn’t really one day where you don’t manage money, even if you don’t go out and shop, you will spend money indirectly, with your electricity bill, telephone bills, handphone bills.”

Yip herself isn’t a fan of generalising spending habits, as “people have to be aware of their own individual situation and cash flow”, and that each one differs from the other, she said.

She gave the example of one of her clients who assumed that he spent over a thousand dollars a month, eating out with his family and doing other daily activities, but when it really came down for him to keep track of how much it cost for him to eat out, he found that he was spending three times the amount that he initially estimated.

“It was a shock to him, so of course, I cannot tell him to not eat out anymore, how can he even tell his family, that they are not eating out, so we have to find out the psychological and sociological reasons for why him and his family eats out,” she said. She added that people spend money on certain luxuries, for many reasons, and her client’s sole intention could very well be to enjoy quality family time together.

Asked about what solution she would recommend to her clients in similar situations, Yip said that there are always alternatives to things people spend money on, or they could cut down on how frequent they spend on the item.

“If he wanted to eat out, they could eat in a cheaper restaurant. Massages or visits to hair salons could be less frequent, or be substituted with a cheaper alternative,” she said.

Personal financing can also be translated into business financing, she said. “Handling money for businesses is quite clear-cut, that when you can see the income coming into the businesses and track the expenses for the business then you will be able manage your business cash flow very well,” she said.

One of the downfalls that the finance guru noticed, is that along the way, business people tend to get “very intertwined in their business finances”, where the finances for the business becomes the individual’s personal finances, and vice versa.

“This sometimes becomes a grey area and the danger happens when you don’t know how to distinguish between the two,” said Yip.

One advice she has for her clients in terms of managing their personal finances is to keep track of what they spend and to set themselves a strict budget, particularly where they differentiate their cash spending and credit spending.

Yip said that many people tend to see credit cards as unrelated to money. “They tend to see credit cards as a convenience, and people end up using their credit cards too often, and spend more than their salaries,” she said.

Yip will be involved in an open forum discussion sharing the diverse experiences of women in managing money challenges as guest speaker during the Women’s Forum 2010 held at the Empire Hotel and Country Club today.

The Brunei Times

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