When it comes to Personal Finance, it’s down to PERSONAL issues. It is usually not determined by Budget 2019 or the government. For example, I wish my job is easier. However, at the same time, I wish my salary is also higher. Briefly, when someone in a cheaper cost country could do what we do for a lot less, we will lose our jobs. The world is getting smaller and much more connected. Serving customers via phone in an European country does not mean the person on the line has to be stationed in Europe.
I hope I could save more money for my own property in the future. However, I also hope to buy that latest smartphone to have some standard when my peers show me theirs. Unfortunately for most of us, that monthly salary per month could never keep up with the new smartphone prices every year. Assuming we earn RM3,000 per year and the increment was 5%, that’s RM1,800 increase per year. Latest iPhone XS retails for RM4,999. Latest Samsung Galaxy Note 9 retails for RM3,999. Even if we change a smartphone every 2 years, we are still NOT saving any money for property yet.
Property prices have been increasing by around 6.5% per year from the periods of 1990 – 2016. (26 years). If we assume that it will now slow down and will only rise by 4% per year, then it’s extremely important that our income moves at a faster pace; it has to catch up with the property prices of today. When our income moves faster, we SHOULD have more savings because as demonstrated in the example above, it is usually not about the salary increment. It’s much more about the ‘devil’ in wanting to own something that destroys our potential to save, own a property and start building wealth.
Remember, it’s much better to BUY a property and WAIT instead of the other round. Remember also to push ourselves to earn a higher income. Usually it’s through taking up additional responsibilities and rising up the ranks through working more diligently. A point to note is that based on the examples of all the more advanced property markets all over the world, property prices do not usually fall for long periods of time. They will fall but they will recover and new highs will be reached and then they will fall and the cycle continues. Our income has to catch up because property prices will not fall to a level to match it.
written on 7 Nov 2018
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