Navigating Expenses: A Guide for New Parents

New baby, new expenses. Where got money for property?

An old friend told me that having a new baby means extra expenses. I agree. Then, he said with new baby, he does not have enough money to save. He could only do rental and does not have the downpayment to buy a new property. I disagree. I told him that he should keep moving up the corporate ladder together with his wife so that they could earn more. I told him that his current expenses are expensive because both of them were driving non-national cars. Is it truly needed for their work?

He said he has worked so hard, earn money so it’s acceptable to buy a proper car right? He does not want to be like the majority who drives a non-national car. I just smiled and nodded my head. Remember yeah, everyone has their own opinion and they should just take the appropriate actions accordingly. Do not pretend and then could not even save money to b uy a new property since you have a baby now. Do you know why I say so?

RM500,000 property with just 1% increase per year will become…

Actually, a RM500,000 property today, when we have finished paying for it 35 years later, it should already be very close to RM1 million. This is just with a 2% increase every year for 35 years. Is RM1 million 35 years later a lot of money? Chances are, not really. Inflation would have reduced a lot of our money’s value and maybe the value of the property is just the same as today. In other words, price may have risen but value could have gone down.

I assume this is right about inflation. However, even at RM500,000 value, could we save money slowly and hit RM500,000 at the end of 35 years? At the same time, if we did not buy, do we rent then? If rent, then what about the rental over 35 years? Rental after 35 years are all not ours yeah. It belongs to the home owner and not us, the tenant. So, get read yeah. If we want to send the children to further their studies, this RM1,000,000 home is worth a lot of money yeah.

One Baby and One Property?

I encouraged my friend to do the same. He just smiled. I think he does not agree yet. It is ok. I have no intention to pressure or persuade him. Everyone should have their own way of planning. As long as there is planning, it should be okay. How are you planning for your baby? Do you save or do you put down a deposit to just buy a home instead? Think really carefully yeah. When we have high expenses, we must ensure our money is put into assets yeah.

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