3 basic requirement of saving more money:

1. Ability to earn
Our earning ability equals to our value. The amount of money we earn equals to the amount of value we add to other people.
Crux of it is we are always in control of the amount of value we want to add to others.

2. Discipline
Saving money is all about discipline. We must have the discipline to save, and also the discipline to spend.
Imagine a bank account that does not give you any withdrawal facility! Just like a piggy bank. You can only deposit money. After opening such an account, you must deposit money into it every single day. The bank officer will call you up to clear the account someday in the future because your account is too full with cash!
This is the kind of discipline we are talking about. Spend less and spend later. Save first and save more.

3. Time
It takes time to save money and accumulate wealth. The eight wonder of the world: Efffect of Compound Interest will only work if we have enough time for it.
If we do not spend the interest return of wealth, the biggest interest return will come at the later years. That means the longer the time that we let the interest to compound, the higher the interest we get at the later stage
Do you have the time to save money? Congratulations if you are very young. Sorry if you are too old or going to die soon.

Money Saved = Ability to earn x Saving rate x time

Examine the mathematic equation above. You will notice that when any one of the variable is zero, the amount of money saved = 0.
When we lost either one of the 3 basic requirement, we won’t be able to save more money. Major diseases will destroy our earning ability. Pre-mature death will take away our time to save money. If you lack the discipline to save money, it is better to engage some financial system to help you.
Even though the rate of return is mediocre, insurance endowment plan is a prefect plan to ensure we overcome the above challenges.


Personal finance author and trainer

    8 replies to "Do you qualify to save?"

    • Mei Fong


      I would to ask you on the tax treatment on the returns of the investment-linked policy and also savings plan (such as Hong Leong bank’s endowment plan).

      Will the interest income from
      (i) Investment-linked
      (ii) Savings plan
      be taxed?

      Assuming a company paid a RM 10k of savings plan every month; Can this 10k be treated as an expense of a company or can it be as an allowance paid to directors or it is treated as an investment of a company.

      Will the returns/ interest received from the savings plan be taxed by the IRB? – As other income of the company?

      Or it is only taxable at the time of withdrawal of the savings plan? Which portion is taxable?


      Mei Fong

    • Colin

      Hi, I have a question here. If I still have debts ( housing loan, car loan, etc ), should I start to save or pay off my loans as soon as possible?

      • Chong Kong Hui

        Do you believe in the following:

        A) Pay off loan = Saving interest = Saving
        So you should pay off loan first! Then, continue to save even after all loans settled.


        B) Saving as a form of habit? Cultivate the right habit from “younger age”, you will definitely benefit from long term financial planning. So, it is about income allocation. Beside amount allocated for house installment and car installment, keep a portion you owe to “you-in-the-future”! Unless we are talking about credit card debts or overdraft due to overspend.

    • Relax

      I would recommend you to do the exercises in the book Your Money or Your Life, as it covers all factors said above.
      Buy insurance, just in case.

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