Pessimism and Money Management – bad choice of words to put into a sentence.

But let me tell you why it makes sense to inject a healthy dose of pessimism when it comes to managing your personal finance. This is most applicable for Gen-Y, generally referring to those born between 1977 to 1994.

Here are two distinct Gen-Y traits that will be detrimental to their personal financial standing in the long run.

Instant gratification and optimism.

Allow me to explain.

If you are a Gen-X-er (born between 1966-1976), then you would actually shake your head in disbelief as the young executive who just joined the company for a year had changed his smartphone model 3 times for the past one year while you still find your good old trusted Nokia (insert model number here) serves your daily purpose.

If you are a Gen-Y yourself, you will definitely feel the temptation to buy what your peers are buying. Peer pressure, anyone?

Here’s my ‘dumbphone’ since 4 years ago.

My phone

You can call me a dinosaur (if you know me in person) or you would probably thought I am still broke after working for 7 years (if you don’t know me in person).

One thing for sure – I am surely an outcast when colleagues discuss about the hottest Android/iPhone Apps during lunch.

Anyway, I digress.

The fact is, Gen-Y-ers feel the urge to get everything accomplished instantly.

Like doubling your stock market investment return in a year. Or tweeting & Instagram-ing  to their 2000 followers (and subsequently went viral on Facebook in 3 hours) about the-staff-that-got angry-and-wanted-to-beat-up-a-customer incident in a fast food joint.

Gen-Y-er live in the moment, so try telling them to plan for retirement three decades ahead. That idea will be instantly brushed aside.

Which leads to another point, optimism.

Most Gen-Y-er are living beyond their means. Read – expenses exceed net income.

“But that’s okay, I will earn more in the future as I am young, and there’s so much time ahead. I am convinced things will work out eventually”, so they think.

Keeping up with the Joneses is much more fun for Gen-Y-er, right here, right now.

But believe me, shit will happen. You will get retrenched, even if you are in a multinational company. In our father’s time, retrenchment is virtually unheard of for young people but not in this era.  My peers in their twenties – they were retrenched in the 2008 recession when companies closed down or sold certain departments in order to cut cost.

Living on borrowed money means you are wide open when the shit hits the fan.

Now here’s some statistics

  1. A survey by Consumer Research and Resource Centre, released in July 2012 found that 47 percent of Malaysia’s young workforce between the age of 24 and 29 are crippled by consumer debt, whereby their monthly debt payments comprise 30 percent or more of their gross income.
  2. 15 percent of the 1002 respondents had no savings.
  3. 37 percent had never thought about retirement planning.
  4. 54 percent were degree holders, showing that conventional education failed to provide any awareness on good financial sense.

An investment in knowledge pays the best interest – Benjamin Franklin, Founding Father of the United States

In Personal Money Aug 2012 issue, a fresh graduate, Tan from Penang sent in a question to the Consult the Expert column – asking on how to invest with his basic income of RM 2,800. He said he tries his best to save around RM 1,300.

Now, I absolutely salute him/her because:

1. He/She makes an effort to save 50 percent of his income

2. He/She is so financially aware at that age

Truth to be told, I was not that financially aware when I first joined the workforce. I saved only in Fixed Deposit during the early years.

I think someone like Tan is going to go far, and this is exactly what Gen-Y-er should emulate.

You spend like you want to grow rich, not as if you are rich. But most people just feel compelled to spend in acquiring material things to look rich.

If you want to look rich while you are not yet rich, how can you be truly rich? Click here to tweet this

It just won’t compute.

To quote a profound paragraph from The Millionaire Teacher: The Nine Rules of Wealth you should have learned in School:

Responsible spending habits are often overlooked by people who want to be rich (LCF: Actually, I think the better term is to be financially free). It’s one of the reasons many people nearing retirement age have to work when the would rather be travelling the world or spending time with their grandchildren. Naturally, not everyone has the same philosophy about work. But how many people on their deathbeds ever lament: “Gosh, I wish I had spent more time at the office,” or “Geez, I really wish they had given me that promotion back in 2012”.

Most people prefer their hobbies to their workplace, their children to their iPhones, and their quiet reflective moments to their office meetings. I am certainly among them – which is the reason I learned to control my spending and invest my money.

If you are a young person starting out and you see someone with the latest expensive toys, think about how they might have acquired them. Too many of these items were probably bought on credit – with sleepless nights as a complementary accessory. Many of those people will never truly be rich. Instead, they will be stressed. 

By learning how to spend like a rich person, you can eventually build wealth and material possessions without the added anxiety. 


LCF (or Ching Foo) is a frugal and unconventional “early” Gen-Y who think differently from most of his peers, and had to battle his way everyday from succumbing to the many temptations to part with his money.

Update: LCF is an independent financial planner in Malaysia.

LCF blogs about personal finance matters at

KC Lau is borderline Gen-X and Gen-Y. 🙂

The above is adapted from the following columns in Personal Money Aug 2012 issue:

  •  Simply CJ column by Ong Shi Jie, head of wealth management at OCBC Bank Malaysia 
  • Mind Your Money column by Tho Li Ming

CF Lieu
CF Lieu

CF Lieu (CFP) is an independent financial adviser and maintains an active vlog at

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