Monday, June 06, 2016

Coffee and cigarettes

Cost of living and lack of savings seem to be big issues in Malaysia. I offer two simple suggestions: Quit smoking, and significantly cut down on "fancy" coffee and other drinks.

Let's assume you spend RM10 every day on cigarettes and RM10 on "fancy" coffee, that would be RM20 every day, or RM600 a month or RM7,300 a year just for coffee and cigarettes. Over 10 years, that would be RM73,000, enough to buy a decent new foreign car! Or even make a housing down-payment.

Now, RM73,000 is a substantial amount, and that was assuming you had just kept it "under your matress" (no investments). If you had invested that money instead, 10-year compounded interest at 3%/year (considered low for FD rate these days) would turn that RM73,000 to over RM83,686.

You can check it out for yourself with this useful Compound interest calculator.

I'm always amused when certain people cry out, "Where did all my money go?" or "How come I've worked for 10 years and have no savings?"

Maybe just quit smoking and fancy coffee?

Credit: Rae Aleen/flicker/CC