Developing a Financial Independence Mindset: Part 1 – The Paradigm Shift

Hi Money-Makers!

Mrs. Money here. So I believe there are a lot of people out there like me. Mid-career professionals, earning in the mid-income bracket, travelling, owning a car, enjoying an active social life, purchasing things as you want them. Some months being able to set aside some money, others, perhaps not. Investing in financial products your friends or family advise you to get but that you never really understood, getting some health insurance. Perhaps some of you have already bought a property on your own, or with the help of family.

But… not quite having a plan. Not really thinking about retirement beyond EPF savings and dividends from unit trust. Counting on insurance to kick in in the event of a health crisis. Hoping that your property will  appreciate in the long-term. Trying to put together a budget for expenses, (but not really succeeding). Or perhaps not really thinking about financial future at all, and just assuming that you will be able (and willing) to keep working and being in this rat race for the next 30, 40, 50 years.

Sounds like you? Well, that was me too.

Then things changed, particularly after I met Mr. Money. On one of our early trips together to Cherating beach on the East Coast of Malaysia, cocktails in hand, watching the waves roll in, I asked Mr. Money what his goal in life was. What he thought his purpose was on earth. Those kind of big existential questions. I was expecting an equally big response like the one I gave him (saving the world or something along those lines). Instead this is what he said:

“I want to lead an ordinary life.”

“Eh?”

“I want to make enough money so I can be financially independent. I want to be able to live my life without ever thinking about money again.”

Needless to say, coming from the non-profit world where my goal in life was not to make money, but rather to try to make the world a better place and right all of wrongs of the evil capitalists, his response truly baffled me. To be honest, I had a fleeting moment where I wondered if I was dating a greedy, money-thirsty cyborg, causing all the problems in the world I was trying to fix.

But as we unpacked that, I began to understand where he was coming from. And that started the wheels in my head turning. What if I could make enough money that I never HAD to take a crappy job just to pay the bills? Or never needed to do work that I wasn’t deeply passionate about? Or being able to just take off and travel as much as I wanted? Or just spend time with family? Start a cool passion project? Knowing how impactful money is in the non-profit world, and how difficult it is to fundraise, what if I could earn enough to actually give it to causes that I care about, and make an impact in a totally new way?

This was the start of the paradigm shift for me. I think this moment arrives in different ways for everyone in the FI community – for some, its a moment at work, when they are slogging away at their desk at midnight, health and relationships deteriorating, where they wake up and think “I’m not getting paid enough to sell my life to this damn company who will replace me in a week if I drop dead”. For others, it may be a personal crisis, or maybe starting a family and a desire to spend more time with their children instead of with their bosses. It could be as simple as reading a blog post on FI, like some of the ones written by Mr. Money Moustache. Whatever it is, when that moment comes, one can never go back to previous states of blissful (stressful?) ignorance. 

cherating
The exact spot in Cherating Beach where the paradigm shift took place

But I quickly realized my biggest barrier – my belief system around money.

This is something that I wanted to do a deep dive into, as I think it isn’t spoken about nearly enough in the FI space. And that is how our beliefs around money, has direct consequences into our ability to make and grow money.

How do you even begin the journey to FI when you don’t even believe you can (or should) be wealthy? How do you go from barely being able to save, to being able to invest and slowly begin to grow your wealth?

I’ll cover how I shifted my belief system around this, as well as my process in developing financial literacy to get to a FI mindset in Part 2 of this post, coming up shortly!

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Are your government-backed investments really that safe?

Hello Money makers,

Mrs Money and I have been offline during December due to us attending a destination wedding followed by a desert holiday in early December.  We returned back to Malaysia just in time for year end closing and season holidays.

mrs money at the desert
Mrs Money enjoying the incredible desert sunset

Nevertheless, we have been tracking our investments and following financial news during this period. My post today is a short comment on a subject that has been gnawing my mind since I first read about it, dealing with transparency and governance of government-linked investment funds.

The news about Tabung Haji and the alleged mismanagement of the fund surfaced in 2015 during the previous administration’s time, through a leaked document from Bank Negara that apparently questioned Tabung Haji on its financial strength.

Tabung Haji, similar to EPF and ASNB, are funds that are very popular among the mainstream Malaysian population. Although the purpose of Tabung Haji differs drastically from EPF and ASNB, its returns have been very impressive over many years resulting in many eligible investors tapping into it

Investments like this that attract mainstream retail investors (especially through government-guaranteed support) must accord the highest level of governance to maintain the trust among it’s investors and the general public. I have historically avoided funds due to their opaque structures and lack of clear understanding of where the high dividends are derived from. The problem is that most retail investors often save in these funds due to the explicit government backing and high returns these funds enjoy without delving into the details. Therefore, it is even more pertinent for these funds to emphasise strong governance, transparency and independence from political influence.

I recently decided to invest in ASNB so the news about Tabung Haji was a reminder on the importance to understand (or attempt to understand) one’s investments – even if these investments have backing from strong institutions or sovereign state. The Lehman Brothers crises and the drastic change of external credit ratings within a short period that followed is an important lesson to draw upon of how fast things can change even with investments with seemingly strong backing.

I am however still very confident in ASNB with one assurance being the fact that the person that already highlighted Tabung Haji’s issues back in 2015 was Tan Sri Zeti Akhtar, PNBs current chairperson. My hope is that PNB, under her leadership, will strengthen its governance and enhance its risk management to lift its funds reputation to even greater heights. As a Malaysian, and beyond my personal financial interest, I hope that the current administration can instill good governance and transparency across all institutions under its direct and indirect purview. As I write this, a press conference is held about MRB being shortchanged in a transaction involving EPF… sigh.

Mr. Money’s Portfolio, November 2018

Hello Money Makers!

It is my turn to brief you on my current portfolio, the road getting here and my future plans.

I decided to categorize my holdings in 3 broad asset classes – Equities; Property; and EPF (which is the Malaysian Superannuation Retirement fund). My assets are divided equally between the Malaysian market and one Northern European AAA economy.

My current goal is to reach RM25,000 monthly in passive income through dividends and other yields from the assets. This goal has changed over time, for instance it was RM20,000 around 10 years ago when I effectively started on this journey. This has lead me to realize that a number is no more than guideline and not necessarily a fixed goal as the goal posts moves upwards with time (inflation and consumption patterns).

My existing assets would conservatively be able to yield around RM15,000 a month in passive income – which means I am already financially independent with quite a comfortable margin (based on existing consumption patterns). However, the plan is to keep going until I reach the goal of RM25,000 in order to have a wider margin of safety.

Having technically reached financial independence, this blog serves as a space for me to share topics and tips related to my interest in investing and wealth creation, as well as to do my part in increasing financial literacy among fellow Malaysians. It also serves to to help me evaluate performance and follow my progress.

How I got here: Saving as a lifestyle

I started saving very early on, putting aside RM500 on my first RM2000 salary. The strong savings culture is something I have got from home and has followed me throughout my life. My savings ratio today is 81.3% of my net salary (excluding EPF allocation that is set aside automatically). My lifestyle is frugal and I try to avoid expenditures that I deem unnecessary and lavish. There are however two areas in which I spend above average and that is on F&B and with my personal trainer. Mrs Money and I will talk about how we plan to reduce our F&B expenses in a future post.

My investment path: stocks > properties > index funds

My long-term investment strategy has changed over time. I began investing in my university days in the dotcom heydays without any real knowledge of the stock market. However, I consciously started investing around 2007 after reading the Intelligent Investor by Benjamin Graham, written in 1949. It’s a book on value investing that covers stock analysis, and I highly recommend it to any long term value investor. Warren Buffett often refers to this book as the basis of his investment philosophy. The time-tested tools in this book came in very handy through the Lehman Brothers crash, and was particularly useful given that my plan at that time was to keep my investments limited only to the stock market.

Inteliigent Investor
The only investment book I have ever read

In 2011, I stumbled into the property market by chance and now own two properties, with the second purchased in 2014 in the KLCC area. The capital appreciation of these have been diametrically different, which since has cautioned me on market risk. Properties tie capital, and my risk aversion meant that I prioritized paying off my mortgage. Therefore, any new investments in stock were effectively halted in mid 2011. I also had less time to spend following the market, and my long term 12 shareholdings (which have since been pared down to 6) due to work engagements. The occasional increase in my equity portfolio comes from reinvesting of dividends.

Fresh funds have since 2016 been channeled to an index fund following the stock market in the AAA Northern European market. This index fund does not have any fees or charges and allows me to eliminate concentration risks on stocks. This fund has returned 20.2% over the past 3 years, despite an abysmal -2.06% in 2018.

My portfolio

Mr. Money pie chart

Equities:

This asset class covers stocks, bonds, mutual funds and other similar investments. My current portfolio is heavily weighted towards stocks but index funds are gaining traction and I expect it to be balanced holdings within 3-4 years. Investing in the stock market is time consuming and increases my concentration risk on certain companies. Whereas my index fund investments are distributed over the top companies as per the index and eliminates the concentration risk. I expect my equities to yield 10% per year over a 10 year period including dividends.

Property:

I own two properties, one in Europe (2011) and one in KLCC (2014). The property market in Malaysia has been in a slump for the past 4 years and the capital appreciation has been weak (negative – 16%). I do however have a strong believe in its potential as a long-term investment due to its location in the heart of KL. The property in Europe was acquired in 2011 and has appreciated close to 50% since. Like the property in KL, the location is good and there is more potential with that investment with time.

EPF:

The Malaysian Employment Provident Fund is a superannuation fund that every resident company and employee is required to contribute to in behalf of the employee. The funds performance is guaranteed by a minimum 2.5% dividend. I have contributed to this fund for the past 11 years and the performance has been above expectations.

 

Writing this post gave me an opportunity to evaluate my holdings in a more holistic way than I have done in many years. My new set target is to rebalance Equities, Property and EPF equally. This means more free cash flow will be invested in Equities and EPF. EPF is per definition a discretionary investment done without any active participation from me so my investments in Equities will take most of my time and my blog contribution. The goal will be to have ⅓ of my assets in Equity class products that yield 10% per year over a 10 year period.

Any suggestions on equity products I can consider adding to my portfolio, or comments on my asset distribution and future strategy?

Mrs Money’s Portfolio, November 2018

Hello fellow Money-Makers!

In the next couple of posts, we will share our current portfolio allocation in different assets, and the vision for our financial future. The aim of these posts is to set the stage for where we are right now, our thinking that led us here, and where we are hoping to be in a few years which is, hopefully, financially independent!

What is financial independence? Generating enough passive income through assets owned, that can at least cover ones expenses.

Mrs Money’s Long-Term Goal: earning a passive income equivalent to RM10,000 ($2,400) monthly in today’s value. Based on my assets today, a simplistic assumption of 5% yield per annum would bring me to ⅓ of my current expenses. So needless to say, I have quite some way to go!

So let’s start!

Part 1: How I got here

I started my financial journey just as I begun working in a law firm in my early twenties. (I will disregard part-time jobs I did as a student. Like most teenagers, any income earned was just as quickly spent. Youth is truly wasted on the young). I earned RM1,800 a month ($425) as a chambering student in 2008, with a starting salary of RM3,000 a month ($715) the following year. At the time, I thought that was a pretty sad salary because I was left with nothing at the end of the month. However, as I explained in my earlier post on How to Save Money When Travelling, I used to spend most of my money travelling, eating out and drinking wine with my colleagues after work, so it was really no surprise I had nothing to show at the end of the month. It puts things in perspective to know that  the median salary for employees in Malaysia in 2017 was RM2,160 a month ($515). However, with bonuses of between 3 – 5 months over a few years, I managed to save a decent amount of money.

However when I quit my job to do a Masters degree in New York, I used all my savings to pay for the ridiculous living expenses. Despite receiving a partial scholarship, and financial support from my folks, 4 years savings was swept away with the cold winds of a New York winter.

Gray's Papaya
Gray’s Papaya, New York. Pizza for $0.99, my kinda meal

When I returned from the US and before I got a job, I had to live off my credit card. I didn’t think much of it and assumed I would easily be able to pay my credit card bills back when I got a job. Man, was I wrong! Paying off my debt after 4 months of unemployment took much longer than I expected, and I vowed then to never, ever go into credit card debt again. Long story short, I started saving in earnest when I returned to Malaysia and after I paid off my credit card bills at the ripe old age of 28.

Although I wasn’t earning that much more, a few skips and hops later into different, better paying jobs, coupled with a strong desire to save and live within my means after that credit card fiasco, allowed me to (i) buy my first car (ii) accumulate some savings and (iii) begin investing – in that order. In retrospect, I would have made a different decision with regards to purchasing Sophie, my car. But that’s a different story for a different day. (Literally. I am considering selling Sophie, and am doing the math and weighing the potential costs, so I will be sharing my research and thoughts in another post on the real cost/benefits of car ownership).

Part 2: Where I am

Ok, let’s open the books!

Below is a pie chart of my asset distributions, with some explanations and analysis on my part:

pie chart Mrs Money

    1. Employer’s Provident Fund (EPF): My biggest “investment”. As I had Malaysian employers for most of my career, I accumulated a decent amount of money in my EPF, which as you can see above, is the largest class of assets I own.
      • My analysis:: EPF is really one of the most stable investments Malaysians, especially at a young age, can have. Although I initially felt a pinch seeing 11% of my income monthly get taken out and put directly into a fund I can never touch till I am 55, it also is incredible in that your employer is statutorily obligated to contribute at least 12-13% of your salary in addition to your contribution! It’s free money! On top of that, EPF has been giving historically high returns, with 6.9% returns in 2017. Definitely a keeper. As I have moved into doing consultancies this year away from a fixed job, employer EPF contributions is the one thing I really miss.
    2. Private Retirement Scheme (PRS): Around 4 years ago, I started investing a small amount in CIMB Islamic PRS Plus Growth. That investment is just under 10% of my total retirement savings. It has pretty choppy returns – at 3.27% in 2016 and 11.45% in 2017 and 2.39% this year. Management fees are at 1.4%, although they were waived for  2018. Sales charges are at roughly 3%.
      • My analysis: Since I’m doing a financial “cleanse” over the next few months, I need to do more research on whether it makes sense to continue with this investment. Anyone investing in PRS too? Thoughts?
    3. Unit trust: At the same time, I started investing in unit trust through CIMB, specifically in the Asia Dynamic Income Fund. This is a fairly high risk and volatile fund, with a 3 year annualized return of 5.67% (2018: -8.86%). Additionally, there is a really high sales charge for this fund at 6.5%, and management fee of 1.8%.
      • My analysis: In short, I’m losing money on this one, AND paying ridiculous fees on top of it. However, given that the market is so weak, maybe I should just continue purchasing them in the hope that it averages out in the long-term? Mr. Money says “don’t catch a falling knife”, which Google tells me is a popular phrase in the trading world. I’ve also heard that these funds can be purchased on Fundsupermart for a fraction of the fees, but haven’t really looked into it. If anyone has, please let me know! All part of my homework.
    4. Fixed deposits (FD): I started putting some money in fixed deposits this year. You can get somewhere between 3 – 4% fairly easily but I would suggest that you shop around as banks always have different promotions, especially for fresh funds. Anything above 4% is pretty good, but you would usually have to commit the money for quite a few months.
      • My analysis: This is really something temporary for me. I managed to accumulated quite a bit of savings this year due to a consultancy I got on the side. Since I am now able to have enough cash for the downpayment, I am looking into purchasing my first landed property within Klang Valley (hoorah!).  With liquidity being a priority in this instance, I decided to place the money in several FDs of different durations so I can easily withdraw them when needed. The other option would be to let the money sit in my savings account and collect dust, while the bank earns money on my money. No, thank you.
    5. Most recently, I invested in Amanah Saham Nasional. See the drama that went with investing in our post on the Trust Deficit in the Financial Sector. But I’m excited about this one! The returns have been consistently high (6 – 7% per annum). I’m looking at this as fairly long-term savings, and plan to put in additional savings after I purchase my property.
    6. Car. Depreciating asset. Enough said.

     

 

  1. Here are some further details of returns risk and liquidity for all my investments:

 

Returns Risk Liquidity
EPF Medium – Low Low Low (only Account 2, under limited circumstances)
Fixed Deposit Low Low High
Amanah Saham (fixed account) Medium -Low? Low High (1-3 days)
Unit Trust Low Medium High (1-3 days)

In short, as you can see from above, I have a risk appetite of a grandma – afraid that my world will come crashing down at any moment and I would need to be able to access tons of emergency cash to pay for my dentures. 

Part 3: Where I aim to go – An overview of “The FI Plan”

My short-term (1-2 years) plan to achieve my long-term goal is rooted in the 3 pillars of financial independence. Each pillar will be fleshed out in greater detail in later posts:

  1. Earn: Since I’ve recently moved into the “gig-economy” like all good millennials, I am looking to build on my skill sets, network and experience and secure more projects and consultancies. In theory, this is less predictable, but potentially will earn me a higher income and greater flexibility in the long run. I am also blessed to have a fixed part-time job that I love that also pays well, so now its all about the hustle to get in more!
  2. Save: Although Mr. Money earns more than I do, I have higher expenses that he does – which really annoys me! My plan is to review all my recurring expenses (I’m looking at you, Sophie) and see where I can cut them down.
  3. Invest: Apart from reviewing my existing investments to make sure I’m not bleeding money, I’m looking forward to purchasing my first property. I have conducted extensive research into the latter, which will be the subject of a future posts. I just hope to avoid analysis paralysis, but I think Mr. Money will be good at making sure I get moving!

More to come as I aim to diversify the asset classes of my portfolio. This is very much a learning process for me, so any tips, advice or thoughts on my portfolio, or how you have distributed yours, would be very welcome!

The Trust Deficit in the Financial Sector – Our First Hand Experience

Hello Money-Makers,

Mr Money here. My first post will be about a recent event Mrs Money and I encountered with regards to purchasing Amanah Saham Nasional Berhad (ASNB) fixed-price funds. Let me start with a brief introduction to myself to add some context to the events that played out.

My experience in investing in equities and interest rate products go back around a decade to when I was a university student in Europe. I dabbled in the stock market then without any prior knowledge or understanding of the markets. The consequence of this was felt in the crisis at the time and left me uninterested in equities for a long time until I started working.

Fast forward 10 years and I have now been active in the financial sector during this period and consider myself quite well versed in financial products. My experience in this sector has led me to avoid products I do not understand and allergic to high sales and management fees. I would categorize myself as a conservative investor. My target has always been 7% per year, leading to a 100% (96.7%, to be precise) increase of the principal within 10 years.

Mrs Money’s investments in the local mutual fund market was my first insight into the real costs involved in investing in mutual funds in Malaysia – although I was at the time already aware of the unusually high sales and management fees (in my opinion, this is a sector ripe for disruption). This was hard for me accept with my exposure to the financial products offered elsewhere, where index funds are often offered with next to nil management fees, and sales fees barely exist.

This brought me to highlight ASNB funds (under Permodalan Nasional Berhad) to Mrs Money. There are several fixed funds (expect a comparison of these and other comparable investments in a later post) that offer stable returns well above Malaysia Government Securities (MGS). These funds have outperformed MGS consistently – in addition to not having any form of sales or management fees, i.e. aligned with my investment criteria of stable returns with low cost.

PNB
PNB 118 under construction – soon to be Malaysia’s tallest building and home to Permodalan Nasional Berhad, a Malaysian government-linked investment company

Earlier this month, I explained to Mrs Money that I was considering moving some liquidity into these ASNB funds to diversify my holdings. After doing some research online, including forums like Lowyat.com and financial dailies, we got a tip that these highly sought after funds have very limited quotas available, but that the likelihood of obtaining units were much higher prior to a festive season (with the logic being that people would sell of some units prior to the celebrations). This prompted Mrs Money and I to quickly decide on opening ASNB accounts in view of the upcoming festive season.

The ASNB funds can be purchased over the counter at any major local bank in Malaysia. Since Mrs. Money has had an account with RHB Bank for over 15 years, we ventured into their branch in Bangsar the day before a festive holiday. The front counter immediately directed us to a personal banker. The banker started by describing the variable (as opposed to fixed) ASNB products. We were very clear in that we had no interest in purchasing variable ASNB (higher risk mutual funds) products that moreover carried management and sales fees. The variable products described to us had also underperformed the fixed products returns. The banker continued to discourage us in looking into fixed products and emphasised that the quota was full and there was zero likelihood of us obtaining any fixed products units. It was disheartening to hear that we had missed the train, so we left RHB Bank quite disappointed but also with a sense of something not being right. We felt that we should double check with Maybank’s branch in Bangsar despite the advice we just received.

While Mrs. Money waited in the car, I entered the Maybank branch in Bangsar Baru and was informed by the front counter to fill in a form and proceed to the counter (a very different approach from RHB). Once at the counter, the bank clerk processed my application and informed that there were fixed product units available and that I could go ahead and open account! I directly called Mrs Money and she parked nearby and also opened an ASNB account through Maybank.

Although we were excited, we also felt a sense of being deceived by RHB Bank. We had tried to open the same account through RHB barely 15 minutes earlier and received information on no units being available (despite no formal check of units). We would have not been able to get any units had we listened to the first advice from the personal banker at RHB Bank (who called Mrs Money two days later to follow up about our interest in purchasing variable ASNB products).

Being in the financial sector myself, I understand that banking is based on trust. This incident clearly shows the trust deficit that exists where a banker with more knowledge than the potential customer chooses to push a product with presumably higher internal incentivised bonus, over what the customer actually requests. The whole experience with RHB Bank left Mrs Money and I with a bad aftertaste. We decided to report the incident to RHB Bank’s customer complaints department before escalating it to Bank Negara if no satisfactory explanation in given.

I strongly believe that there should be greater integrity and accountability within the financial sector. This compounded with increased financial literacy amongst consumers can only benefit the investment eco-system in Malaysia.

We’ll keep you posted on their response. In the meantime:

Do any of you have any negative (or positive) experiences with financial advisors to share?

How to save money when travelling

Hi Money-Savers,

Mrs. Money here, and I’m excited about my first post!

I’m in London for work, but thanks to jetlag that has me up at 5am, I’ve managed to set aside some time to update you guys on my thinking around money while travelling. Mr. Money is back home in KL, excited about Grab Food’s 50% off promo for orders above RM60 deal. (He’s ordered for lunch and dinner; he will write a separate post on his spending related to food).

I love to travel. Always have.

My first taste of solo travel was on an exchange program to Brazil when I was 17. My parents seemed to think that I was mature and savvy enough to take my first solo trip to the other side of the world when I was still technically a child. Since then, I have learned a thing or two from my numerous travels – living in London and New York, backpacking across Europe, solo travel to replenish my soul in Barcelona, Bali, Lake Toba (if you’ve never heard of Lake Toba, you’re welcome). Now I travel a lot with work, which really is a new chapter in my travel book.

regent-street-xmas-lights.jpeg
A photo of stunning Christmas lights taken during a walk along Regent Street, London, 2018.

Let’s start with this — travel for any reason that is not related to work, is a luxury and usually puts a dent in your savings. Early on in my professional life, I thought “I don’t make enough to save anyway, and since I work so hard, I deserve to spend my money on things I love, like travel!”. I now want to knock my 23-year old self over my head with a heavy branch, but I think a lot of people do think that way.

Everyone has something that they feel is worth spending money on. It’s all about VALUE. What does that amount spent bring in terms of value to your life. Some people (like Mr. Money), pay a good amount to his personal trainer because that being his only form of exercise keeps him accountable, fit and feeling like he can take on the world. Some people feel strongly about the environment and their carbon footprint, and will spend that extra amount on purchasing organic produce and food. Some, like me, love travelling and are happy to part with their money for the joy and experiences that travel bring.

This post is about how you can travel and enjoy all the wanders travel brings, without spending money that you don’t have to. That’s the key phrase. How can you enjoy a lot of the same things, for less. There are a lot of tips out there on saving for travel, so I won’t repeat the common ones, but here are my top ones that I have used.

As a starting point, my most important tip is research, research and research. And this doesn’t have to be endless hours in front of a computer. But just having a good sense of basic ways to save money in the country you are travelling can take you some way in achieving your FI goals!

1. Cheap tourist data plans

If you are travelling alone and need to use Google Maps or just need to stay in touch, there is nothing more annoying that constantly trying to look for free wifi.

TIP: Almost every country now has cheap tourist data packages. For example in Bangkok, you can get a generous data plan for 7 days for just THB 300 (equivalent to RM38 – which is what Maxis charges for one day of roaming!). You usually can get them at the airport, but in some countries, that might still be expensive compared if you just step out and walk into a store. Do 5 minutes of homework before travelling to see what data package is out there, and travel without fuss.

2. “Do I NEED it?”: Saving money on random travel purchases

One of the worst ways you can throw money away is buying random crap when travelling. I have learnt this very late in my travel life. Things that my seem exotic and novel in the moment, almost never feel so when back home and just end up collecting dust, or worse, being thrown out.

TIP: Either have an idea of what items you NEED (e.g. I look for shoes when in Europe as I find it hard to find my size in Asia) or things you really want and know you will use/enjoy AND that you can only find in that country. For example, if you are a collector of beautiful cloths that you like to display at your home, and find something you love, by all means! But be clear when you are buying where it sits in your home, and how much value it will actually bring to you. Mr. Money is so good at this, and it really helps when he’s with me to ask me the question I really don’t want to hear: “But do you really need it”? Or “Where will it go at home?”. It’s almost always a “no”/ “nowhere”.

3. Food

One of the greatest joys of travel: food! And I get that. Really. So what’s the best way to save money here?

TIP: Usually there are 3-4 dishes that are “must tries” in a country. Research where to get them (and many times they are local, inexpensive food), and make sure you have them. But there are some other money-saving tips worth noting:

Dine-in vs take out. Dining in, you just end up spending more – getting sides, a drink, maybe desert. If it’s a famous restaurant you really want to try, sure. But if you really just want to enjoy the food, why not take away that fish and chips or paella, find a beautiful spot in a park and chow it down? Mr Money and I may do one nice meal at a restaurant a day, but have breakfast at home (if you can make your own at the BnB), and a to-go simple lunch/dinner from a local grocery store or deli. That way, you’re not missing out on the delicious local food, but you’re not wasting money on meals that don’t add anything to your memory bank/travel experience.

Speaking of which, why do people order drinks at restaurants? Carry your own water! I must have saved tens of thousands of Ringgit in my lifetime (try to compound the interest from RM5,000 saved over 10 years) from almost never ordering a drink when I’m out. I usually have a water flask with me, and if I don’t, I ask for tap water (I’ve been known to call the manager when waiters refuse to serve tap water, much to the embarrassment of my friends!). Who needs that extra sugar anyway? And I would much rather spend money on a delicious meal than half the price of a meal on some drink that adds nothing to my experience. This is something Mr. Money has also picked up, seeing that eating out was one of his biggest expenses in the past.

Australia - restaurant 2
Oysters in a lovely seafood restaurant along our Great Ocean Road Drive in Melbourne earlier this year. Another money-saving tip: we tagged this on the back on a work trip, so I saved money on flights, and Mr. Money used his airline miles to get his flight paid for. It meant we weren’t on the same plane, but it’s a small price to pay!

4. Hotels vs AirBnB

I’m surprised that people still book hotels anymore!

TIP: In most cities, you can get a cosy, central and safe place through AirBnB for a fraction of the price of a hotel. Look out for SuperHosts, and good location easily accessible by public transport.

5. Best ways to see the city

TIP: Forget expensive tour buses – go on a free walking/bike tour! This is very common in Europe and other developed countries, where you just pay the tour guide any amount you want – although perhaps less so in other parts of the world. Alternatively, just get by on foot or with free buses to explore the city on your own (nothing beats out good old fashioned research to plan out your route). There is something quite magical about getting lost in a city – always bearing in mind the usual safety precautions – with a map, a big bottle of water and good walking gear. Some of my most memorable holidays have just been low-budget trips exploring towns and cities on my own. As long as you plan your route so you’re not going all over the city everyday, you can usually get around easily on foot in many countries.

We do however feel that there are circumstances where it makes more sense to use a tour operator. We are travelling to India next month, and decided to go with a private tour operator for our travels in Rajasthan, mainly because of (i) additional work we would have to do in planning logistics that is usually unpredictable there (ii) difficulty getting around and (iii) dealing with some locals vendors who have a reputation for fleecing tourist on a regular basis  – and all of this would have outweighed the cost involved. We’ll let you know how that worked out in a later post!

Bogota
I took this photo close to the La Candelaria district in Bogota, while strolling around its beautiful, historic buildings. I got a little lost, and roamed slightly farther out that I should have (as I was later told). But I found this mural to be so poignant in a city that, like many others, is still grappling with complex issues of race and class.

6. Flights

There are lots of money saving tips here, from flexible dates, to booking early, to using Skyscanner, all of which I won’t get into it. But some tips that I applied recently:

TIP 1: Sign up for a miles program. Now it’s important to bear in mind that this is not always a financially savvy thing to do, as ideally you should be aiming for the best deal regardless of airline. However if you travelling for work (and assuming you are paying first and getting reimbursed), including travel points from your work trips in this program will leverage the miles you earn which you can then use for personal travel (this works similarly for points earned from ride-hailing services).

TIP 2: If travel is one of your largest expenses, also get a credit card that leverages that. You can check out some good ones here.

TIP 3: Packing efficiently is important to avoid surcharges for luggage on low cost flights. If you pack smartly, we have found that there is very few instances where you need to check-in your luggage especially if you are flying (for a holiday) regionally. It also has the added bonus of saving time as you are exiting the airport, and avoids having you waste time planning out your wardrobe while on holiday as you have already planned out each day when you were packing. I could write a whole post about packing efficiently, if anyone is interested!

Hope this was helpful, but now we would love to hear from you! What are some money-saving tips you have when travelling?

The Journey Begins

Join us in our journey to complete financial freedom!

We started this blog to share our journey towards financial independence (FI). The concepts of living within our means, saving aggressively and investing are not new to us having done this for a lot of our careers, however we realised that there was a gap in information and sharing of ideas on how to reach FI in Malaysia, where we currently reside. We hope this blog will be a space to support a Malaysian community of people seeking FI — sharing tips on investment opportunities, lifestyle habits and most importantly values that can help us all achieve what we all want at the end of the day — to have freedom to live life on our own terms.

Stockholm1
We thought this photo captured the essence of our ultimate goal of freedom — whether it be financial, emotional, or spiritual. Taken during one of our annual summer trips to Europe