Enhancing Financial Knowledge: The Basics

I remember reading one of Robert Kiyosaki’s books containing the 5 different aspects of Financial Knowledge which I would want to comment on here.

Check out Robert Kiyosaki’s blog at: http://www.richdad.com

1. Making money: Most of us are really good at this. Whether it be through direct selling, working, stock market, you name it. The difference is only in the amount of money that we make. There are a lot of factors that contribute to how much money you can make. To name a few are knowledge, skills, network, time spent, risk. Personally, I would say that I am not really a good money maker (yet!) since I make money only from my daily job and a little bit of freelancing. Though I try to balance it by enhancing knowledge on Protecting and Leveraging money :)

2. Budgeting money: Just ask yourself as you’re reading this blog, do you have a regular budget that you work with when spending your money? (Of course you don’t :p). Most of us will say that we have a budget but we never really did draft our budget for the month and keep track of it. It’s just too much hassle. For me, budgeting is a must for those who overspend and buy at the spur of the moment of attraction towards a product or service. For those of you who are more of a saver type, you shouldn’t need to worry about budgeting since you won’t spend a lot of money anyway. Of course the best practice is to have a budget list and keep track of it on a monthly basis if you can’t afford to do it on a daily basis.

3. Saving money: Amazingly, some people with salary up to Rm10k+ or even Rm20k+ cannot afford to set aside some money for savings at the end of the month. To be able to save money, there are a lot of methods available out there. It’s either you spend first and save, or you save first and spend, it depends. For me, I believe on saving first then spend. Therefore, if you’re the type of person that cannot stand to spend money if it’s in the bank, you should automate your finances so that there will be monthly funds credited into your savings account. Savings are important in the case of emergency where you need instant cash. So, try to at least maintain a 10% (out of your total net worth) savings value.

4. Protecting money: Taxes, taxes, taxes! Earning money from business or work, there will be some amount taxable by the tax bodies (in Malaysia it’s LHDN). What I do with my income is I try to do a Zakat deduction instead of tax deduction (for the Muslims). Because the Zakat money that you paid in total will be reimbursed 100% by the LHDN. So that means if the amount taxable to you is RM1,000 and the tax you pay is also RM1,000, you will get refunded by the LHDN the RM1,000 that you paid in taxes. For non-Muslims (& Muslims too!), make sure you keep your receipts when you buy or pay for any of the items that LHDN approve as tax relief items (refer to link below). Therefore, when you do you taxes at the early of the year, some percentage of the amount taxable will be deducted from you total taxable income.


Protecting money is also about buying an insurance to protect your assets. For example when buying a car it is a must for you to buy an insurance plan with it. As for personal and accident insurance coverage, you will need to buy your own insurance plan from selected insurance providers. For me, I opted to go for Maybank Investment-Linked Insurance Plan since I already have a Maybank account and the insurance plan also incorporates investment schemes.

5. Leveraging money: Financially speaking, leveraging means to use a small credit or fund that you have to acquire bigger funds for a particular financial purpose. This can be either for business or investment. A lot of people are very illiterate in money leveraging. Usually it is because of their nature as a conservative type of person, who go for low risk savings or investments. On of the things that I learned from most billionaires in this world is that they are willing to leverage on other’s money (for example bank money). If you’re willing to risk big sums of money, then only can you gain big sums of money, it’s as simple as that. High risk, high return. As for me, I have a few investments setup from the funds that I have. I would not say I have a lot of knowledge in leveraging, but at least I can say that I have the needed networks and links for me to invest with confidence and security (of course with a not-bad return :p).

There you go folks! If you wana claim yourself as a financial literate person, you must have knowledge in all the fields mentioned above! Wana learn more, do contact me personally or join my network :)