THERE was an air of confidence in Adam when he graduated from university with first class honours. He was now well prepared for the real world where he had to earn his own money.
Adam started his career in one of the big five accounting firms. He was paid a starting salary of RM2,500 per month and with overtime and other claims, he was able to earn an average of RM3,000.
This time, Adam had more disposable income in hand and decided to review his budget.
In Adam’s revised budget (see table), he put “savings ” as the first item under his “expenses” column. This is in line with the principle that we should always pay ourselves first.
Therefore, he continued with the unit trust investment but topped it up to 10 per cent of his salary.
In fact, some financial planners would recommend saving half the income. This is inclusive of the mandatory EPF contributions from both the employer and employee which amount to 23 per cent.
This means that you have to save another 27 per cent of your gross income to meet the 50 per cent target.
This may be tall order for most people, especially those with children, but this is the sacrifice we’d have to make for a comfortable retirement.
Second on Adam’s list was repayment of his PTPTN loan. As a responsible graduate, Adam started repaying RM150 each month as soon as he received his first pay cheque.
As Adam was staying with his parents, he was able to save quite a lot on rental.
So he decided to give his parents RM250 each for food and lodging.
Another RM500 was set aside for meals outside home, mainly for lunch and dinners when he has to work late. The estimate was RM20 per day for 25 working days.
Adam also set aside RM500 for clothing and entertainment as he would most likely go out with his colleagues, and a night out can easily cost RM100.
Adam would like his own wheels, decided to save up a little bit more in order to put down a larger down payment for his first car.
For now, he would rely on public transport.
He got himself an integrated travel pass for public buses and LRTs for RM135 per month. The transport allocation was increased to RM200 to cover taxi rides now and then.
Adam also set aside RM100 for his handphone bill.
After taking into consideration all his foreseeable expenditures, Adam found that he had RM300 per month to spare.
He decided on an insurance policy and the monthly payment came to 10 percent of his salary, a sum that was well within his budget.
When Adam was sent on an audit assignment, he met a familiar face that set his heart a flutter. It was Aida, a finance executive at the bank that Adam was auditing and she recognised Adam.
They were university mates and had not met or communicated since graduating from university.
Aida was a business graduate and they were staying in the same hostel.
At times, they would walk together with other friends to the faculty but never had they gone out alone together.
Next... Adam falled in love
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