I’m Shahril Hamdan And This Is How I Spend

I joined Destini Oil three years ago upon its acquisition by the current parent company, Destini Berhad.

Prior to that I was working in a consulting firm, McKinsey & Company. Then, I got the opportunity to run this oil and gas services firm or drilling services firm, which was a very big jump from consulting for big multi-national corporations to actually running a local services company.

But I felt there was an opportunity for me to take the learnings I developed at my old job, to apply and see whether I was able to follow my own advice and how practical some of the consulting advice was to a real-world situation.

Without going into too much details, I’m also involved in public life. So what I do with the salary and the income that I get, is that I tend to put them into three buckets.

The first is your personal type of expenditure: the day-to-day expenses, the groceries, and that holiday with the wife.

I am quite strict about making sure there’s always a buffer within this first bucket; so I have an idea of how much I spend every month on necessities.

I also have a second bucket which I use for my own expenses in my public life. So, if I need to travel, to do work, or if I need to fund some of the activities of a few non-governmental organisations that I run, I’ll use this bucket.

And the same process happens. I have an idea of what the mean expenditure every month is and I also know there are some months that would cost a bit more due to travel or just doing a lot more things.

So, I would plan and as I plan ahead – a month or two months ahead – to ensure that I have enough in that bucket to spend.

If there are times where bucket two is going down – I mean all these come from the same source: my salary – I will, sometimes, have to compromise or shift from one to another.

I really dislike doing that because I feel the discipline drops, but there are some times where you just have to.

So if you move, for example, from bucket one to bucket two, from the personal bucket to the work bucket, you may need to tighten belt for the next two months.

In this case, instead of going out for dinners three times a week, we go out once a week. Then you immediately see the results coming in – it’s those kind of strategies.

I also have a third bucket, where it’s for charity. Sometimes when I go to mosques and suraus, I would leave some money there. I try to do as much as I can.

Obviously it’s not the biggest bucket due to my expenses in buckets one and two, but I ensure that there is still something I can commit to every month. That’s the least I can do to give back for how lucky I have been in life.

I’m a bit of an old-school guy; I have an Excel sheet going.

I probably need to migrate at some point to an app to make it easier… but maybe this comes from my McKinsey days where Excel and PowerPoint were basically my entire life [laughs].

So, I’m very familiar and sort of versed in the mechanics of using Excel – I tend to use it quite quickly and conveniently.

But maybe I’ll try an app and see if it’s as convenient as people make it up to be. One day.

I think this is sort of academic because you can’t control it like any other sphere of information.

Easier access to information is something we’ve got to accept as a given. The question is, is there enough financial education being given to young people especially on the different tactics and techniques to track your spending and to invest correctly and smartly.

That’s the question, right? So if there’s enough access to information about credit, there ought to be enough access to information about how you manage finances and how you think about it in the long-term.

Yeah, I read a stat the other day about 22,000 Malaysians under the age of 35 being declared bankrupt over the past five years. Clearly it is a problem to contend with.

I don’t know about advice but how I do it is I try to avoid personal loans, and I can share that I don’t have one, apart from credit cards.

And regarding credit cards, whatever your credit is, I don’t see that as your yardstick. I mean, banks can be quite cheeky sometimes, like all of a sudden they increase your credit to double whatever it is.

And you think, “Oh, I have more spending power.” I suppose you do, but I am quite prudent in the sense that because I track my expenses, I know how much I need to save in my first bucket.

So for my credit card expenditure, I try as far as I can to make full payment. As long as I can meet the full payment for that month, I am satisfied. This requires discipline.

Of course, there are exceptions to that, like maybe I want to get that guitar or I want to go on this holiday because I’ve worked really hard all year, then if I do any of these, I may not be able to pay the full amount, but I can clear it all within two or three months, so that the interest doesn’t hurt me so much.

I have gone as far as three months of not paying the full amount and that already got me jittery.

So that discipline of paying it off as quickly as possible… because there’s a way of racking up that credit limit and after that, you don’t change your lifestyle for the next three months and it just goes on and on, and you’ll carry a debt for the rest of your life.

Then, you’re just waiting for your bonus to pay it off, which is what I went through the first couple of years of my professional life.

I was just stuck with my credit limit and I just waited if there’s going to be a bonus on payday and then I’ll be able to pay off my credit card. Not the healthiest way of looking at things

As a young person who doesn’t have a bucket of cash to be spending and investing around, I am quite balanced in my approach to it.

As a Bumiputera, I have access to Amanah Saham Bumiputera (ASB), and I’ve maxed out in terms of loans as I feel that’s a no-brainer. So that’s done, all the low-hanging fruits are done.

I withdrew some of my EPF for unit trusts. Not all of it but an amount I’m comfortable with to spread the exposures and risks because you know unit trusts are not going to be higher than your EPF returns… but they just might?

I dabble a bit in equity markets as a retail investor and I look at this the way a typical retail investor would.

So, I make some smart guesses about which counters/industries are going to show an uptrend or downtrend and I make my decisions accordingly.

Here you win some and you lose some, but for me, at this age, this may sound strange to Gen-Ys who want to make millions so quickly, but I am still at the tail end of learning these things and I want to let experience always guide me on investment decisions.

For me, it’s not about whether I win on that counter or whether I make money out of this investment in an equity market. It’s more of learning what did I misread, if I made the wrong decisions.

And hopefully, at some point, if I have more income and wealth to play with then I would have learned a lot from these experiences.

Retirement planning, sure. But retiring early, no.

Two reasons. First, I think it’s an unattainable goal for too many people and there’s something about Gen-Ys who do think a lot about this. There are a few examples of people who made it big, and they feel that’s something practical to aspire towards.

I don’t mean to say it’s impossible but it’s so improbable it ought to not be your guiding principle in life. Also, I doubt the people who were able to retire early set out in their early life to retire early. It’s more like, I want to do my best and if things go my way then I have that decision to make.

But you don’t work backwards. In this case, if you say you do, I think your thinking process starts getting muddle up and you start thinking of exiting early as opposed to making the right career decisions and letting things fall as they should.

The other reason is I enjoy professional life and I wouldn’t know what I’ll do if I retire early because I enjoy going to work, engaging with professionals, learning from one another and making tough decisions.

I enjoy holidays but I don’t think I would live my life as a holiday. That would be too strange for me.

It doesn’t grow on trees? [Laughs]

That it’s not everything. I’ve lived long enough to realise that there’s a point where the change in lifestyle based on money doesn’t necessarily equate better emotions or life or even utility.

And I am not a believer in this utility economics we’re taught in university anyway. I reject that notion partly because of my own experiences, in the sense that I grew up from being not-so-well-off to middle class.

I wouldn’t say I was happier then as I was when I was a kid.

Similarly, now, I’ve been lucky to experience a few salary increments, from when I first started working. You get to do different things, sure. I can go buy an expensive pair of shoes once in a while but it doesn’t give me joy.

For me, it’s about family, time you spend with people you care about. So I wouldn’t get too crazy about it.

As long as you are able to provide for your necessities, lead a fairly comfortable life or whatever you are used to, that’s enough.

I would like to see a reduction in private debt. I think young people, as we’ve discussed, have a lot to do with it. I am not blaming them but they are part of the private debt phenomenon.

Our private debt to GDP ratio is close to 90%. I think that’s something we need to be looking at more closely than, say, government debt.

There’s a lot of talk about fiscal debt and how we should address that. Actually, to me, private debt is a far more important thing to monitor.

What I hope is for young people to have enough of an income increase such that consumption is no longer driven by credit.

I think that’s where the country needs to look at very seriously, at how to increase productivity, wages and salaries. That’s your long-term solution, I think – driving growth through consumption that is not driven by credit.

So, I want that to change.

Nadhir Ashafiq, who runs TheLorry.com.

He made that transition from a steady income to running a start-up and I feel he has a good head on his shoulders to advice on some of these questions.