Thursday, September 27, 2007

Cultivate good saving habits early in life.

One of my client called me in the early morning to tell me his son has been granted a place in Australia to study aero-engineering. The entire package will cost him more than RM 400,000. He wanted to know whether his three policies with me could raise that much of fund or perhaps he could borrow from our insurance company.

Life is very funny! If our children don't do well in studies, we will not be happy. On the other hand, if they do too well, we may be worried too because a lot of funding is needed in pursuing their education.

I found it difficult to answer my above client request. Although I had known him for more than twenty years, he was not willing to save from beginning till current. When he was much younger, saving wasn't his priority. He felt that insurance was not attractive. He thought there were better option to save and to invest elsewhere. By the time he realised, age has caught up on him. It was the last few years, he seriously considered some medical and protection covers. The time was too short for him to accumulate the fund. Surprisingly he had not invested in other venues, except owning a house which is still under mortgage.

Finally with a bit of hesitation, I explained to him that all his policies will not be able to raise this high amount of needed fund. Neither can he borrow from the insurance company. Perhaps he can still try to apply an educational loan from some banks. However this amount can be doubtful without proper collateral being charged to them. He wanted my frank and sincere advices. With courage I suggested to him that his son should try the next alternatives. As the father is reaching almost 60 of age, he should not burden himself for committing further obligation and liabilities. Not forgetting he still has another two younger children who also might need his support later. Is good that his son has done well in study but if the family hasn't the means to assist, don't force the bread winner to shoulder the unnecessary toll. If he was to force himself to borrow, he might be under tremendous amount of stress and tension later. It could lead to further health and sickness problems.

That was my true feeling for a friend/client, spoken from my heart. I thought he was angry and be upset over me. Surprisingly he said, "Robert! Thank you for telling the truth. I will take your advices."

Moral of my real story. Cultivate good saving habits. Save early in life and don't turn back. Spoken by Fred Adler, "Happiness is a positive cash flow."

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