We just had our 10th community meetup last week!! It’s always nice to see you all face to face. We will recap what we discussed and elaborate further on what we shared last week.

Money rule of thumbs by HY 🦭

The first session, HY discussed simple rules about money that everyone should follow, but most people dont do it.

1. Money spending mindset

Most people practice this money spending habit:

Income - expense = savings

They will save money only if there is extra after spending money. If one practice this money spending habit too long, you will fall into the trap of increasing your expenses whenever your income increases. This is why most people eventually fall into the rat race trap, even if they look “rich”.

The better way to practice good money spending habit is:

Savings = Income - expense

Putting savings as a priority and save with discipline is the first step for all good financial decision.

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2. How much to pay for your car 

The 2 biggest spendings for most people are buying a house and buying a car.

The rule of thumb before buying a car, is to make sure:

Car price < your annual income

Why? Because whenever your car price is more than your annual income, your car instalment will be more than 20% of your gross monthly income. Spending >20% on a car is not healthy.

Let’s look at real world example:

Whenever you keep your car price below your annual income, your monthly car instalment will be below 20% of your gross monthly income.

Also keep in mind to never take a 9-years car loan, 7-years should be the max.

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3. How much to pay for your house

The rule of thumb before buying a house, is to make sure:

House loan instalment < 30% of your monthly income

Whenever you buy a house, banks will assess how much commitment you have versus your monthly income (Debt Service Ratio). Most banks will only approve your loan if your Debt Service Ratio (including your housing instalment) is below 60% of your monthly income.

But spending 60% of your monthly income on a house is not healthy. The maximum you should spend for your house is 30% of your monthly income, because that’s a 30-35 years commitment.

When you include your car instalment + house instalment, your fixed commitment will be around 50% in total. Your goal should be to reduce your fixed commitment and keep it as low as possible, either by increasing your income, or buying something more affordable.

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4. Focus on active income first, then only passive income

Another mistake most people do is they focus on passive income too early, when their active income is still low! (Ahem to all the direct selling kaki)

Many people love the idea of “making money with money”. But this will only work if you have enough capital, because to “make money with money”, you still need to put in time and effort to do homework.

Imagine spending 4 hours a week to study an investment that can generate 5% passive income for you. If your capital is RM10k, 5%/year is only RM500, which is definitely not life changing money.

If you spend the 4 hours a week on learning a skill that can increase your active income, you might be able to generate RM500 every week. This is a better investment of your time, compared to spending time to earn passive income when your capital is low.

Having a high active income will also speed up your process to accumulate RM100k or even RM500k, then only it’s worth your time and effort to focus on passive income. Because 5% on RM500k is RM25k/year, now that’s something.

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5. Cover your ass first

One final thing is to make sure your downside are protected. Throughout our life, we will face 2 big spending, other than buying a house and a car:

1. Falling sick

2. Lose our active income

These are all very bad news and will quickly drain your life-savings, no matter how much you have. To protect yourself, everyone should have:

1. 3-6 months of your expenses as your emergency fund: To protect yourself when you lose your job/active income

2. Have medical insurance: To protect you and your family when you fall sick

Dont like your boss? You can resign knowing you have enough to live without work for 6 months. Investment drop a lot while you fall sick? You dont need to liquidate your investment at the bottom.

When you downside are protected, you will be more confident when pursuing your financial goal.

Portfolio Update (June 2025)

We also showed our updated portfolio to everyone in the community meetup:

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