The Ant and the Grasshopper Analogy in Personal Finance? No kidding

Who would have thought the story of ants and grasshopper we learn in elementary school is applicable to personal finance?

Yeah, I am talking about frugality and money management. How does this relate to the ant and grasshopper story?

For those who had forgotten this, let us recap what this childhood story is about

grasshopper ant in personal financeThe story concerns a grasshopper that has spent the entire summer months singing while the ant worked diligently in stocking up food for winter. When winter season is imminent, the grasshopper finds itself dying of starvation and begs the ant for food. To its reply when asked that it had sung all summer, it is rebuked for its idleness and advised to dance during the winter.

The fable has been used to provide an ambivalent moral lesson about the virtues of hard work and planning for the future.

For many, it is extremely easy to be tricked into that false sense of security when everything seems to be going our way. Think that being a staff in a multinational company is safe, secure and can get you through until you retire at 60? Think again. Most MNCs are ruthless and merciless in cutting staff so that both the executive management and the income statement looks sterling in the eyes of the shareholders.

Therefore, it is imperative to always save when possible and make contingency plans for when things go wrong. Things WILL go wrong, it is not of a matter of how, but a matter of when. When things go wrong, they often occur without much warning. As the Malay proverb goes – “Malang tak berbau”.

This is one way I like to approach the topic of savings and investment whenever people ask me about financial planning. Of course, I don’t preach this – I mean, for some, this is really insensible to them. So I chose not to even mention such topics. These are the group of people who say that life is short and they should enjoy/savor it while they can. And I believe there are lots of such people around is, especially colleagues and friends.

I actually got the inspiration from a Singaporean blog, whose author mentioned that he has been labelled a person with a peasant mentality when it comes to wealth building. Looking back at my experience, I encountered such scenarios, but there’s no better way to put this so succinctly like he did. Anyway, a peasant “is a member of a traditional class of farmers, either laborers or owners of small farms… The majority of the people in the Middle Ages were peasants.” (Source: Wikipedia)

When I changed company for a higher pay about 2 years ago, my ex boss and ex colleague asked why I am not changing to a bigger (read: more expensive) car?

When I chose a local destination for my honeymoon, my wife’s colleague questioned her why she didn’t ask me to bring her to some exquisite destinations – the likes of Maldives or Gold Coast?

You see, I know my own situation. I believe if you are reading this now, you can relate to this. Now, if your monthly household income is like RM 8k – RM 10k a month, you surely thought you can afford to blow a month’s worth of your income to enjoy overseas vacation. But call me a miser, I am hard-pressed to do so. That’s what happen to most middle class families. They see their uncle’s second nephew going for that extravagant European vacation, spending like RM 20k but they don’t consider that probably their relative’s household business income is like RM 100k a month. You are stretching yourself thin just to keep up with the Joneses (a term I learn from Andrew Hallam, the Millionaire Teacher). They are probably using RM 20k like you are using RM 200.

Sorry, but that’s not what I would do.I am blessed to have a wife with the same mindset.

Frequent readers of my blog will know that I was not born with a silver spoon in my mouth. I don’t act like an a self-made-[insert your own term] who knows everything about becoming wealthy or reaping huge returns from investment. I don’t aim to drive a BMW or live in an oversized bungalow. So, I am definitely of the masses like you and I can only do what I can with my limited resources to move upwards.

For me, it is the ultimate goal to emulate the author of the Singaporean blog I mentioned – “to move from a time when I was dependent on my monthly wages to meet my living expenses to now when I no longer have to”. It could be a modest one in the eyes of noblemen and aristocrats but I will be happy enough to own a fully house a fully paid car and to be free of all debt.

To quote him again:
“So, to the people who called me a peasant, you are probably right in your description. I am a peasant and will probably remain a peasant but I hope to be a happy peasant.”

If Azizi Ali has a blog “Be A Happy Millionaire”, I think I can write a more humble book title soon – “Be a Happy Peasant”.

be happy millionaire

With that being said, once you become a happy peasant, then there is nothing wrong to aim for the next level  – in this case, to quote Yap Ming Hui: –

Moving from the financially-free quadrant to the wealthy quadrant

yap ming hui set yourself free

This Post Has 11 Comments

  1. You are state the good points. Luckily your wife has the same mindset like you.
    We are trying so hard to resist the temptation from colleague, friends, relatives and even ourselves to spend money on unnecessary thing.
    This shows the importance to set the financial goal.

  2. today one of my brother friend have come to our work place and he did ask both of us want to buy the ipad, iphone for how much…..rm400 and rm500. i look at him, in my mind he is the boss getting sub from here there and when the ipad, iphone come out he go buy it, but now he is in tough of cash and got to sell it. come on la, this all thing like this for me is just temporary gadget enjoyment but i am looking for long term cash inflow to my pocket. so what i say to he is no no sorry, or i want it but if you give me free la. haha

    LCF, this ant story remind me as i can related to my friend story

    1. Desperate times call for desperate measures for your pal, CK. Instant gratification is a hard-to-break habit 🙂

  3. Good Phrase : “Things WILL go wrong, it is not of a matter of how, but a matter of when.”
    With a continuation phrase “Are you prepared when things go wrong?”

    You are right. People tend to assume things are all right and will be all right. They would not expect to have any problems in their lives when things are smooth sailing.

    Nothing wrong with that. Sometimes do we think too much or should we also, in the meantime do some contingency plans for ourselves, our families, and also our close ones.

    I would always preach “Start preparing during the good times. Your family will appreciate it when the bad times arrive”.

    Cheers!!

  4. The grasshopper and the ant are indeed very real in our lives. We just need to realise that it exist and learn the correct way to a happy and fulfilling life.

    However, if we want to enjoy the life of the grasshopper, we must first accummulate what is required to do so. As a famous financial author said “It’s never about living below your means. It’s expanding your means through acquiring assets that gives you cash flow which then gives you all those good things in life.” Then we can use the cash flow to live like the grasshopper.

    I think the title of your book should read “Be a Happy Person” rather than “Be a Happy Peasant”

    1. Refreshing indeed the way you put it KS. “Expanding your means…”. Bersakit-sakit dahulu, bersenang-senang kemudian, to quote Malay proverb 🙂

      1. I actually prefer “Sedikit sedikit, lama lama jadi bukit”.

        Nowadays it is my practice that if I really need something, I have to find a way to earn additional revenue that will pay for the purchase. In that way, my capital is preserved while the revenue will be used to acquire the item.

        Then I can be both the grasshopper (enjoying my new purchase) as well as the ant (maintaining my capital for future enjoyment).

  5. Hey LCF – No worries. Take your time. When you are ready let me know and we will run up the numbers in the System to see which Unit Trusts are a good fit for yearly investment and provide consistent returns. As I have mentioned, so long as the Net Returns are way above FD and above EPF, which is the benchmark I am using, I will be happy with it but my target remains 10% Net Returns PA consistently which I believe are achieveable. 🙂

  6. The paragraph below. Very true indeed. I can relate to it. There is no such thing as a job for life. I have a saying which I share with my friends, “Be an Investor, not an Employee”. Ultimately, if you invest in a good business you will benefit.

    “For many, it is extremely easy to be tricked into that false sense of security when everything seems to be going our way. Think that being a staff in a multinational company is safe, secure and can get you through until you retire at 60? Think again. Most MNCs are ruthless and merciless in cutting staff so that both the executive management and the income statement looks sterling in the eyes of the shareholders.”

    Keep up the good work on bringing awareness to the masses on the need to plan for retirement.

    Cheers,
    Steve

    1. Hey Steve, thank you very much. Sorry, I haven’t got time to look into into the unit trust thingy to simulate on your system yet 🙂

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