Disclaimer: I am by no means an expert on the subject matter. Treat this post as a personal opinion of myself with a limited experience and knowledge at the time of posting. If you have any questions, concerns or objections about my point of view, please refer to an actual expert on the subject matter.
This is going to be a bit controversial. Especially for couples that are planning to get married, I hope this post would benefit them to plan what would be the best course of action for them. Across many cultures in Malaysia, the groom-to-be often provide a sum of money what would be described as dowry (mas kahwin atau mahar), ‘wang hantaran‘, and similar terms (from this point on, I will describe them solely as dowry). This dowry would be given to the bride-to-be as a form of a gift, as a symbol of responsibility, commitment and earnestness. The one that I want to point out is not the problem of the dowry itself though: it is the problem of what the dowry would be spent on, which most of the time to finance the grand wedding. In this post I will argue strictly from the aspect of finance, not whether dowry and wedding ceremony are still relevant or not in our culture.
Case Study: A Failed Marriage
Let me give you an example. You had been thinking. You were committed to it. You guys had been discussing and agreed to it. You finally decided that this one person is the one and the only love of your life. Now, moving forward you and your partner are engaged. Both families met, getting to know each other, discussing about the wedding, the amount of the dowry, etc. After the discussion, both parties came to a conclusion that the dowry should be RM20,000, for example. Now, what do you do? RM20,000 is a lot of money, if you ask me. It could pay for your house or car down payment, it could finance your honeymoon overseas, buy you luxurious jewelry, or better yet, you guys could use that money to buy any needs for the marriage later on. But for most people, they would spent it all in one single day, and the day is called the grand wedding.
What is the grand wedding? The grand wedding is what I would call the ‘spent it all for nothing’ day. The day we purchased other people impressions about us that we were rich with our hard earned money, that lasts only for just one single day. Well, it had fancy wedding drop, wedding dresses and banquet for hundreds of people, so it better be good, as all of the money was gone. It also set a new track record, as RM20,000 is pretty impressive to be spent in one single day, you know?
Later, you guys lived together in a small rented house. You guys had kids and a small car, barely enough to fit the family. Then, the bills and commitments came. Suddenly the bank came knocking at the door as you just figured out that the dowry you just received came out from a personal loan. At that exact point in time, all hell break loose. You guys had a fight. It went crazy. Then you guys talked about it, thinking it was over.
The same happened the next month. Then, the next month. Each time it was approaching the end of the month, you guys had a fight as you were living paycheck to paycheck. It lasted for years. Then, one of you filed for a divorce. Before you know it, it was over. Not only that, the original loan for the wedding was still there despite the marriage dissolution.
Not a good story with a happy ending, isn’t it? Yet this is what happened to almost half of Malaysian marriage which ended up in a divorce, according to a news article here. Based on this story, there are several mistakes which I would like to discuss.
How to Spend the Dowry
The dowry by definition is a gift from the future husband to his future wife. Therefore, it is 100% up to the wife about what would she do with it. Yet, using it for something that has no monetary value in return like a grand wedding is a bad idea.
If the dowry was used to buy jewelry, at least the jewelry can be pawned or sold back in times of need. If it was used to buy a car or a home, no matter how lavish it is, it would still provide monetary value. Even if the dowry wasn’t used for anything particular, the RM20,000 would still exist in the hands of the wife for her to enjoy.
Spending all of it on a grand wedding is wasteful: no one would remember it past the first day except for the married couple. Yet, we tried so hard to impress these other people. Instead, what I would recommend is to spend only a small percentage of it for the ‘affordable wedding’, and let the wife to keep the rest. As most of us are not rich influencers or artists which relied upon popularity to generate revenue, I would advise ourselves to have a reality check and just keep the wedding simple.
Family Planning
Although I weren’t married, I would argue that the spending of a married couple would be less than two separate individual living apart. The reason is that often times the commitment and benefit of a couple would be shared: i.e. instead of renting 2 separate rooms or houses, they both can share only one. This also applies to transportation, groceries and others.
But, the costs would quickly add up when the couples started to have kids. As raising kids would require proper care, education and nurture, the couples should expect a greater financial responsibility, which in the above scenario failed to account for. Being ignorant about this could lead to disaster later on. I’m not saying that having kids is bad though: What I wanted to say is just make sure that you know what you are doing, plan accordingly and be ready for it.
Thoughts on Personal Loan
At the time of writing, I could only imagine 4 justifiable reasons to take out a personal loan.
- For a justifiable business expenditure
- Expenditure which would create justifiable revenue in return
- Emergency related cases
- To cover loans with higher interest (i.e. credit card, more often than not the credit card loan was made because of an emergency anyway which would relate with the 3rd point)
Among the 4 common loans, ranked by their interest rate in ascending order: mortgage, vehicle, personal loans and credit card, personal loan has the 2nd highest interest rate in general. Not only that, as the nature of personal loan itself doesn’t have a collateral, it exposes the borrower to higher risk of bankruptcy. According to a news article here, personal loans are the highest cause of insolvency (which are followed by car loans).
Taking out a loan for your wedding is a huge NO, as it would create unnecessary financial burden later. Instead, try to lower the expenditure for the wedding by negotiating the terms. This would allow you to save in time without jeopardizing your existing relationship.
Living Paycheck to Paycheck
The worst kind of living someone could possibly endure financially is either living as a bankrupt or living paycheck to paycheck. I would describe bankruptcy as ‘financial death’, as all of your assets would be seized to pay off your debts, your banking accounts froze, restriction from travelling abroad will be imposed, not being able to work in certain professional fields and not eligible to run any businesses.
On the other hand, living paycheck to paycheck would be described as ‘financially dying’. More often than not people that lives this way doesn’t have any emergency savings whatsoever, as they couldn’t afford it. One should keep in mind that the amount of money we were able to save is an indicator of our financial health. It reflects our ability to live well below our means. The margin between our net income and our actual spending acts as a fail-safe: if anything goes wrong, we could resort to the margin and our savings as a backup instead of making additional loans. Conversely, having more loans would deplete this margin, and in some cases completely diminish our ability to save money.
Saving and investing is not that easy however: a person that can save their money in theory should have a positive net cashflow, which most people with low salary don’t have access to. Therefore, in order to increase their net cashflow, they should opt for additional source of income. One way to do this is to do service-type of business, which doesn’t involve a lot of capital but requires knowledge, skills and energy to be executed. Examples of providing skill-based services are drawing housing plans, writing, affiliate marketing services and such.
Final Remark
There’s a lot of things to consider when building your marriage together, whether it’s the quality of loyalty, responsibility, perseverance, etc. We all sought out the best for ourselves and our partner, therefore putting our mind into it could help us build a long-lasting relationship that we dreamed of. It might not be a guarantee, but it sure do help. I would like to remind that I’m in no position to decide what is best for somebody else’s marriage, thus my opinion here should be taken with a grain of salt, so feel free to agree to disagree. Differences in views and opinions are appreciated and often times result in a better resolution, as different people had a unique knowledge and experiences. That’s all (I felt so sluggish and drained when I was writing this conclusion tbh, that’s why it sounded so odd).
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