Look after Your ATM Machine

A wise and (more importantly) wealthy man once told me to take emotion out of any financial decision. Emotion clouds judgement and can affect people’s purchases whether you are buying a house for your family or a packet of cigarettes to take the edge off the everyday stresses. At GMS we are dealing with client’s and their family’s money on all levels including planning, protecting and investing. A common analogy taught from our director to help clients understand the importance of financial planning as a whole is to stop thinking about the family’s breadwinner as a person. Imagine the avenue that supplies the family with money not as a father, not as a mother but as an Atm Machine sitting downstairs in the basement supplying money on a monthly basis.

Of course, most parents are telling their kids that they are in fact not an ATM machine and that money actually does not grow on trees. However for the purpose of understanding the importance of the financial planning for families, we use this analogy on a daily basis with many expatriate families in Jakarta.

Imagine that ATM sitting downstairs. Every month it will dispense, for argument’s sake, 10,000 dollars cash until a certain date, many years from now. 10,000 dollars cash for you to do whatever you wish. This ATM is your everything, it directly provides you with the roof over your head, the food on your plates, the wheels that drive you to work and the kids to school, the holidays, the phones, the iPads…the everything.

Have you ever been to an ATM machine that has broken down and not been able to give you your money? Of course all machines can break down. But the cost to fix these machines can be very high. Wouldn’t you want to insure your own ATM machine against mechanical failure? Do you have what could potentially be up to hundreds of thousands of dollars to fix the machine sitting in your bank account? Remember, your bank ATM machine could become faulty at any time, this isn’t something you can plan, save or schedule payments for. You don’t want to be in the position of selling your house or other assets to cover the cost for fixing your ATM machine so it doesn’t break down all together to become irreparable. This of course is an analogy demonstrating the value of Health Insurance. 

What about the time taken to fix the machine should it break? It could take months or years to fix that ATM machine. There will be no money being distributed to the family. How will the monthly bills be paid? What if you could pay a small premium every month to ensure that if your ATM machine was not able to pay out your monthly figure, that money would be temporarily replaced until it was fixed. This of course is an analogy demonstrating the value of Income Protection Insurance.

What if your ATM broke down all together? Completely broken, unrepairable and never to supply money again in the house. How will next year’s rent be paid? How will school fees be paid? Where does the money for food come from?  Holidays, cars, computers? Forget it! Wouldn’t you want to insure your ATM against total failure as it will never dispense money ever again to the family? If that machine had 10 years left of dispensing 10,000 dollars a month, that’s 1.2million dollars that will never be dispensed if your ATM machine breaks. Doesn’t it make sense to a pay small amount of the cash that is dispensed each month in the form of an insurance premium to insure that the household will get that 1.2 million dollars just in case the machine does break? This of course is an analogy demonstrating the value of Life Insurance.

Have you thought about when the ATM machine naturally stops dispensing money? When it has been sitting in the basement for 60 to 65 years, the day that everyone knew would come. The ATM machine will stay but that monthly sum of money will not be flowing out for the family to spend. Again, how does everything get paid? All those expenses without an income from your family’s ATM machine. Of course you must use your remaining resources, whatever they may be. So wouldn’t it make sense to ensure those remaining resources are as substantial as possible. If you wanted to continue having anything near the 10,000 dollars a month to spend like before, you will have needed to be putting 20-50% of the money you had been receiving for years from the ATM machine. 20% if you start saving early, 50 if you’re getting closer to the time your ATM will stop dispensing. This of course is an analogy demonstrating the value of Pensions and savings. 

The idea of the analogies using the ATM machine downstairs is trying to show how your, your partners or whomever is producing a salary’s ability to earn money for the family and household can be limited. Limited by health issues, by their retirement, by loss of work and other reasons, some of which are completely out of your control.  That salary could be 1,000 dollars or 100,000 dollars a month, the principles are still the same. This is how our industry has been created, financial planning.  For a free financial review or to talk about any of the products mentioned please see our contact details below.

GMS are always on hand to offer professional advice so click here to book in a consultation.

2018-03-29T14:49:16+00:00January 28th, 2015|Expat Insurance, Expats in Indonesia, Pensions|0 Comments