Being asset rich but cash poor means you own valuable assets but have too little available cash to meet everyday commitments comfortably. A high income can coexist with a monthly deficit when repayments, living costs and other obligations exceed the cash coming in.
In my original 2022 article, I shared a conversation with a regional manager. He asked to borrow RM6,000 and said he would repay it when his bonus arrived in two months.
I had assumed he was doing well. His career and lifestyle gave that impression. But his cashflow was tight. Three months later, the money had still not been returned.
That conversation stayed with me. You can have a good job, a good income and a life that looks comfortable, while privately worrying about the next repayment.
If you recognise that feeling, the place to begin is an honest look at the monthly numbers.
Why can a high-income earner still run out of money?
Your salary tells you what comes in. It does not tell you how much has already been committed before the month begins.
Housing loans, car instalments, credit card balances, family expenses and support for other people can absorb a large share of income. Investment properties may need cash top-ups. Business commitments can draw on the same household bank account.
When a bonus, another card or a personal loan keeps filling the gap, it can be hard to see that your regular income no longer supports your regular commitments.
Two situations deserve attention:
- You cover everything but have little left. There is very little room for an unexpected bill or a change in income.
- You cannot cover everything from current income. Borrowing, savings withdrawals or delayed payments are supporting the month.
Both require a closer look. The second means you need to identify how much the shortfall is and how it is being funded.
What is the difference between wealth and cashflow?
Net worth is the value of your assets less what you owe. Cashflow is the money coming in and going out over a period, such as a month. Liquidity is how readily you can access cash when you need it.
A property may add to your net worth while requiring a monthly cash top-up. Selling it may take time and involve costs. Its estimated value does not automatically give you money for this month’s instalments.
I learned this painfully in my own property investments. A portfolio that looked impressive could still create a cashflow shortfall. You can read that part of my story here.
Net worth
What is left after subtracting what you owe from what you own?
Cashflow
Does the money coming in cover the money going out each month?
A valuable property still needs cash for its repayments.
The assets were there. The monthly cash was short.
the portfolio gapRM12,000 / month
Historical figures from my shared property portfolio. This shows the portfolio shortfall; it is not my individual share or a full household cashflow statement. Asset and loan values are not given here, so no net-worth figure is assumed.
The question is: can the cash coming in support the life and commitments you have now?
What a RM4,043 monthly deficit looks like
In a separate example in my 2022 article, a person earning a comfortable income was running a monthly deficit of RM4,043. His finances were more fragile than he had realised.
The monthly shortfall between income and outgoings.
Historical cashflow snapshot · First shared in June 2022
A recurring deficit means money has to come from somewhere. A credit card, personal loan, a withdrawal from savings or help from someone else may keep payments moving. But those sources can conceal the underlying gap.
A bonus may relieve the pressure for a while. If the same shortfall continues the following month, you still need a plan for the recurring commitments.
How do you start reviewing a monthly cashflow deficit?
This is where I use my ICE JAR method. In my earlier article, A Practical System for Saving Money the Stress-free Way, I explained the three questions it helped me answer: how much can I spend, how much can I commit, and how much do I need to save and invest?
ICE stands for Investment, Commitment and Expenses. The rule of thumb I shared is the one-third rule: divide monthly income into three jars, with one-third for each.
One income. Three jars.
With a monthly salary of RM3,000, the original example looks like this:
RM1,000
Save for investments. Include investment commitments, such as investment-property instalments, when reviewing this jar.
RM1,000
Up to this amount for commitments. My original cases include personal-loan and credit-card debt repayments.
RM1,000
Up to this amount for expenses: the money you spend on day-to-day living.
First, see which jar is under pressure.
Bring out your recent bank and card statements. Put your actual monthly amounts beside the three jars, then compare them with the benchmark. The aim is to identify the pressure before deciding how to respond.
Too much money is tied to investment commitments. My original article uses property instalments exceeding the Investment Jar as an example.
Debt repayments and other commitments take up more than the Commitment Jar allows, squeezing the rest of the month.
Your expenses exceed the amount available in the Expenses Jar.
This matters for someone who earns well. The pressure may come from property top-ups or loan repayments, as well as everyday spending. Looking at each jar helps you see where the income is going.
Then connect the jars to your actual monthly gap.
- Start with your current income and statements. Keep an expected bonus separate so you can see how an ordinary month works.
- Compare your actual Investment, Commitment and Expenses amounts. Use the one-third benchmark to identify where you may be over-investing, over-committing or overspending.
- Identify how the shortfall is funded. Are you using savings, more credit or help from someone else to keep the month going?
- Review the decisions behind the overloaded jar. An investment commitment, debt repayment and daily expense may need different actions. Choose the action after you understand the pressure.
The one-third allocation is a rule-of-thumb benchmark. If you are already in deficit, the immediate purpose is to understand the imbalance and work towards a sustainable arrangement. It does not mean taking on a new investment commitment while existing repayments are unaffordable.
For this cashflow check, count actual money allocated or paid out once. Investment-property instalments belong in the Investment Jar in my original example; do not also count them in the Commitment Jar. Likewise, avoid counting the same credit-card purchase and its payment twice.
From my original writing: A Practical System for Saving Money the Stress-free Way, first published on J Advisory on 28 September 2020. That article introduces the one-third rule, the RM3,000 / RM1,000 illustration and the problem of over-investing in property. The review questions here apply that method to this article’s cashflow-deficit discussion.
Will debt consolidation solve the problem?
It may change repayment timing or monthly instalments, but you need to compare the full terms and your ability to sustain the arrangement.
A lower instalment may come with a longer repayment period and a higher total repayment. Fees, interest or profit charges, and any asset offered as security also matter. If new borrowing continues to fund a monthly deficit, the underlying problem can remain.
Before committing, compare the total cost, term and risks, and work out whether your revised monthly budget is realistic. If you are having difficulty meeting repayments, contact your lender early. Bank Negara Malaysia also points people overwhelmed by debt towards AKPK for advice and help with restructuring.
What should you do if this sounds like your situation?
Start with your own cashflow summary. Then ask: what needs to change so that my ordinary month works without relying on more borrowing?
This is why I focus on high-income individuals facing debt and monthly deficits. Earning more is only one part of the picture. Understanding the commitments, decisions and pressures behind the numbers helps you choose your next step.
You can begin with a Money X-Ray at JA to explore your situation and the support that may fit.
Questions you may be asking
Can I have a high net worth and still be in financial trouble?
Yes. Your assets may be valuable while your available cash and regular income are insufficient for repayments and everyday costs. Review net worth, liquidity and monthly cashflow together.
Should I wait for my bonus before reviewing my finances?
You can review the numbers now. Keep an expected bonus separate from reliable monthly income so you can see whether your normal commitments are sustainable without it.
Does being cash poor mean I must sell my property?
A sale is one option to evaluate, rather than an automatic answer. Consider the property’s cashflow, outstanding debt, sale costs, likely timing and your wider circumstances before deciding.
Put the ideas into practice: find the ICE JAR and Asset & Liability templates in eResources.
About Ka Hoe
I’m the founder of JA and a Financial Transformation Coach. My work focuses on high-income individuals facing debt and monthly cashflow deficits, informed by my financial planning background and three personal financial crises.
Read my story →About this article
Rewritten from “Are you Asset Rich but Cash Poor?”, first published on J Advisory on 17 June 2022. The RM6,000 borrowing story and RM4,043 deficit come from separate examples in that article. The ICE JAR explanation draws on my September 2020 article, named above. Personal names have been omitted.
Further reading: Bank Negara Malaysia: banking FAQs · Malaysia.gov.my: financial advisory services by AKPK.
This article provides general financial education. Any borrowing, restructuring or asset decision should be assessed against your own circumstances.