Managing your finance is never an easy task. The more you earn, the more you tend to spend. A lot of Malaysians have the bad habit of spending what they hadn’t earned. That makes it worse.
The economic downturn and COVID-19
Coronavirus changed the world forever. People lost their jobs, governments started providing financial assistance, companies had to close and the list goes on. If you are a typical Malaysian who is living in 2021, you will have to squeeze your spending and be more prudent. You have to think about the possibility of losing your job and could fall into some form of financial difficulty. If you are a fresh graduate coming out during these times, you should take a moment to ponder what you should do and give your financial health a good headstart. So, what would make a good start? Let’s examine them below.
Aim for financial stability
While you are still far from retiring, you should have the end in sight. If you are in your mid-20s, your savings in the EPF by the time you reach 60 might not be able to sustain you for many years. You DEFINITELY need to have a safety net somewhere. Start investing early so that you have more money when you retire. Unit Trusts and the PRS (Private Retirement Scheme) are good engines to start.
Expenses – Be reasonable
If you are not demanding, this could be quite easy. Learn to be more easily contented and live within your means. Being in the middle-class (T40) is a great option because you can have a roof over your head, a good car to get around and by the time you are 30, a family with all that you need. You do not want to get into big expenses that are recurring like a 9-year car loan that you have to pay RM1,500 per month. But this does not mean you do not indulge every once in a while. You can still bring your partner for date night and have a great meal in KL Tower or go for a vacation every year.
Remember and keep your stable income
In whatever case, a stable monthly salary would be ideal so that you have a steady stream of income every month. While you might be doing freelance work by the side, don’t forsake your stable job unless you have no choice. Stay in your job and be good at it. If you have some form of revenue now (side income), at least you are still contributing to EPF which will be useful once you reach retirement age.
Have an emergency fund
What a lot of people don’t get about emergency funds is that they think it is all about the money. They think it is impossible to get a certain amount in case you lose your job or unable to work. It is more about knowing that you have a safety net. That is what it is all about. That said, you must seriously consider building an emergency fund that can be of use if the need ever arises. You should ideally have enough funds to keep you going for 6 months.
Invest and insure
If you are going to invest, make sure that you know what risk you are taking and don’t put your money into something you are not confident of. Have an insurance policy to cover your and your family should something happen. Ultimately, be responsible enough to know that you cannot foresee everything that happens and have some form of protection if the need ever arises. Enjoy your life, not spend your life away.