Are you feeling the pinch that your monthly salary could not sustain your monthly commitments? Do you find yourself raking in more debts each month than you are earning? Have you considered taking a personal loan or a credit card to help you with your expenditure?
Ignorant about financial planning
What makes this situation all the more worrying is that a majority of Malaysians claimed that by the second week of every month, they do not know where their salaries went! While most are saying that it is due to the high cost of living, it has more to do with personal financial planning which is very crucial. One thing for sure, the standard salary of Malaysians will not match the rising cost of living in the country. But that does not mean you accept this fate and neglect this.
Tips for saving
You won’t be the only one when it comes to coping with the high cost of living. Many Malaysians are facing the same problem and they survived. In fact, they bought a house, fed their family and enjoyed a comfortable life. So, what is the difference? Is there a formula for this?
The 50/30/20 model
If you keep it within this framework, you would be fine and that is the 50/30/20 model. This is one model which is easy to follow and keep track of. It does not involve any sophisticated calculation, only a lot of commitment. Spend 50% of your salary on your needs, 30% on your wants and 20% on savings.
- For the 50%, it refers to your monthly commitments that you will need to pay in order to survive. This includes expenses like rental or mortgage, your utility bills, school fees and such. This also includes your groceries and your daily meals.
- For the 30%, this includes expenses you use for leisure. There is no reason to fully utilize this 30%. If there are extras at the end of the month, you can always push them into savings.
- For the 20%, it refers to any sort of savings for the future. It can be part of your investments, insurance policies, education fund and such.