Do you notice the ones who are continuously being financially stable are continuing to be so, while those who are less stable, complain on insufficiencies at the mid of every month? Through this read, we will understand more what are the key points to improve our financial solidity.
1) Save 30%, spend the others
Ideally, we need to divide our monthly income into two categories, namely, savings and expenses.
An average working adult is needed to save up to 10-30% of their income for emergency purposes, the balance can be used for loan repayment and monthly expenses. For example, a person earning RM 2,000 per month, will be saving RM600 and the balance of RM1,400 can be used for expenses. Some of the ways to keep your budget on track will be to record your expenses, make a budget, plan on saving money, choose on something to save for, decide on your priorities and make automatic savings.
2) “Sedikit sedikit lama-lama jadi bukit”
Savings are a great key for emergency expenses, asset buying, investments and much more. Warren Buffet, an American business magnate, investor and philanthropist, said: "Do not save after whats is left after spending, but spend what is left after saving". Savings become an integral part of life. It would be good for parents to teach their children to save from a young age.
3) Place a ceiling on your desires
A new home, car or even the trendy clothing worn by Rihanna or JLo, it all takes a toll on our monthly income. So watch out on what you put your money on. For example, no housing loan is less than RM500 a month, that’s a huge amount in the expenses list.
Our weekly movies, dates, gifts have yet to be included on the long list. Parents nowadays give their children lots of things to meet their desires, from the conventional playstation to expensive handphones. This in return, causes children to be too attached to gadgets until they do not have time for family and friends.
4) Cook at home
The healthy habit of cooking at home has lost its trend in the modern days. People prefer eating out even during dinner, where usually family members gather after work. Cooking at home reduces the risk of heart diseases by half and keeps diabetes and blood pressure under control. Not only that, it improves your cooking skills too.
5) Use debit cards instead of credit cards
Debit card is a great way to manage your finances, as you can be 100% sure you do not need to pay back to the bank. Recent statistics states that the bankruptcy rates in Malaysia are on the rise, particularly among youths aged 18 – 30 years old. Credit cards debts are one of the main reasons.
6) Share Grab car rides
Grab taxis are famous among Malaysians these days. Fares are relatively high during peak hours, the rate can even reach up to RM20 for a few kilometres. Sharing is not only great for food but also our expenses. Find a few people who come from the same destination and travel together. Speak to work colleagues to know where they are headed to.
There was a US couple who saved US$50,000 last year. They downsized their home from a high-end home to a simple 2 bedroom and 2 bathroom apartment, and they are much more happier now. Not only that, they have gone car-free for a year and cancelled underused subscriptions. They have also gone to eating at home only. They have also taught their children to distinguish their “wants” and “needs”. Finally, they have changed their mindset to not only read more but to follow more of the financial tips they have known.
Hope you have gained insight of how to manage your finances with these tips. For more financial education tips log on to our website http://www.akpk.org.my/.
This article is brought to you by AKPK
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