"Prepare for a rainy day."
Now that you understand the basics of finance, you are ready to move on to the next level - create a budget and start saving.
You will realize when you start saving, even a little, but continuously, your savings will be able to increase over time without you realizing it!
Today’s Word: Emergency Fund
Money saved for emergencies that may occur at any time. For example, during the COVID-19 pandemic.
Remember these 3 numbers - 50/30/20
Principles that are easy to practice:
- Your needs (50%).
- Will (30%).
- Savings and investments (20%).
This number is not necessarily fixed. Still, it provides a strong foundation for building healthy financial habits to help you achieve your goals. For example, when a crisis occurs and money for necessities expenses is limited, you may need to reduce the portion of money for temporary savings.
Improve your budget
If you look at the overview of your budget in general, you will immediately see that there are several types of withdrawals from your salary like this:
- Investment / emergency fund.
- Requirements that cannot be changed.
- Controllable requirements.
- Not a necessity.
The key is to generate a budget by finding alternatives and options for shopping.
For example:
Many Malaysians forget that basic house bills such as internet and telephone can all be exchanged. By switching to a cheaper one, you can easily save hundreds of your annual expenses!
Buy in bulk. You may look like a crazy person for a while, but this can really save you money on spending.
Try to pay early or on time - some service providers will provide a deduction for timely payment and avoid late charge penalties (example: Annual charges for insurance are sometimes cheaper than monthly).
