Recently, I have asked myself, what should I know about money as I was growing up? I did not learn anything about money management until I started my reading habits after I was desperate to find ways to escape from my financial debts. Growing up, my mum only mentioned to me that, I need to save money & own a house but there was no specific guide in order for me to save money or ways to own a house. I had to explore all that by myself.
My struggle when I started to work was, I struggled to save any money due to low income, but my goal was clear, I had to save money & own a house. After surveying house after house, all the issue is the same where I have to pay a 10% deposit for those houses. The problem is, I don’t have any savings to afford that 10% house deposit. When I am able to buy my first house, I had to borrow RM5,000 from my mum & pay her back later by using my EPF withdrawals. Years later, I have to sell the house to pay off my debts due to poor money management & debt.
To be honest, saving money as a young adult was not the easiest thing to do since my income is low & I did not have any knowledge to equip myself on the right way to manage my money. Now as I am in my mid-30s, I am able to manage it better by just knowing these 4 tips:
1. Simple Knowledge On Investing
Commonly, many people’s ways or excuse for investing is, I don’t know how & I don’t want to take risks in investing. They ended up keeping their money in the bank account with no interest. With a yearly inflation rate, it will actually devalue their savings. Some of them choose to put in Fixed Deposits since it is safe & you are guaranteed a certain amount of interest. It is good enough to combat inflation but it will not increase your wealth.
Maybe in the past, investing is hard as we don’t have many options to invest & it can get really complicated. With the current investment platforms in the market, investing can be really simple. But, you should also learn about the basic knowledge of investing to know what are you actually investing in.
2. Learning How To Manage Your Money
There are lots of different ways you can learn how to manage your money. The most important tip is to control your spending & save between 10-20% of your income. Learning how to manage your money can be really easy but making it a routine can be challenging. Imagine you are earning RM3,000 a month & you need to manage that amount of money. How much do you need to allocate for food, house, transport, savings, investment & other expenses? You need to plan it accordingly to ensure that you are spending within your earned income.
3. Managing Your Debt Well
As a student, PTPTN loan will put you in debt once you apply to fund your study. When you start to work, you will need to pay back your PTPTN debt. Aside from that, you may also buy a car or house which needs to be planned well to ensure that you can afford to pay those debt. Credit card can be your best friend or your worst enemy. If you manage it well, it can bring good benefits to you such as advance payment, payment flexibility, or even rewards for spending with it. If you don’t manage it well, you will be stuck in a situation where you can’t afford to pay & you will have to serve the minimum payment with interest. It is an inevitable situation where you will have debts unless you don’t own a credit card or any loan for a car & house. You need to manage it smartly & use it to your advantage.
4. Getting Yourself Insured
I never understood the importance of insurance until I was in my late 20s when I started to buy insurance. Despite being advised by many people on the importance of insurance, I did not see any benefit in it & choose to ignore the importance of it. There are lots of insurance available in the market which range from affordable to premium packages. Choose the one that you can afford to pay for based on your income & upgrade it as and when you can afford a better package. Some of you may find that insurance can be irrelevant, but it is about getting yourself insured just in case any unpredictable situation happens in the future. The most basic insurance that you should know about is Life Insurance & Medical Insurance. Learn about it & make sure you have both insurance packages for yourself.
Conclusion:
No matter how old you are, learning about these 4 tips will never go wrong. I started to learn about the importance of all these 4 tips in my late 20s, but it is never too late for me as I am able to be smarter with my financials. If you are a young adult & you just started to work, these tips will definitely be helpful for you as a guide to managing your money better. For those adults who’s been working for a few years, these tips can be also helpful for you if you are not applying these 4 tips in managing your money.
OSS!
You can also check out my latest YouTube video on Why Do You Need Financial Planning?
