Budgeting app, HeyAlfred, is here to help with this article!
Here’s a scary fact: did you know that more than 50% of Malaysians find it hard to raise RM 1,000 for emergencies? We all know we need to save money, but with rent, bills and day-to-day spending, saving money can sometimes take a back seat. However, it should be non-negotiable! Despite our financial commitments, having money set aside for emergencies and our future should be prioritised the same way as paying a bill – it HAS to be paid, on time, every month. If you’ve found yourself with some paltry sum in your bank account, scratching your head wondering where it all went this month, consider these steps:
- AUTOMATE A 5% SAVINGS RATE
Most financial advice will tell you to save 20% of your paycheck, but if you’re living paycheck-to-paycheck and struggling to save – start with 5%. One way to do this is by automatically setting up a direct deposit of 5% every time your paycheck comes in. This way, you’re building the habit first and can increase the amount once you’re in a more comfortable position. You can automate your savings at the bank or through saving platforms like Pod (via the HeyAlfred app). You can also consider increasing your EPF contribution, which could help you get your employer to match it.
If you don’t know how much money you CAN save, you need to create a monthly budget – it’s not as scary as it sounds! Most of the time, our inability to save comes from the habit of overspending. With a budget, you can determine your monthly fixed expenses and variable expenses. From there, you’ll be able to see where most of your money goes, and what you can cut down on. Start by making a list of what you’ve spent on last month, then based on those numbers, set a budget for next month. For example: if you spent RM800 on food last month, try to reduce next month’s food budget by a little, say, RM750. If that was doable, try reducing it a bit more next month. Your budget will take trial and error – keep on tweaking it until you get it right. You can read more about how to create a budget here.
- SEPARATE SAVINGS ACCOUNT FROM SPENDING ACCOUNT
When you separate the money you’re saving from the money you spend everyday, you won’t be tempted to spend it all. This makes sticking to your budget more fool-proof too! Put the amount you’re allowed to spend into a spending account and monitor it closely – if it’s dipping low, it’s a sign that you need to reel back on spending not reach into your savings. At the end of each month, transfer any extra money leftover from your spending or checking account into your savings account.
- SAVING A FEW RINGGIT DOES MATTER
Anytime you have a little bit of money left, SAVE IT. Even if it’s just RM 1 or 50 sen – put it into your savings because believe it or not, it counts! Each increase in your savings will bring you closer to financial independence, and the younger you are, the MORE these little amounts count. Because of compound interest, the longer your money has to grow, the larger your returns will get.
Remember to put your money in a savings account that has a good interest rate (check out rates here). You can also look into property or other ways to invest your money and grow your savings. If you’re looking for a fun way to save, with accountability buddies, join HeyAlfred’s Simpan Challenge! Save RM 1,000 in a month and WIN cash rewards for a job well done. Join the challenge now.
NOTE: If you are struggling to follow these steps due to a low-paying job, or any unfortunate circumstances, saving money may take more work than what is listed here. This could involve taking on another side gig, or talking to the people at AKPK when facing serious debt.