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.
We’ve connected with HeyAlfred to get the 411 on finance!
You know that feeling, when it’s almost the end of the month, but payday still seems so far away – you start mentally calculating how much you’ve spent and begin regretting that Friday night out or the time you #treatedyourself a bit too much during an online shopping spree. Some may even find it hard to sleep because their bills keep piling up, but believe it or not – for most of our adulthood, our anxiety surrounds our finances.
This is where budgeting helps.
Does the word ‘budget’ make you clench your teeth like that Chrissy Teigen GIF? You’re not alone. It does seem quite restrictive and requires too much commitment, like, “I’m just not looking for a relationship right now”.
But when you budget the right way, and customise it to your own personal choices, a budget can actually give you the freedom to spend without guilt – you won’t have to constantly worry about how the money you splurge on iced coffee could have gone to your credit card loans instead.
It’s a simple guideline for where your money goes every month, so you can enjoy your life even more. Woo!
What is a budget?
A budget is essentially a spending plan for your money – for whatever goal you have (saving for a holiday, paying off debt, early retirement etc), a budget can help you achieve it.
Having a plan will ensure that you have enough money to cover the things that you need, and are important to you.
Note: never think you don’t have enough money for a budget! If you start budgeting the second you get your first pay check, you’ll be able to build a habit that will last your entire career.
How do I create a budget?
One of the most popular ways to budget is the 50/30/20 method:
- 50% of after-tax income on needs (groceries, transportation, housing, utilities, insurance)
- 30% of after-tax income on wants (eating out, hobbies, shopping)
- 20% of after-tax income on savings and investments
However, personal finance should always be personal – like skincare, the most common method may not work for you as an individual. So, if you can’t currently save 20% of your income, try starting with 10% or 5% and grow it from there.
The best thing to do when developing your budget is to test out different ways and then tweak them to suit your own lifestyle and goals.
How do I implement my budget?
First, start by tracking all of your expenses for the previous month – write down everything you’ve spent on or use an app like HeyAlfred to help with the tracking.
This will provide you with a better understanding of your spending patterns and habits: are you spending too much on something you don’t need? Are you putting aside money for savings every month? Don’t be afraid to look at your own spending – the more aware you are, the faster you’ll be able to make better decisions for your future.
Next, set an amount for each category of spending (food, transport, bills, rent, gifts, subscriptions, entertainment) and from there, pinpoint the expenses you can do without.
Try out your new budget and don’t stress if it doesn’t work out the first few times! Maybe you find yourself constantly overspending on groceries (we, too, get carried away in the snack aisle) – is there anywhere else you can cut down on so your grocery budget can be increased? Adjust it accordingly.
How do I stick to my budget?
Consistency is key. Don’t set a budget that is too strict – start small and be kind to yourself. If you’re used to spending RM500 on eating out every month, it would be unrealistic to cut it down to RM0. While it’s good to challenge yourself, don’t set yourself up for failure either.
To be consistent, you also have to enjoy the process, so put aside a budget for the things you like too!
Tip: Automate things like paying your bills – you can also automate your weekly savings via the HeyAlfred app.
How can HeyAlfred help?
HeyAlfred is a personalised financial tracking app that helps you save, budget and track your spendings.
It automatically tracks all of your spendings (across different bank accounts) and displays it on the dashboard – allowing you to see what you spend on by category. From viewing all your spending categories in one chart, you’ll be able to identify your habits and notice when you over spend.
HeyAlfred also dishes out budgeting and saving tips to help you stay on track of your financial wellness journey. From the data based on your personal spending, the chatbot Alfie will let you know when you’re close to going a little over budget.
The latest version of the app lets you automate your savings (via their partner Pod), so you can easily save for any goal you have – there’s nothing like a well-planned savings goal for your next big adventure (or purchase) to reward yourself with.