It’s that time of the year when many of us get all fired up and inspired to make a change in our life and start making a long list of New Year’s resolutions; and later posting them on Facebook, Instagram and the like. But what’s your money-saving resolution this year?
Although it’s good to begin the year with fresh goals and motivations, not many of us Malaysians actually think about ways to improve our financial situation as well. With the arrival of 2017, it’s high time for us to prioritize our financial improvement. To help keep your financial life on track, we’ve compiled these 10 absolutely doable money-saving resolutions for you. No excuses!
Set a year-long budget
There’s no point to start a savings plan if you don’t have a budget planned out for your expenses. That’s like trying to navigate through a pitch black room with a blindfold on. All you need to do is set a figure on how much you can realistically save out of your total income and commit to it. After that, take the time to calculate all your important expenses such as your car, mortgage, groceries, insurance and so on.
The balance from these vital expenses is what you can spend on occasional treats for yourself. Your budget plan doesn’t have to be all fancy and complicated, as you go along the year you might need to adjust your budget anyway, so don’t worry about making it perfect. Place your finalized budget somewhere you can easily see as a constant reminder – the fridge or your desktop screensaver, for example.
Start an emergency fund
According to the Malaysian Insider, 86% of urban Malaysians do not have savings to sustain themselves should a financial crisis happen – isn’t it time to change that? An emergency fund is a vital financial backup plan for you should anything like a car breakdown or job loss happen – even for the once-in-a-lifetime opportunity to buy something you that really want for cheap. After all, we can’t rely on others forever.
See also: How To Start An Emergency Fund
Change to a healthy lifestyle
This may sound odd for a financial resolution, but you’d be surprised on how much you can save once you ditch all the unhealthy habits such as smoking or vaping and excessive partying.
An average cigarette smoker spends about RM6,120 a year, while an average vape user spends about RM2,640 a year. If you saved that money, you could have gone on a week-long trip to Australia.
Partying – not only it costs you a lot of money, most of the time we lose track of how much we spend as we revel the night away – that’s how a lot of people blow their entire salary in one night. You don’t have to skip it entirely, just reduce your outings. Channel your energy to more cost-effective activities such as exercising, camping, hiking, reading and anything healthier (and more affordable) that captures your interest.
Aim to be debt-free
Whether it’s a credit card, mortgage, car loan, personal loan or any other form of debt, make it a point to start paying off your debts. You can try the snowball method. Of course, there’s no snow in Malaysia so it might sound a little foreign to you – unless you’ve actually experienced snow.
Here’s how you build a massive snowball the smart way; pack a small ball of snow, place it on the snow-layered ground and roll it as far as you can go and before you know it, you get a massive snow boulder in no time. Using the same theory in debt-management, this is how debt snowball works:
Step 1: List down all your debts from the smallest to the largest amount, without counting the interest.
- Phone bill – RM300
- Credit card – RM3,600
- Car loan – RM19,000
- Student loan – RM26,000
Step 2: Pay the minimum amount for all of the listed debts except the smallest one – harden your heart, forget that new pair of jeans and pay off the entire amount and scrap it off entirely from your list of debts.
Step 3: Enjoy the surge of partial freedom from one of your debts.
Step 4: Add in any extra money from the phone bill to pay off the next debt on the list – the credit card debt. Be fierce and think of your debts as your mortal enemies that you need to slay with all your might, one by one. Instead of paying the minimum for the credit card debt, try paying all of it at once or increase the payment to RM720. You’ll finish paying it in 5 months.
Continue with the same method with the other debts that you have on your list. After you’ve knocked off the credit card debt, focus on your car loan and increase your monthly payment to RM1,051 and say goodbye to that eyesore in 18 months.
Now for the final entry in the list – the student loan. You’re free of your other debts, so channel in all your extra money and pay RM1,084 monthly and be free of your student loan in only 24 months.
It’s going to be hard for a while, but absolutely worth it. Think about it, instead of scratching your head worrying about your debts when you hit 40, all your debts can be written off in just 4 years with this method.
Become a deal hunter
Don’t go for the obvious kill, use the internet as your weapon and ‘window shopping policy’ as your shield while you hunt down those juicy bargains and deals! Scrounge for coupons and vouchers online or pay attention to the advertisements in the newspapers where occasional coupons pop up and look around for the best deals before you purchase anything – groceries included. Check out iPrice for coupons and vouchers for hundreds of merchants.
Start a coin jar
Collecting all of your loose change can really make a difference to your savings plan. Make it a habit of emptying your pockets, wallets, handbags and purses and up your savings game by not only putting in coins, but small notes such as RM1 and RM5 as well. You can either add the accumulated money at the end of the year to your emergency fund, investments or use it to treat yourself to a small reward.
Be smart with your credit card
Most credit cards have cash back and reward programs that can help you save hundreds of ringgit on groceries, petrol, bill payments, entertainments and more. Understand them carefully and make full use of these money-saving credit card features. You can also compare the best cash back and rewards credit cards via our comparison tool.
Start earning side income
Contrary to what some politicians may have you think, you don’t need to work 2 jobs and kill yourself. Just start by doing something on the side that will help generate more money for your savings. You can be a part-time seller for cosmetics or household items, be a part-time driver (such as Uber or Grabcar) or start a small food business that you can manage outside of your working hours. Be sure to save the income that you get from these side jobs and not spend it!
Invest for your future
It’s never too late to start an investment plan. Be it Amanah Saham Berhad (ASB), cash deposits, mutual funds, stocks, bonds or real estate, choose your investment plan wisely and take the time to understand it fully before you commit to it. Remember to go through the right and legal channel such as banks and legitimate financial institutions to avoid any fraud cases.
Set reward goals for yourself
Nothing gets us more inspired to achieve something than a sweet, juicy reward. Set a reward for yourself once you achieve your savings target, or even for when you clear off your debts. It can be anything from your dream (but affordable) vacation or gadget. Pin or post it somewhere you can easily see every day to keep the motivation going.
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