Truth hurts and sadly the title of this article is indeed true. let's talk about a very common topic. The rise in cost of living in Malaysia. Somehow this topic doesn't seem to fade away for obvious reasons. I mean we are constantly slapped with price tags or fees that burns a crater in our wallets.
For months or even years now, Malaysians are burdened with this financial epidemic. So who is to be blamed? and what is the solution? This is really a rhetorical question, right? But what's not rhetoric are some facts and data pertaining to this phenomenon.
A recent study by Agensi Kaunseling Dan Pengurusan Kredit (AKPK) found that 18 per cent of working Malaysian adults are unable to make any savings in the last six months. In the same report, it was highlighted that 28 per cent of working adults needed to borrow money to buy essential goods. That is equivalent to 3 out of 10 working Malaysians. These are all attributed to the high costs of living especially in main cities.
Another worrying factor is that most Malaysians still fall prey to scams and other financial frauds. A sign that clearly indicates that we are not financially literate yet. In October last year, a whopping 8,313 cases of victims of financial scams were reported.
"Given the alarming red flags, it is therefore crucial that we as a nation step up our financial literacy and increase our efforts to learn smart ways to manage our finances. We need to particularly invest in a regulated environment, instead of falling victim to get-rich-quick schemes or fraudulent companies and investment scams." Lim Guan Eng, Malaysia's Finance Minister.
The Finance Minister has a point. It is so important for us to educate ourselves financially as this is to ensure that every cent we make is put to good use. As much as the statistics and data mentioned above is scary, money problems may also have an impact socially. You know, desperate times call for desperate measures.
Having money problems is one thing, but developing new problems because you have no money is another. I'm talking about theft, engaging in gangsterism, selling drugs, etc. Oh and even suicide. There was a report that a man took his own life in KL due to his financial problems. Isn't that just sad?
Here are some helpful tips that you may consider adopting to save that extra buck!
1. Cut down on expenses
Cutting your day-to-day expenditure can also have a massive impact. Identify areas with the highest monthly expenses and try to reduce it. For example, if most of your money goes to petrol, toll and car maintenance, perhaps it makes sense to commute using public transportation more often. Plus it saves you time as well.
2. Generate your passive income
One of the easiest ways to do this is by increasing your passive income. Unlike active income (which you usually earn through having a job or running a (profitable) business), passive income generation typically requires less time and effort.
Passive income can include investments, especially with low-to-mid risk instruments that let you leverage on capital with minimal active input. It might take some work, money, and maintenance, but if you plant passive income seeds to suit your climate (aka your personal preferences and skills), you can bring in quite a harvest.
The more you save, the more returns you will get. Lower-risk financial instruments like fixed deposit will give you lower returns, but they are generally considered safe and are an effective tool to help preserve the value of your contingency funds.
3. Stick to a budget
Saving money on everyday costs is great, but unless you have a solid budget, you will still face many months where you are overspending. Take the time to carefully review your bills, budget for unexpected bills and emergencies, and of course, budget for leisure too.
The idea of budgeting is just a simple way of you telling your money where you want it to go. Looking thoroughly into your previous expenses from your bank or credit statements should give you an idea on where your money flows to. Also its a good way to wake up! You’ll want to create categories for each expense in order to set a limit for that category, and also list your income. Be sure your budget never exceeds your income — if it does, there might be some items you’ll need to cut.
Related: Costs Everyone Forgets to Budget For
4. Spend it. Yes Spend but..
You can make the most out of your money by adopting strategies that allow you to save while you spend. For example, buying essential items such as rice and toiletries in bulk can save you a small fortune. Let me share a list that would help you spend your money wisely:
- Plan your purchases in advance
- Avoid impulse purchases.
- Wait for sales and discounts
- Review your regular spending for things to eliminate.
- Identify things to reduce.
- Start writing down each purchase you make.
- List down places, things, or people that cause you to make poor spending choices.
Well to be honest, there is no REAL conclusion when it comes to saving money. There are plenty of ways you could do so. But what is important is the attitude to change. So before you choose to purchase something, as yourself the magic question. Is it necessary?
Here is a short clip we found on YouTube that may help you cope with the rise in cost of living. Don't forget to take part in our poll at the bottom.