April 17, 2019
Updated on 17 April 2019
Are you tired of living between pay cheques and want to head towards financial freedom? Follow these 5 tips on how to break away from that dreadful cycle!
It’s the end of the month, you just got paid, and you’re feeling excited because you can finally checkout all the items that you have hoarded in your online shopping cart. But adulthood and responsibilities come crashing down on you, and you leave those items in the cart for the umpteenth time. While this may be a usual condition for many Malaysians, some of us still do live paycheck to paycheck. When you live this way, you often find yourself scrambling to make ends meet, which is absolutely stressful and frustrating. Living paycheck to paycheck does not only mean that you are unable to buy the things you want, it also means that you have only enough to cover your bills. In severe cases, living paycheck to paycheck could lead to increased debts and even dire financial situation. If you are done with living between pay cheques and want to head towards financial freedom, follow the 5 tips listed below!
Tip 1: Learn to Budget
If you are an excessive spender, the term ‘budget’ could possibly be your very own kryptonite! In fact, a lot of people actually take this important step far too lightly. Some people, on the other hand, will write a budget but fail to follow it diligently. The key to healthy budgeting is that you keep track of all your expenses. From monthly rental payment to yearly car insurance payment, you should list all these expenses down. This is to ensure that you are not surprised when infrequent payments pop up. A proper budget will help you realise how much you have been overspending. There’s tons of apps that can help you to budget effectively such as Pocket Expense, Goodbudget, and Wally; and they’re all free!
Tip 2: Prioritise Your Payments
The most important thing you must do after receiving your salary is to pay your bills such as house rentals, car loan repayments, etc. Next, you should focus on paying yourself, and this does not mean rewarding yourself by buying yet another pair of shoes! Paying yourself simply means setting aside a portion of your salary to go into your savings. This money should be off-limits unless it is needed for emergencies or long-term investments such as to pay for a down payment on a house. Another important fact to ponder is that many financial experts advise working adults to save at least 20% of their monthly income for rainy days. However, you are always encouraged to save more money once you are able to do so.
Tip 3: Cut Down Your Expenses
Tip 1 is not just to make you realise about your overspending habits (and possibly to make you feel guilty for doing so), it is actually tied in with this third tip, which is to cut down on unnecessary expenses. Do you really need to spend RM200 monthly on gym membership? While your efforts to stay in shape is commendable, there are other affordable ways to staying healthy. The same goes to other unnecessary expenses like eating out and indulging in retail therapy. Once you begin to trim superfluous expenses, you can work towards paying off all debts and start saving more money.
Tip 4: Diversify Your Source of Income
It is quite common for working adults to moonlight, albeit anonymously as this practice may be frowned upon by some employers. Moonlighting or having a second job can definitely help you to reduce the likelihood of living between pay cheques. Even Meghan Markle used to work as a freelance calligraphy artist in between her acting jobs for extra cash! So, put your hobbies, talents, and skills to good use. There are many websites that allow you to freelance such as Upwork, Favser, and Matdespatch. Not only that, many Malaysians are also actively working as Grab drivers, which does pay quite well.
Tip 5: Change Your Attitude On Money
You need to change your mindset towards money if you want to improve your financial situation. One of the most important rules to abide by is to spend less than what you earn. This is a surefire way to ensure that you do not actually overshoot your budget. Another way to change your attitude towards money for the better is by mingling with the right crowd. Friends with expensive tastes could put a dent in your wallet as you need to spend money unnecessarily to keep up with them. Not only that, always focus on the bigger picture to keep yourself aligned with your financial goals. Instead of splurging on the latest gizmo, it’s advisable that you save up money and use it for long-term investments like buying a house.
If you still need some extra cash, you should opt for legal means such as applying for personal loans from banks. Nowadays, there are many banks that offer personal loans at very low interest rate, and these loans can be approved within a few days. An example of a personal loan with one of the lowest interest rates from 5.88% per annum is Citibank Personal Loan. You can even apply for the loan online and get instant approval. Another example would be Hong Leong Personal Loan with a flat interest rate of 6%, subjected to terms and conditions. This personal loan has a flexible and affordable instalments for tenure of 2 to 5 years. Always do your research to find out the best personal loan for you.
Breaking away from the vicious cycle of living on paycheck to paycheck is tough in the beginning but the outcome is extremely rewarding. Follow the tips above and always keep your mind on the prize to achieve your financial freedom.