It’s the start of the new year and whether you like it or not, planning your finances for the year is something every young adult should start practicing. To help you get to know more about money matters and how to save as much as possible given the rising cost of living and impending GST implementation, we speak to Liew Ooi Hann, Chief Executive Officer for Saving Plus Sdn Bhd.
1. Treat savings like you would a bill and an expense –
Regardless of who you are, you will always be able to save more money than you are currently doing, even without changing your lifestyle, be it restructuring your debt products to a lower rate, changing the way you spend money or even making sure you maximise the discounts that you get on every spend. A simple trick which I’m currently advocating for people looking to save easily is to treat yourself like a bill each month. It may be hard to save, but paying bills or expenses is something that we are very used to doing each month, so why not treat saving like a bill/expense?
2. Maximise personal savings –
While as individuals we can’t directly influence inflation which is a economic indicator, one of the things we can directly control regarding the rising cost of living is our own personal lifestyle inflation. This is where consumers feel the need to spend more and live a more expensive lifestyle each year, whether or not they get an increase in income. One sure way to save and ‘tackle the rising cost of living’ is to keep your own personal inflation in check.
3. On GST affecting your savings –
The key thing that will affect Malaysians with regard to GST is that while many things are expected to go up in price, some things are expected to reduce in prices due to GST replacing certain existing tax structures. The one thing I would say to young adults here is that you don’t have wait for GST to take effect before taking control of your finances.
4. Why is the middle class important –
It’s widely accepted that the global middle class is growing faster than ever, with the majority of that growth driven by the middle class in the Asia Pacific. What may need a bit of tweaking would probably be the definition of middle class which may be understating what it takes to be considered middle class. A sizable middle class is important not just to contribute to the economy through consumption of discretionary goods and services.
5. How much you should put aside each month –
Each individual’s circumstances are different. Someone earning RM3,000 but with no financial commitments or dependents may find it extremely easy to save more than half their take home pay, while another with a family to feed or bills/loans to pay off may find even a small percentage to be saved difficult. A quick tip to make sure you save as much as you want would be to save a certain amount first, and then only spend the rest of it. The 10% (or salary saved) rule of thumb is a nice start, but that shouldn’t stop you from saving any more if you can, or feeling bad about not being able to save more if you can’t!
Liew Ooi Hann is the Chief Executive Officer of Saving Plus Sdn Bhd and founder of SaveMoney.my. He is a CFA Charterholder, has a degree in Mathematics and Statistics from the London School of Economics and joined Barclays Capital in their Structured Financial Products division right after his tertiary studies.
