1. Set up a budget.
Yeah, we agree - this isn’t groundbreaking. And, it sounds boring and mafan, right? But hey, if you don’t tackle this first, it’s going to be hard for you to track your spending. Without this, it can show you areas where you could cut back. So, where do you begin?
First, comb through your debit card, credit card statements, online or e-wallet transactions for the past year and take note of how much you spend each year and for what. Then, list them on a spreadsheet or use a budgeting app to get yourself going, or if you’re not a techy person, a notebook would do as well.
2. Cut down the unnecessary expenses.
Okay, now that you know what you’ve spent your money on, you’ll be able to find meaningful ways to reduce your spending. We’re not saying you should be super kiamsiap and lower every single expense in your budget. We mean, it’s not wrong - in fact, the more expenses you cut, the better.
BUT, let’s be realistic, shall we? While you may not be able to reduce certain fixed expenses, such as rent or a car loan repayment, pick one that you feel you don’t really need to spend on and start working your way from there. It’s advisable not to be too ambitious and drastically change your lifestyle because it’s not sustainable in the long run.
For instance, maybe you have the habit of buying snacks every time you're at the petrol station - cut that off. Or perhaps, instead of always ordering from FoodPanda or GrabFood, you can opt for meal prep to lower your meal expenses.
3. Start automating your savings.
Since you have cut some expenses, this would be a great opportunity for you to save some monies. You can do this by setting up an automatic transfer from your current account to your savings account, ASB, Public Mutual etc. every month so that some money is stashed away off the bat. It’s hard to spend money that you can’t see or isn’t easily accessible.
You can start small - it can be RM20, RM50, RM100 - whatever you can afford and comfortable with. The key here is to get into the habit of saving consistently while removing the option of overspending.
Not only this can help you to become wealthier by the end of 2022 than you started, but it can also help you to prep for any unexpected life situations and financial worries.
4. Create a debt management plan
If you want to improve your financial situation, you must get out of debt. Based on Bank Negara Malaysia’s report, from 1 June 2021 to 29 October 2021, more than 2.7 million individual borrowers and 93,000 SME borrowers had obtained some form of loan repayment assistance from their banks. So, this means that there are a lot of people entering 2022 with some amount of debt. You might be one of them - or not. Whatever the reason, if you've racked up some debt; figure out what it'll take to pay it off.
So, how do you manage this? First, you need to create a debt repayment plan. For example, list your debts in order from highest interest rate to lowest. Then, if you see that you have a lot of high-interest debt, you might want to begin paying all of that using the extra money you got (from cutting the expenses) toward that debt instead. Or, if you have credit card debt, you might want to do a balance transfer to lower the interest rate on your debt or consolidate it with a personal loan.
If you have no clue where to begin, fret not. Talk to your bank or Agensi Kaunseling dan Pengurusan Kredit (AKPK) via its Debt Management Programme (DMP). Its financial advisors will work with you to develop a personalised debt repayment plan that you’re comfortable with in consultation with your financial service providers.
However, don’t forget to treat yourself!
More often than not, the reason behind the financial mess is a lack of self-discipline and the inability to delay gratification. These moves to sort your finances may not be rocket science, but it’s no child’s play. It sure takes a lot of discipline to sustain.
Once you are in control of the money you are spending, it’s easier to make other financial decisions like getting a home loan, investing in unit trust funds or fixed deposits etc.
That said, while you’re taking steps to be more financially disciplined, don’t forget to treat yourself. You deserve to splurge once in a while without feeling guilty - just make sure that you’re adjusting your monthly budget accordingly and not falling back on your savings.
Finally, do know that there will be some setbacks, but don’t let that demotivate you. Getting your finances in order, it’s not a one-time thing - it takes a lot of practice.
*The above article is intended for informational purposes only. Loanstreet accepts no responsibility for loss that may arise from reliance on information contained in the articles.
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