April is inching closer to us and the first quarter of 2022 seems like it's slipping through our fingers.. Most of us have spent the last two years navigating through the pandemic, adjusting to the new normal while staying sane and safe.
Regardless, we hope you’re getting your battery levels recharged, prioritising self-care, and on your way to financial freedom - yes, we’re claiming it!
Now you may be wondering what exactly is financial freedom? To be honest, it truly depends on you.
So the real question is: What does financial freedom mean to you?
To be debt-free?
Not looking at prices whenever you order?
Affording a home?
Whatever it may be, a key starting point towards your goals is saving.
Last year, the 2021 Malaysian Financial Literacy Survey found that saving money amongst Malaysians proved to be a more difficult task during the pandemic as the percentage of individuals who could not save rose from 19% to 21%. Possible factors include Malaysians withdrawing their EPFs, job loss, and an overall price increase in essentials such as food and fuel.
The pandemic had most of us in survival mode, but with restrictions slowly easing up and the world easing back into normalcy, here are a few steps (tried and tested) to rebuild your savings.
Track your expenses
The first step is to figure out how much you’ve been spending. Start writing down what you’ve been spending on for a month - bills, coffee, groceries, e-wallet reloads and yes, that RM0.20 sen plastic bag also counts. Better yet, use an app like BigPay to make tracking so much easier.
By tracking your expenses, you’ll be able to see where your money has gone or been going and analyse your spending before you set a savings plan that works for you.
Make sure to categorise your spending into two parts: needs and wants
Needs represent items that require to be paid and generally cost the same every month, while your wants include spending that isn’t exactly necessary like a new shirt, an extra cup of coffee or tickets to a movie you’ve watched twice (iykyk).
Live, laugh, love on a budget
After tracking your expenses, it’s much easier to visualise how much you can actually spend according to your income and needs.
It’s important to remember that a budget isn’t made to restrict you, but rather a monthly plan for your hard-earned money. That being said, it’s also vital to set up a budget that’s tailored to your lifestyle.
The 50/30/20 rule is a simple budgeting strategy to start with.
Basically, we'll split your money into 3 buckets. Let's say your monthly income after tax & EPF deduction is RM6000.
Now, we have 3 buckets that are:
Needs (For things like rent, bills and loans)
50% = RM3000
Wants (For things like your gym membership or a new pair of shoes)
30% = RM1800
Savings (For a rainy day or even for investments)
20% = RM1200
The nice thing about this method is that it accommodates splurges once in a while. If you’d like to treat yourself to a fancy dinner or buy a birthday gift, it can all be included in your wants. Just make sure to stay within your spending limits and avoid blowing your budget.
Also, there’s no pressure to follow this rule to the dot, you can always adjust and find what’s works best for you.
BigPay Tip # 518: Please don’t ever spend more than you earn.
Without a goal, you can’t score
With all the numbers, additions, and subtractions, saving with a goal in mind usually makes it more exciting. Everyone has dreams and aspirations, and most of the time money can get you there.
Picture that long-awaited holiday to Japan or a new phone to replace your dying one, everyone has a goal to achieve.
That being said, your long-term goals, such as your retirement fund, new home, or clearing your debts shouldn’t be overthrown by the latest iPhone. Last year, it was reported that due to Covid-related EPF withdrawals in the last two years, only a concerning 3% of Malaysians can afford to retire.
Automate your savings
If you’d prefer, you could always automate transfers between your checking and savings accounts. By directly transferring a fixed amount to your savings account, it’s much easier to stay on track and continue the habit of saving since you won’t have to think about it.
Look at it as paying yourself first. 😉
With BigPay allowing a maximum of RM10,000 in your account, why not utilise the Auto Top-up feature within the app and save with BigPay!
Money can be a difficult topic to talk about, but it’s crucial to be financially literate so that you understand and make the right decisions when it comes to money.
Get back on the savings track this 2022 with the BigPay app!