• How much financial preparation is needed.
• How much one should save.
• How much one needs to invest to retire comfortably.
Many good options are available from financial institutions including savings accounts, loan instruments, and extendable credit limits. However, we can easily fall into deep debt if we do not manage our finances properly.
The rate of bankruptcy in Malaysia is on the increase. This is especially true for many fresh graduates who have just started working and earning an income.
Spending all one earns (or sometimes more than that) without a thought for the future can suck one into a whirlpool of debt.
Malaysia recently amended its bankruptcy laws to a minimum debt of RM50,000 instead of RM30,000. However, the number of bankruptcies have increased instead of decreased.
Bankruptcy is indeed a serious matter as one faces travel bans, limited credit lines, assets seizure, and employment restrictions because of it.
For the *ahem* slightly older ones among us who have been working for years, the situation may not be much better.
We often have insufficient savings due to poor planning of finances and are largely depending on our EPF during our retirement years.
Malaysians generally lack awareness and proper channels to learn how to manage our finances. It’s true that “The person who doesn’t know where his next dollar is coming from usually doesn’t know where his last dollar went.”
Financial education
We need to start by educating and equipping ourselves with financial education. It does not have to be difficult, but we do need to focus on and pay attention to our finances. This allows us to plan for the future with the right resources and tools to help us.
Financial knowledge will help you confidently use your time and money effectively.
Education and awareness is important to help people make good financial decisions, rather than chase hot tips or listen to speculative/fake news.
Financial education is all about making financially responsible decisions in our lives.
This ranges from understanding things like banking and credit cards, to planning for a home purchase to your children’s education expenses, to planning your retirement and investments.
Financial education is not tied to education levels. Someone with a high active income may be worse off in terms of financial literacy and overall finances compared to someone who only completed his SPM examinations.
Financial tips
These are not “hot tips” but simple and sound advice to get you started in your personal finances.
• Know your motivations in why you want to focus on your personal finances. Your time is a finite resource. You need to know why you are doing what you are doing instead of burning hot then cold.
• Start from personal finance basics. Sort out your cashflow, emergency savings, and risk management before you start working on investing, as well as estate and retirement planning.
• Continuous learning occurs as long as you are breathing. Work with a mentor, advisor, or financially successful individuals willing to share with you their experiences and knowledge.
An improvement in financial literacy impacts not only the individual and his family, but has the cascading effect to drive forward an entire nation on the right foot into the challenges of tomorrow.
Gaining financial knowledge is not easy, but it is simple and the returns grow and compound over a lifetime.
This article first appeared in https://mypf.my