Malaysians from all walks of life share the common goal of achieving financial stability. Amidst the hustle and bustle of city life or the peaceful rhythms of rural living, the aspiration for prosperity is universal.

With proper guidance and practical steps tailored to Malaysia’s dynamic economy, financial stability becomes not just a distant dream but an attainable reality. With that in mind, here are five ways to help you get a handle on financial challenges that come your way.

1. Debt management

A crucial step towards achieving financial freedom is gaining control over debts. It’s not just about understanding what you owe but also about developing a strategic approach to repayments.

Two effective methods are the snowball and avalanche methods. The snowball method involves prioritising repayment of smaller debts first, regardless of their interest rates. You gain momentum and motivation as each debt is eliminated, emphasising psychological wins that help you stay motivated.

The avalanche method prioritises debts with the highest interest rates first, allowing individuals to save money in the long run by reducing interest paid over time. While this method may not provide immediate psychological victories, it offers financial benefits by minimising interest costs.

The choice between these methods depends on individual preferences, financial goals, and the specific debt obligations one faces.

2. Emergency fund

An emergency fund is your financial safety net for life’s unexpected turns. Experts suggest having enough to cover three to six months’of living expenses.

This buffer can be a lifeline during unforeseen events such as medical emergencies or sudden unemployment.

Starting small and staying consistent, such as setting up automatic bank transfers, is the best approach to growing this fund. Even modest, regular contributions can build significant reserves over time.

3. Budgeting

Good financial health starts with a solid budget. Today’s budgeting apps make tracking spending easier, setting savings targets and pinpointing where you can cut back. These tools keep a real-time check on your money, helping you stick to your financial plan.

For those who prefer a more hands-on method, the envelope system – dividing cash into expense categories and spending only what you have allocated – remains a tried-and-tested budgeting technique.

4. Mental resilience

Financial crises test our preparedness and mental fortitude. Having an emergency fund and a solid plan is crucial, but so is addressing the mental toll of financial stress.

Adapting to economic downturns requires flexibility and the ability to diversify income streams. It’s about being resilient, with a support system that includes mental health resources and expert financial advice.

5. Professional help

You do not have to spend all your time building new financial skills or knowledge; hire an expert who can help you. Start by researching qualified financial advisers or planners in your locality to ease logistics and communication.

Look for certified planners and schedule a consultation to discuss your financial situation, goals and challenges. A good adviser will help you create a personalised financial plan, including budgeting, debt management, investment strategies, and retirement planning.

He or she might suggest a diversified portfolio of investments that suits your needs. They could also help you set up a regular investment plan that automatically invests a portion of your monthly salary, making the process effortless and consistent.

Finally, consider talking with a creditor about lowering interest rates. Begin by reviewing your current debts, identifying those that have the highest rates and would benefit most from a reduction.

Contact your creditors directly, explaining your financial situation and asking if they could offer lower interest rates or a modified payment plan. Be honest about your ability to pay and be willing to negotiate. If you have a history of timely payments, use this as leverage in your negotiations.

This article was first published on MyPF. To simplify and grow your personal finances, follow MyPF on Facebook and Instagram.