He said he wanted to impress relatives and friends coming to his house.

The administrative worker first got his credit card when he was fresh out of university back in 2010.

“It was easy back then to manage my money as I was still not attached,” said Adam, who is 29. “Now I am close to 30 and am ruined.”

Earning just above RM2,500, Adam started to feel the pinch when he got married. Now, he has to provide for his wife and his three kids at home in Bukit Jalil.

Adam has to make sure his salary is divided monthly for the various expenses and other purposes.

He said he first gives his wife some money to cover household expenses and other necessities, then sends funds to his parents back in his hometown, Besut, and finally pays the house rent and car loan instalment for his multipurpose vehicle (MPV).

His cash flow is even worse when the festivities come as he struggles to make his house look nice.

“I do not want to be seen as inadequate to provide for my family,” Adam said.

“The sad part is when Ramadan comes, I always find myself up to my nose in expenses. It is hard to even get past half the month.”

He knows he needs to get his finances sorted but just cannot find a way to satisfy everyone’s needs in his family.

“For instance, last Ramadan, I only had RM200 left in my bank account and it was just the beginning of the month.

“I maxed out my credit card come Raya.”

Through careful planning, Adam is slowly sorting out his finances.

According to statistics from Bank Negara Malaysia (BNM), 1,022 credit credit holders were declared bankrupt for failing to settle credit card debts from January to June last year.

Credit cards affect spending

Kevin Neoh, a financial planner for VKA Wealth Planner Sdn Bhd, said even if credit cards did not bring a person to the brink of bankruptcy, it will still have a dire effect on his or her financial health.

“When we fail to service our credit cards regularly, we will get into trouble with our credit score. This will impact on our ability to borrow in the future,” Neoh told FMT.

Malaysian borrowers can get a copy of their credit score report from the Central Credit Reference Information System (CCRIS) of BNM or credit reporting companies like Credit Tip-Off Sdn Bhd (CTOS) and RAM Credit Information.

Neoh said it was important for consumers to be prudent, especially during festive seasons such as Ramadan.

“You can review your spending during the last festivities and from there, estimate and anticipate how much you will spend for this year.”

A boat with holes

Robert Foo, who manages MyFP Services Sdn Bhd, a financial planning company in Puchong, uses the analogy of a boat with holes when talking about personal finances.

“It is whether you want to drill more holes, or cover up some of the holes, or all of them before the boat sinks.

“You are the one in control of your own finances,” he said.

“If you keep spending on things you want rather than based on your needs, you will never break away from your debts.”

Foo said planning finances for the festivities is like going to war.

“You need cash flow planning to estimate how much you can spend by working out your monthly salary and your monthly expenses in advance.”

However, the problem is that most Malaysians tend to react to situations with a “go with the flow” attitude and the need to impress others with their success.

“When you keep spending RM300 for buka puasa (breaking of fast) gatherings with your friends every week, it will leave a hole in your pocket.

“Better to come clean with your friends on your financial situation or else leave them,” Foo said.

“You have to determine whether they are just your friends for happy times or good ones who will take care of your back during times of need.”

Meanwhile, the credit counselling and debt management agency, better known as AKPK, which is under BNM, has a different perspective on managing finances during this Ramadan.

Nirmala Supramaniam, a manager at AKPK’s financial education department, said it was never too late to start planning your personal finances now before the Hari Raya Aidilfitri festival is upon us.

“AKPK has observed that during festive periods, 30% of Malaysians’ total expenses will go for new clothes.

“So, our advice is take limited cash when going out shopping,” Nirmala said.

Old outfits that have never been worn can be given a new look with some adjustments too, she added.

“You don’t have to constantly buy new outfits for every festive season.”

AKPK advises everyone celebrating Hari Raya to stick to “potluck” for buka puasa gatherings.

“It will save you so much more. These gatherings do not need to be lavish. Spending moderately will go a long way to family prosperity,” Nirmala said.

She believes it is a trend among Malaysians to hold buka puasa functions even when they know it will affect their finances and they can possibly run into debt.

“Most of us are shy when it comes to telling people about our tight finances, but you simply have to let people know.

“Setting a budget for every buka puasa is a good way to keep your money in check.”

With the numerous Ramadan bazaars around, the tendency to spend on food also becomes a potential major expense, especially for those who are married with children.

“While it is fine for a person who is single to eat out occasionally, it is not the same for families.

“A family of five can easily spend around RM70 for buka puasa, with just simple dishes of rice with fish and chicken. Having that same meal at home will cut down your expenses by half,” Nirmala said.

As Hari Raya approaches, Malaysians are also encouraged to set aside some money for contingency purposes.

“It is good to have this extra cash. You never know when you’ll need it.”

She advises people to put aside the advance salary or bonus they receive for Hari Raya “because you still have to pay your monthly commitments”.

Fasting is not meant to cause excessive hardship for Muslims but rather to encourage moderate living and spending.

Adhering to a monthly budget is an effective way to manage expenses and avoid unnecessary overspending.