PETALING JAYA, Sept 23 — Understanding financial jargon can be a tricky topic to navigate.
Unsurprisingly, a recent survey conducted by financial comparison site iMoney discovered that 63 per cent of Malaysians find money-related terms confusing and intimidating, preventing them from seeking early financial information.
The survey also found that 75 per cent of Malaysians surveyed said they have little to average financial knowledge, 68 per cent said they believe they don’t have enough savings in general and 41 per cent didn’t know the right channels to help them manage their money better.
Couple these figures with last year’s Credit Counselling and Debt Management Agency (AKPK) survey that found more than half of Malaysians have difficulties raising a minimum of RM1,000 for an emergency, financial literacy is a topic that requires more attention.
In a sharing session at the launch of a new financial sustainability campaign DuitSmart, Hong Leong Bank group managing director and chief executive officer Domenic Fuda, AKPA CEO Azaddin Ngah Tasir and Universiti Malaya vice-chancellor Datuk Abdul Rahim Hashim reveal simple but effective habits to help Malaysians attain better financial literacy and sustainability.
The year-long campaign in collaboration with AKPK and Universiti Malaya is intended to provide Malaysians with financial knowledge information in a straightforward, non-intimidating way.
Here are some insightful tips to help you manage your money better.
Put your savings in a separate account that’s harder to access
So you put aside money regularly but can’t seem to stay away from the funds you saved?
“Put it in another account where access isn’t so easy and regularly put savings away,” said Fuda.
What is a credit score?
Malaysians only know what a credit score is when they take a loan and therefore, more education is needed to help the public become aware, said Azaddin.
A credit score is a financial tool that measures a person’s financial health, commonly used to see if a prospective borrower is eligible for a loan.
Reward your kids when they save
Fuda, who has two children, said he would give them RM10 each for pocket money with the disclaimer that they can only spend a certain percentage and save the rest.
“It wasn’t a lot of money but at the end of the year I would double up what they saved to teach them a little trick called the power of compounding,” he said.
The lesson here isn’t the amount but the principle and discipline they would learn.
Why you should pay the bills the minute they’re due
Simply put, doing this clears debt and helps you maintain a good credit score.
Paying smaller bills like phone bills or your first credit card on time indicates to banks that one is a good paymaster.
Being able to meet the due date will help you prepare for bigger things ahead such as a housing loan or a car loan.
Start with a simple budget
Budgeting really comes down to the simple things like living within your means and understanding the commitments you have.
Fuda advises Malaysians to break one’s finances down into short term, achievable goals if looking too far into the future scares you.
How to resist consumerism
The simple question of ‘Can I afford this?’ will help you avoid getting carried away with purchasing the next trendy must-have.
“Sometimes we have to stop ourselves from spending the money which might be in your pocket right now. We are forgetting what might be around the corner tomorrow,” Fuda said.
Plan your retirement on the first day of work
When the increase in wages doesn’t commensurate with the rapidly rising cost of living, Abdul Rahim said Malaysians must look at what they can do in the long run whilst highlighting the financial precariousness of retirees or those nearing retirement.
“Every dollar that you earn as you move on is being eroded faster than what you can afford to buy.
“You don’t want to be in that situation 30 years down the road so how are you going to manage your resources with what you have at present?” he said.
Low-income Malaysians can’t afford to make financial mistakes
Those from the B40 group don’t have room or buffer to make mistakes, said Azaddin, making financial knowledge even more crucial for the economically vulnerable. He added that 70 per cent of those in AKPK’s debt management programme come from the B40s.
“The effort to teach people about credit score and financial awareness is important not only for them to reach financial wellbeing but to meet their current and future financial goals,” he said.
How you can reduce your housing loan from 30 years to 20 years
Sharing a not-so-well-known tip, Fuda said you can take 10 years off a 30-year housing loan of RM100,000 by doing this.
“Let’s say you get a bonus at the end of the year and you put in RM2,000 extra every year. From 30 years it will be down to 20 years just for the simple fact that you put in a small lump sum once a year,” he said.
