2 over 3 of Malaysians does not have any savings (not even RM1000!)

For Bahasa Malaysia version, click here.

Did you know that according to Bank Negara Malaysia, over 75% of Malaysian does not have any savings in their account? Not even RM1000. 

That means, out of 31 million population in Malaysia, 23.2 million are at risk of not having any savings in case of emergency. According to a financial consultant, you need to have at least 3-month salary of savings in your account. At least a month saving, minimum.

Imagine if there are any unavoidable tragedy happened like losing a job or accident of a family member, or worse - death.

Let’s say a standard family of 5 with only the dad working while the mother is a full-time housewife. What would happen to the family if the father is destined to die in an accident? Can anyone help the single mother with 5 children? Who is going to buy them groceries? Who will pay for the children’s school fees and tuition? What about the house and car? Water and electricity bill? Who will pay the monthly rent?

That is why financial management is very important for everyone. None excluded. Even me.

How to manage your finance?
Here are 4 general steps for your Personal Financial Guideline(PFG).

1)      PROTECTION – The maximum value for protection is 10%. Protection is used to ensure that you and your whole family is covered if anything happened (based on agreement).

Types of protection are insurance and takaful insurance. For the Muslims, it is best to take Takaful insurance. I will be explaining the differences between those two here..

2)      SAVINGS – Minimum amount for savings are at least 20%. The more the better. Some people thought that if you want to save, you need to save in a bank. However, there are many other ways to save.

The saving methods include ASB, Tabung Haji, Unit Trust, PRS, Stock market, Bitcoin, Gold and silver.

3)      COMMITMENT – The maximum amount for a commitment in a family are 60% of their salary. This includes the rent, bills, gas and toll, foods, school fees, maintenance, etc.

4)      SELF-HELP – Only 10% of the household salary can be used for entertainment or a little bit extra for shopping new things. Who know if there's a sale in Shopee or Lazada. 

Therefore, here’s a recap:

-          10% maximum = Protection

-          20% minimum = Savings

-          60% maximum = Commitment

-          10% maximum = Self-help

Please be reminded that these financial management tips are for total household income. If only one of the couples are working, then these steps are for him to follow. But if both of them are working, then they should combine their salary to get the total amount for the PFG.

If you have any inquiries about this topic, feel free to smash the comment section. Or WhatsApp me at 011-14888533 (Sabo chan). You will be entertained. 

Salam Ramadhan and have a splendid day ahead.