The outlook for the Malaysian economy next year is reassuring, given the projections of a 4.8% GDP growth rate from 4.7% in 2019. As part of its “Shared Prosperity Vision 2030”, the emphasis of the government is on sustainable economic growth, revenue enhancement and prudent spending despite the tight finances.
Malaysians, regardless of generation, should adopt the same vision heading into the New Year. Never mind if you were not able to improve your financial situation or solve your financial troubles in 2019. You can restart and implement ways to achieve your financial goals in 2020.
1. Prepare a Clear Financial Goal
The success of any financial purpose begins with proper money management. Maybe the reason why you fell short this year is due to the lack of a clear financial goal. If you had a budget in place, you must not spend beyond what your budget allows.
2. Revisit your Budget
Creating a budget is an integral part of formulating a financial plan. You do not have to alter your previous budget completely. Instead, revisit it and plug in the loopholes. When you are revising the budget, make sure to list down the expense details from the basic necessities and recurring expenses to outstanding debt payables.
For instance, you may adopt the popular 50/30/20 Rule. The trick is to breakdown your monthly income into categories namely:
i) 50% – Commitments
This category is for your basic needs or necessities such as mortgage or rent, transport, insurance, healthcare, etc. Basically, things or needs that are important and you cannot live without.
ii) 30% – Expenses
Under this category, expenses are something that you want instead of need. This can be tricky whereby it might be something that you can live without. For example, dining out is a choice. You can always choose to cook at home. Other examples would include entertainment, personal care, travel, etc.
iii) 20% – Savings
At the end of the day, some part of your income should contribute to savings right? You can either choose to save in the bank or invest it. Or even build your savings by paying down debts like student loan or retirement scheme. It is always important to have an emergency fund.
Moreover, you can be more specific this time by breaking it down to daily, weekly or monthly if necessary. The purpose is to practice financial discipline by following the budget strictly throughout the year. Also, it would be easier to track your progress and make adjustments.
3. Prudent Spending
Match your income with your expenses to determine whether you will have money left at the end of the month. Otherwise, you should start cutting down on unnecessary expenses. Ideally, you should have extra cash monthly. Having excess money by year-end is the result of prudent spending.
4. Pay Off Debts
Debt is an obstacle to financial freedom. The more you incur debt, the higher are your chances of failure. Set a timetable within the year to pay off your outstanding loans.
If it is not possible, start paying down debts with higher interest rates. You can also consider consolidating your debts to have a fixed monthly amortisation. However, you should be able to obtain a debt consolidation loan from a lender that offers the most affordable interest rate.
5. Save whenever Possible
Once you gain relief from the costly interest costs of your debts, avoid obtaining new loans and minimise credit card purchases. Save money at every opportunity. Some people develop the habit of saving by starting small and gradually increasing the savings amount.
As an example, you can save RM10 in the first week, then RM15 in the next week and multiples of 5 after that. You can see that there is a compounding effect. This pattern will help you form a habit until you are ready to save more.
6. Find Other Sources of Income
Have the mindset of an entrepreneur. Instead of engaging in useless spending, look for other sources of income to supplement your regular income. Whatever amount you can add to your take-home pay is a boost to your economic well-being. Cash inflow is always better than cash outflow.
7. Think of Investing
The final step to your financial success is to start investing. There will be no significant gains if you keep hoarding cash but will not allow your money to work for you.
In Malaysia, the popular investment accounts are fixed deposits, bonds, stocks, real estate investment trust (REIT) and mutual funds.
Your financial goal should be specific, measurable, attainable, realistic and timely. However, you can only accomplish your financial objective and prosper in 2020 with determination and discipline. These are the factors that will guarantee 100% success.
This article is prepared by Direct Lending, an online personal lending platform with the mission to provide simple, safe and affordable financing to all hardworking adults. We help borrowers to find, apply and receive financing that most suit them. Our service is 100% free.
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