(This article was originally published on the 22nd July 2017 and updated on the 25th February 2020).
According to a recent survey by Hays Asia, about 46% of Malaysians are unhappy with their salary as they are expecting a much higher pay. When asked respondents who are looking for jobs, more than half of them said that salary is their first criteria.
With the rising cost of living, it comes as a challenging task for individuals to provide for both themselves and their family. So the question is, “How do you make the most out of a tiny paycheque?” Here we share a few tips on how to stretch your budget!
What Does It Mean to be a Low Income Earner?
According to the report by the Department of Statistics Malaysia, the low-income group earns a median salary of RM3,000 per month. This group is known as B40 which also makes up to 40% of Malaysian households.
Now with the average cost of living coming up to RM2,036 per month before housing when you do factor in housing costs, what you are left with (if anything at all) would not make much of a savings stash.
So how do you manage your money and financially survive in city areas where everyday expenses can be incredibly heavy? Here are seven money-smart tips to help you on your way.
1. Start with a Budget
To make the most out of the money that you do have, it is essential to track and plan for expenses as well as income. List down and tally all your monthly costs and incomes. If you are not making enough to cover the outgoings, it is time to trim down your expenses. Check out our article on Elizabeth Warren’s famous budgeting rule.
2. Cultivate a Side Income
Bringing in extra cash is becoming almost necessary just to stay afloat but the good news is that earning a second income is not as hard as it used to be. There are many options now for people to supplement their income thanks to the Internet. You can earn more with flexible jobs like being a Grab driver, engaging in online selling or making use of your creative talents.
3. Cut Out Bloated Utilities
We fully understand that it is unlikely to completely cut out your phone and Internet services. Alternatively, you can choose to downgrade your monthly subscriptions. For instance, instead of selecting the basic plan on Netflix which costs RM33, choose the cheapest option which is RM17. Or alternatively, you can stream on iFlix for free.
Make smart choices by trying to downgrade or cut out any other unessential service. This will help you to save more each month. These bills can drain your finances without actually building any long term wealth.
4. Restructure Loans
If you are struggling to meet your monthly mortgage instalment payments, do consider negotiating with your bank to extend the tenure of your loan. By drawing out the repayment, you should be able to make your monthly instalments more affordable.
However, do note that this would increase your total interest costs in the long run, but it is still a better option than defaulting on your loan. If you are having trouble managing debt, do contact the Credit Counselling and Debt Management Agency (AKPK) for assistance.
5. Eat Out Less
Though eating out is much more convenient, it is also more costly, especially when dining at certain fast food chains and restaurants. Alternatively, cooking at home can help save on food costs. More so if you are cooking for your family as this would spread the cost of ingredients and lower down meal expenses for each person.
6. Join a Carpool
When you consider the costs of petrol, toll, monthly car instalments, maintenance, road tax, and car insurance, it is no surprise that owning one will significantly eat into your salary. But rather than giving up on your car and the convenience it brings, consider cutting costs by carpooling to work. This way you can spread and share the daily transportation costs among your colleagues who live nearby and save up on your car expenses.
7. Rent Out a Room
Saving money does not just involve cutting expenses. You can also save indirectly when you bring in cash. For instance, consider reducing your home loan instalments or rental costs by renting out a room in your home. It is not difficult to find good, paying borders on sites like Airbnb or Homestay. Alternatively, you can also look for a long term tenant to lease out a room and lower your housing costs in the process.
Enjoy reading finance articles that cover topics like this? Follow us on our blog and Facebook page for more tips on personal finance and loan related topics. And if you need a little spare cash to help with expenses as you sort your finances, you might want to consider a Shariah compliant Koperasi loan. Apply with us for free – as we provide you with affordable rates and potentially quick access to your loan funds (as fast as two working days)!