Make This Merdeka Day A Day Of Financial Independence
Each national day, Malaysians would rejoice and celebrate our country’s independence from colonisation (for the 57th time this year). However, as the last firework sizzles and the last cheer of “Merdeka!” fades, each of us would go back to our lives, facing the same financial problems – be it clearing our credit card debt, or struggling to buy our first home.
After 57 years, most of us still have not achieved the independence that we hope to achieve – financial independence. However, it is not impossible.
iMoney have been continuously sharing various tips and tricks to help you achieve financial independence. Here are some lessons that will help you celebrate the next Independence Day, truly independent.
1. Earn more
Most people have the habit of living from one paycheck to the next. It is not only bad for your finances, but also makes peace of mind an elusive goal.
As most fail to draw a budget or cut back on their expenses, living beyond one’s means becomes a habit that is very tough to break. Tough but not impossible.
First, find out if you are earning enough. Compare your monthly expenses with your monthly net salary. If the calculations reflect a deficit, then be proactive about it. Either ask for a pay raise or find ways to earn additional passive income.
Having passive income is sometimes a necessity in order for us to achieve financial stability.
2. Manage your debt
The two most dreaded words for us when it comes to personal finances would most probably be debt management. These two words that sound so simple, can be hard to achieve.
Sometimes debts can just get the better of you, no matter how hard you strive to be organised and avoid defaulting or being late in your payments. It is also something, iMoney has been sharing and bringing your attention to – because it is very hard to realise your other financial goals with huge debts hanging over your shoulders.
To get your debts back on track, go back to basics. List down your debts, and choose to either clear your debts using the avalanche (highest interest rate first), snowball (lowest amount first), or snowflake (pay whatever you can) methods.
There are different ways to help you manage different debts.
For high interest debts like credit card, don’t leave the debts to snowball into a monster. Utilise a balance transfer facility before the debt overwhelms you.
If you are struggling with your mortgage, there are ways to protect your home even in times of financial trouble.
3. Have financial goals and work towards them
Everyone has financial goals – be it buying your dream car, or early retirement. However, there are some general financial goals that everyone should work towards.
If you are planning to buy your first home and need some help to save up enough cash for down payment, you need to start getting organised with this 10-step plan.
Most people don’t think about retirement while they are young and climbing up the corporate ladder. It seems too far away, and does not require immediate attention. Later on, they regret their ignorance and wish they planned for their retirement at their prime age. In order for us to save adequately for a comfortable retirement (two-third of our last income), we need to save one-third of our current income, as early as possible. The earlier we start, the less we need to put away for retirement each month and the more we can accumulate.
4. Grow your wealth
Being financially stable means having enough financial buffer to weather most financial disasters. If you are at the risk of depleting your saving when your car breaks down, you are far from being stable.
It will be tough to depend on your monthly salary to grow your funds, but there are various investments we can take advantage of to give our money a boost and also to protect it from the rising inflation.
Choose investments that can help you weather financial crisis and invest wisely, according to your investment personality.
5. Being adequately protected
Insurance is typically a “just-in-case” product. You won’t use it unless something unfortunate happens. It protects your income and your family from unnecessary financial burden in the event something happens to you.
Having insurance is important and do not let these five myths tell you otherwise. However, the question is not just about having insurance coverage, but we must ensure we have adequate coverage based on our financial needs. If you are earning RM8,000 a month, your sum insured should reflect that in order to protect you and your family from any sudden loss of income.
With Merdeka Day around the corner, every Malaysian should strive to achieve financial independence. By this time next year, hopefully, we will be able to see a more united and financially independent nation.
Selamat Hari Merdeka!