13/04/2025

ON SUNDAY APRIL 13, 2025 II theSunday Special

T HE TikTok trend “Money will come back, but memories won’t” has become a cautionary tale for many, particularly Malaysian youths. While it’s tempting to live in the moment and indulge in the latest trends, this mentality has led many to overspend and ignore the importance of long-term ¿QDQFLDO SODQQLQJ With the introduction of Account 3 for KWSP (EPF) in 2024, the savings culture has shifted for members under the age of 55. Previously, funds were split into Account 1 and Account 2 with a 70:30 ratio. Now, Account 3 allows withdrawals at any time, which has led to a worrying trend of young people accessing their savings without thinking about the future. The Malaysia Financial Planning Council (MFPC) survey revealed that many millennials lack proper money management skills. Alarmingly, those with lower incomes spend 21% to 27% of their earnings on entertainment, which leaves them with little to save. As a result, saving PRQH\ UHPDLQV RQH RI WKH WRS ¿QDQFLDO worries for many. Despite the government’s efforts to LPSURYH ¿QDQFLDO OLWHUDF\ PDQ\ \RXQJ Malaysians are tuning out the advice and continuing to live beyond their means. As time passes, debts accumulate, creating a F\FOH RI ¿QDQFLDO GLVWUHVV HY Tan, founder of DoitDuit on Insta gram and a full-time broker, states that personal loans and credit card debt are Malaysia’s leading causes of bankruptcy, with interest rates ranging from 7% to 18%. “Many people take on debt or credit card loans for immediate satisfaction without understanding the long-term impact,” Tan explains. So, how much should you save to secure \RXU ¿QDQFLDO IXWXUH" +HUH¶V KRZ \RX FDQ H DYLQJ FORVHO\ VWXGLHG WKH ¿QDQFLDO ODQG scape in Malaysia, Tan revealed that we should aim to save at least 20% to 30% of our monthly income. This percentage helps XV EXLOG D ¿QDQFLDO FXVKLRQ IRU HPHUJHQ cies, invest for long-term growth and work WRZDUGV RXU ¿QDQFLDO JRDOV ³+RZHYHU the percentage may vary depending on RXU ¿QDQFLDO FRPPLWPHQWV 7KH NH\ LV WR maintain a consistent saving habit.” There is also a common misconception that as long as you save roughly 20% of your salary, it’s fine to overspend the remaining amount. “The biggest mistake is saving whatever is left after spending. The right way is to save before spending, not vice versa. Saving is a habit that requires discipline.” Tan also suggests that if you lack the discipline to save, consider automating your savings. Set up monthly standing instructions with your bank to transfer a percentage of your income to another account as soon as you receive it. The rule of thumb Diving deeper into the points and consider LQJ WKH ULVLQJ FRVW RI OLYLQJ DQG LQÀDWLRQ Malaysians should ensure they save ef fectively while managing their everyday expenses. “Start practising the 50/30/20 budgeting rule,” says Tan. Allocate 50% of your income to needs (rent, food, transport), 30% to wants (entertainment, travel), and 20% to sav ings and investments. build a solid foundation. Set aside 20% monthly

How much should the average person save in Malaysia?

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BY AQILAH NAJWA JAMALUDDIN

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“Track your expenses weekly, daily and monthly to cut down on unnecessary spending, such as unused subscriptions RU OLIHVW\OH LQÀDWLRQ FRVWV ´ DGYLVHG 7DQ Experts also suggest leveraging cashback and rewards, such as using e-wallets or cashback credit cards. Ensure you pay your credit card bill on time to avoid penalties and extra charges WKDW FRXOG ¿QDQFLDOO\ KDUP \RX Prep for the future Saving money for future milestones like marriage, buying a car, or purchasing property requires clear goals, discipline and smart planning. By understanding where your money goes each month, you can identify areas where you can cut back, such as reducing dining out, limit ing impulse buys or cancelling unused subscriptions. For this, Tan advises following the rule of thumb before committing to any major SXUFKDVH RU VLJQL¿FDQW OLIH PLOHVWRQH ,Q Malaysia, the issue of purchasing cars that don’t align with one’s income has been widely discussed.

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