Chuah: Check where your monthly income has gone. Find the ‘holes’ in your pocket and see if you can ‘sew’ them up and to stop the leakages
WITH the rising cost of living, many are tightening their belts and trying to save more.
But for a lot of people, that’s easier said than done.
Can you still save when money is tight? Or, worse, when you’re practically broke?
If this is something that’s happening a lot, a good place to start is to draw up your income-expense statement, said Success Concepts chief executive officer Joyce Chuah.
“Check where your monthly income has gone. Find the ‘holes’ in your pocket and see if you can ‘sew’ them up and to stop the leakages,” she told StarBiz.
“Some examples may be overspending on a shopping app or overindulgence in expensive dining; drinking excessively or smoking too much; or even spending heavily on unnecessary entertainment,” Chuah added.
She also said medical bills, which could have been insured (assuming that you are still able to qualify for insurance), can also break the bank.
“Once those unnecessary expenses are identified, decide to stop these leakages.
“Instead, use that money to set up a regular savings plan into whichever instrument you are comfortable with, be it fixed deposits, unit trusts or private retirement schemes, for instance,” said Chuah.
Excellentte Consultancy Sdn Bhd financial advisor Jeremy Tan
Excellentte Consultancy Sdn Bhd’s Jeremy Tan said a person should prioritise their fixed expenses, such as housing loan payments, rents, utilities and food.
“If you are tight with cash, purchases should be on a need-only basis, rather than on non-essential expenses.
“Limit eating out and spending excessively on social activities and impulsive purchases.”
Tan added that one should also try to avoid using a credit card and instead, try to make purchases in cash.
“It is definitely a challenge, but nothing is impossible with a change of mindset and discipline.”
Whitman Independent Advisors founder and managing director Yap Ming Hui concurred that discipline was crucial.
“Review your relationship with your money.
“If you’re tired of being broke, then take some serious action immediately.
“If you’re serious, speak to a licensed financial planner that can not only help you review your budget, but also the whole game plan (until you retire).
“When it comes to financial planning, one should always look at the big picture, said Yap. “It’s important to have financial goals. Hopefully, that will make you more disciplined.”
Yap Ming Hui
Yap added that it was a misconception that only low-income individuals constantly go broke.
“You’d be surprised. A lot of times, those that go broke are actually people with a lot of money.
“I know people that earn up to five figures a month and still go broke,” he enthused.
Tan also believes that one should seek professional advice, if all else fails.
“In the meantime, one could reach out to close family members and friends.
“Failing which, you could also seek help via a charity organisation in terms of food and shelter.”
Chuah said a person should also try to identify if there were other “external negative influencers” that could cause them to become tight with cash or go broke.
“You may have friends, peers or social media that may be affecting your need to keep up with the current trends and waste money on an unaffordable lifestyle, such as buying the latest tech gadgets or frequent entertainment.
“If so, decide to eliminate these ‘bad influencers’ and disassociate them from affecting your personal finances. Choose your social network wisely as they cannot bail you out when you are flat broke.”
Additionally, Chuah said one could consider taking on a second job, if the sole income they are earning is not enough to sustain them on a monthly basis.
“Are you earning too little? If yes, think about a second income, enhance your skill sets, or change your career as you may be in an unrewarding job or industry.
“If expenses are weighing you down more than your income, break down your expenses into discretionary and non-discretionary expenses.”
Even for essential expenses such as utilities, Chuah explained that one should be conscious of his or her money-wasting habits.
“For example, are you tracking your electricity bills?
“Do you keep the lights or air-conditioning on for long periods of time?
“You could be wasting money because the electrical items in your house are not well maintained and have become more energy-consuming,” she said.
