PETALING JAYA: With a higher cost of living and income lagging behind, many Malaysians have little choice but to tighten the belt.
While the thought of cutting back to save may be daunting, experts say Malaysians can still find simple ways to stretch their ringgit.
Economist Prof Dr Chung Tin Fah of HELP University said savings are always encouraged and that Malaysians should aim to put aside a portion of their monthly income.
“How much to budget from their monthly income depends on their preferences.
“At the moment, most workers are saving the mandatory 11% of their income to the Employees Provident Fund.
“If they save another 19% for a total of 30% monthly, that will be sufficient for savings,” he said when contacted yesterday.
Prof Chung said the government should also give sufficient incentives to encourage Malaysians to build up savings such as providing reasonable interest rates.
“The real rate of interest should be positive taking into consideration the nominal interest rate and inflation,” said Prof Chung.
“If interest rates are high, more people will save. If it is too low, it encourages people to spend and borrow money to spend as well, contributing to inflation and a high cost of living.
“The right balance must be struck between savings and spending lavishly,” he added.
He also said that savings could be a double-edged sword.
He said it would be bad for the economy if the savings were taken out of the system and not injected back into the economy.
One way for working Malaysians to save their disposable income is to do meal-prepping such as cooking during the weekends and packing them before being refrigerated, he added.
“We should be disciplined to adjust to such a demand on our time,” he said.
Financial planner Fiona Lee said besides saving at least 10% of our income every month, savings should be increased when extra income such as a bonus is received.
Money should also be kept in a fixed deposit account as it has a higher interest rate compared with a savings account, added Lee.
“Automatic transfers from the salary account to a savings account should be considered so that savings can be done automatically without one having to think about it,” she said.
Lee said that another way to save money is to increase income by getting a higher-paid job, taking up extra work or asking for a raise.
“It’s more important than ever to save money now.
“You can consider having an emergency fund of three to six months in case there are unforeseen events such as hospital bills or a job loss in the future.
“But keep in mind the money from the emergency funds should not be used to support everyday spending, or it will defeat the purpose.
“Constantly dipping into emergency funds is also a sign of bad spending habits,” she said.
The Consumers’ Association of Penang (CAP) said that going back to the basics such as cutting expenses like dining out less frequently and growing one’s own food could help save some money.
CAP president Mohideen Abdul Kader said the association has for years advocated that people should prepare food in their homes and eat together as a family.
“Then they can be sure they are eating something nutritious and safe,” he said.
Mohideen added that some people may have little time to prepare food after a long exhausting day at work.
He, however, said that some extra effort could be taken to overcome the problem.
“One way is to cook some dishes during the weekend, freeze them and take out and warm the required amount,” he added.
CAP education activist NV Subbarow said even preparing simple food and drinks could help save some money.
“There are hot drinks that cost RM2.80 per packet if you do a takeaway, but if you prepare it yourself, it could only cost 40 sen. It only takes a few minutes,” he said.
Subbarow also said everyone has a role to play in food security and not just the government.
He said parents should teach their children how to prepare food and drinks and how to grow their own vegetables.
He said schools should educate students about it as well.
