Have you ever asked yourself this question, “Why is my salary always not enough?”. You’re not alone! According to data from the Department of Statistics Malaysia, the average wages of Malaysians appear to be on the rise from RM2,657 in 2016 increased 8.1% to RM2,880 in 2017. And yet, discontent amongst the Malaysians is growing rapidly over the years due to exorbitantly spike in the cost of living in Malaysia.
In recent years, many of the millennials have been struggling to make ends meet, figuring out ways to save money seems to be too far-fetched. According to The Edge Markets, more than 75% of Malaysians find difficulty saving RM1,000 for emergency needs.
It is an undeniable fact that SAVING MONEY plays a vital role for an individual to meet a financial goal or to reach financial independence. Here are some of the great tips to help you save money realistically without sacrificing your social life. (Related: Simple Ways to Grow Money using Leverage)
1. Tracking Your Spending and Set A Budget
Tracking your spending is the utmost priority before you get started with a saving plan.
Many people always share the same thought. “Why do I have to go the extra mile?” “I know where exactly I spend my money”.
In reality, most people are shocked when they start tracking their spending only they realise how much they actually spend every month. The results is always way beyond they could imagine. Tracking your spending is the most effective way to identify areas where you can save money on.
Traditionally, you may need to track the numbers manually using an excel worksheet and reconcile back to your monthly statements. “Urgh, sounds so tedious!”. Worry not, with the exponential growth in technology, there is a wide array of mobile apps that can help you track your spending with ease.
You can get it started by referring to the article here shared by Shopback. It explains the features of 12 FREE popular apps like Spendee and Wally that help users track their spending. You can easily find the most suitable expense tracker for yourself.
Once you’ve identified the areas where you normally spend your money, set a budget to define your spending limits. Next, allocate a portion of the amount from your monthly income for your spending plan. The rule of thumb is to never breach the 30% threshold of your net income on personal spending other than your monthly necessities.
Ask yourself, “What are the expenses that I can trim? Entertainment? Shopping? Food?”. Learn how to prioritise your expenditure so that you do not live beyond your means. Set a realistic amount to spend and stick to your spending limits. Keep a close eye on it from time to time and review your budget at least once a year.
2. Save automatically and pay yourself
One of the easiest ways to save money effectively is – PAY YOURSELF first before anything else.
Set up an automatic transfer for your main account to transfer a portion of your paycheck automatically into your separate savings account every month. What you don’t see, you won’t use. Read also: How to Build an Emergency Fund (And Why it Matters).
You may worry that it’s kinda difficult to control your impulses or resist the temptation of rewarding yourself after going through a hectic and awful day. Ditch your ATM card on your savings account other than your main account!
The cumbersome procedures for you to withdraw money directly from the bank will let you think twice before spending more than what you have budgeted. That doesn’t mean that you should sacrifice your social life without spending. The key takeaway – stick to your own spending limits that you have set in your budget to avoid spending excessively.
Lo and behold, your savings account will grow magically with the compounding effect of the interest earned over time.
Save Automatically Through EPF
Alternatively, you can also self-contribute to your EPF account every month on top of the monthly deduction from your employer. With effective 1 July 2018, EPF has scrapped the RM50 minimum ruling for members who voluntarily contribute to their accounts with a cap at RM60,000 per annum. The dividend rates ranged from 5.7% to 6.9% for the past 8 years appear much more appealing than putting your money in fixed deposits.
There’s always a misconception about EPF contribution where many people think that once you put in the money, you can only withdraw at your retirement age. In fact, EPF allows the members to withdraw the money for different purposes. For e.g. buying your 1st or 2nd house, reduce housing loan, education, etc.
All these can be done at your fingertips if you are using internet banking like Maybank, CIMB, Public Bank, etc. You can simply make a transfer to your EPF account anytime using online banking. With just a click of a few buttons, you can save your money easily every month that comes with high returns!
Save Automatically Through PRS
Alternatively, you can also contribute to the Private Retirement Scheme (PRS) monthly to benefit from the RM3,000 annual tax incentive. It works a lot like EPF. You can refer to this article to find out how does PRS work. I’ve included a step-by-step guide to invest in PRS as well.
3. Be a Smart Shopper
There’re various reasons explaining why you shouldn’t restrict yourself from shopping. Even though you want to save money. There’s a hell lot of benefits of shopping like lifting your mood, lowering stress levels, improving mental acuity, etc. And of course the most apparent reason is, “Life is too short not to spend money shopping!”. It just ain’t sustainable for a person not to shop anything other than necessities.
The tip here is you should learn how to be a SMART SHOPPER to save money effectively.
• Prepare a Shopping List
Always stick to your shopping list. Buy only what you have originally planned before you get in the door. If you are going out for grocery shopping, there are some useful apps like Out of Milk and Bring! that can get your grocery list come in handy. You can refer here for some recommended apps to get one that best suits your needs.
Buy generic instead of buying branded stuff. More often than not, paying a premium doesn’t necessarily mean that the quality is worth the value. Spending big bucks on a set of branded limited edition attire, the chances are you won’t wear it often. Why not leave yourself with more options to mix and match. You will definitely spot the difference in savings over time.
• Discount shopping
Have you ever come across any experience when you bought something that you always dreamt of at the mall, and a few days or weeks later you saw posters promoting SALES at the same store that you went? Unconsciously the words start floating through your mind. “Let’s check it out!” The reality always makes you sink into despair when you see a huge discount on the item that you have bought.
More often than not, stuff that you want to buy will go on sale sooner or later. And the best idea is to shop during the end-of-season sales. Dress your own style to be a trendsetter rather than a trend follower! The steep discount can help you save money easily in no time.
• Compare pricing
If you shop online habitually, it’s understandable that there will be a list of your favourite online marketplaces. Be more promiscuous and do your research before shopping online! There are several platforms like iprice and pricepanda which can help you compare the prices of the same product from different e-commerce websites with just a click of few buttons.
Without spending much effort, search for promotion codes associated with the e-commerce website before you checkout. The price gap will help you save a big chunk of money easily!
4. Buy Pre-loved/Used Items
Shops that offer pre-loved items have been around for decades but are mostly underrated.
Many people think that best stuff only comes fresh off the rack. But in recent times buying pre-loved items becomes the prevailing growing social trend. Especially many people are now constantly looking for breathing room to avoid squeezing every penny out of their wallets.
There are online platforms like mudah.my and carousell.com that give you the opportunities to buy things that are priced just a fraction of the cost. Sometimes the sense of satisfaction after uncovering hidden gems at these marketplaces is just beyond words. It’s definitely another great way to save money effectively.
5. Use Public Transport
The introduction of e-hailing services like Grab and Uber, have definitely provided the public with great convenience as a mode of transportation. Not to mention the ease of use and its affordability. But public transport remains as the best choice of transportation mode in saving big bucks easily.
Other than big savings from the rising fuel cost, you need not worry about the substantial cost on regular car maintenance and repairs for wear and tear.
During the Budget 2019 announcement, RM240 million is allocated to introduce RM100 unlimited travel monthly passes for RapidKL and rail services from 1st January 2019 to encourage more people to use public transport.
For those who normally drives a private transport with more flexibility and less walking time in contrast to going through the hassle of getting on public transport, it might prove to be difficult for such a change in lifestyle.
My suggestion is not to rule out the possibility of using public transport. Depending on your destination and timing, you may be able to find the right chance to give it a try at your own convenience.
Take baby steps and slowly you may start appreciating the benefits of using public transport. Feeling relaxed listening to music or taking a nap on the public transport, playing a role in contributing to a greener living environment, etc other than your primary objective to save money.
While you are contemplating the ideas above whether or not these are really helpful to you in saving money effectively, you need to be determined and patient. Saving money is more than just an act but more importantly is the mindset that rules your money decisions.
“Start small, think big. Don’t worry about too many things at once. Take a handful of simple things to begin with, and then progress to more complex ones. Think about not just tomorrow, but the future. Put a ding in the universe.” – Steve Jobs.
Lastly, good luck with your journey of saving money.