Civil servants get raise? Prioritise savings first, expert advises
Uncontrolled spending, expert argued, disrupts healthy circulation of money within the system.
SHAH ALAM - Civil servants receiving a salary increase from December 1 are urged to prioritise building a healthy financial safety net.
Financial expert Dr Azizul Azli Ahmad recommended setting aside enough for an emergency fund, covering three to six months of living expenses.
He emphasised the importance of ensuring existing debts are minimised to ensure healthier financial management.
"A salary increase means nothing if we do not have dreams to manage our finances well.
"When the salary increases, but there is no culture of saving, within less than a year, the value of that increase will seem meaningless.
"So, the first thing to do is to fill up the emergency fund, at least to cover three to six months' worth of salary," he said.
Azizul noted that good financial management involves dividing income expenditure based on needs (essentials like housing, food, utilities), wants (discretionary spending on entertainment, dining out), savings, investments, and protection according to reasonable proportions.
He said that 50 per cent of the salary should be used for needs, while 30 per cent for wants.
"At least 10 per cent of the salary should be saved, the rest for protection and investment.
"After filling up the emergency fund, it is important to ensure personal protection, especially for those who are the family's breadwinners," he said.
Azizul acknowledged that spending is crucial for the national economy. However, he stressed the importance of individual financial responsibility.
Uncontrolled spending, he argued, disrupts healthy circulation of money within the system.
"Responsible spending starts with prioritising necessities," he added.