Struggling with finances? Here are some timely tips to help stretch your ringgit

Many young people are aware of the need for good financial planning, but are often unsure over where to start.

By KALPANA MAHENDRAN

19 Feb 2025 02:00pm

Prioritise saving 10 percent of your pay every month. Photo: Canva

DESPITE the many stereotypes about their lack of financial knowledge, members of Gen Z are more concerned about money than their predecessors were at the same age.

Etiqa found Malaysian and Singaporean youths are 40 per cent more likely to express stress over money, while "64 per cent [of Gen Z] in Malaysia highlighted that insufficient emergency funds and difficulties in saving money were amongst their top three concerns..."

Many of them take their financial education seriously; turning to 'fin-fluencers' for guidance on financial literacy, workplace happiness and money management.

As a result, around 45 per cent of Malaysian youth express confidence in handling their personal finances. Of that number, a total of 65 per cent are involved in some manner of investement.

In the midst of rising costs of living and inflation, here are some financial tips that may help you streamline your money management.

HOW TO START INVESTING

Many express concern over beginning to invest at all due to the associated risks. Considering your risk profile is a crucial step in the process, according to economist I Wayan Nuka Lantara, a business faculty member of Indonesia's Universitas Gadjah Mada.

To mitigate risk, he recommends beginning with mutual funds because, "you can start investing with minimal capital. If you want to upgrade, you can learn about capital market instruments like stocks or bonds."

A mutual fund, unlike buying individual stocks, involves pooling money with other investors to buy assets together. A money manager then chooses and monitors investments on the investors’ behalf.

The manager also takes a commission from the resultant earnings, but investors will benefit from their expertise.

Furthermore, an investor can start with a small investment, and their portfolio will likely be more diverse than what can be achieved alone.

WATCH YOUR SPENDING

Modern capitalism bombards us with messages to consume. This comes not just in the form of advertisments, but through social media; it is difficult to scroll without seeing a shopping haul, expensive beauty routine, or luxury vacation.

This is designed to instill a viewer with intense FOMO (fear of missing out), which can influence an otherwise savvy person into buying something they don't really want or need.

Here are some immediate steps you can take to mitigate this:

Make it hard to impulse-buy. Deactivate one-click buying when shopping online. Instead, enforce a 'holding' period; put items in your cart, but wait at least 24 hours before checking out to make sure you really want it.
Be open about your budget when going out with friends. They will likely understand that you cannot spend too much.
Use cash when you can, as it makes spending feel more real.
Limit time on social media and learn to identify channels that make it a habit to 'flex' wealth on their viewers.

MODIFY YOUR HABITS

Our spending habits can sometimes be illogical without us realising. Understand when your spending habits are based on emotions and not your financial well-being. For example:

The sunk cost fallacy: we sometimes feel that we should not give up on a bad investment, faulty appliance, or poor business venture just because we've already invested so much into it. Learn to cut your losses when you need to.
Focusing only on monetary savings, instead of overall savings: it is not worth going to four different shops just to save a few ringgit on groceries. What you save in money is lost in time, petrol and effort.
People often treat some financial resources as being 'less valuable' than others. You might carefully save money from your paycheck, but spend your income tax returns or 'duit raya' on shopping because it feels like extra cash.

In fact, that money all has the same utility and should be treated uniformly regardless of the source.

SAVE FIRST, SPEND LATER

Many save whatever is left over from their salary at the end of the month. Try doing the opposite instead; prioritise saving 10 percent (or whatever is possible) of your pay first, and then use the rest on living expenses.

Consider automating this process as well to ensure you stick to it (for instance, you could automatically send a set amount of money to a separate savings account at the start of every month). This should ensure a steady increase in your savings over time.

MAKE A PERSONAL FINANCE PLAN

Your budget has to be tailor-made to you. You will need to decide what you want to spend on. That may include bills, hobbies, and even a guilty pleasure budget; the point is not to spend on the 'correct' items, but rather simply to be mindful of where your money is going.

Once you have a set budget, you can plan around that and ensure you don't go overboard with unplanned spending, whether on necessities or for fun.

You can also use this plan to decide what you want to save for. Maybe you intend to buy a house, start a family, or begin a new business. With clear goals in mind you should be able to track where your money is coming from, where it’s going now, and where it will go in future.

Curious about your own approach towards spending? Take our quiz to figure out your financial personality and learn to plan for the future. Click here to find out!