KUALA LUMPUR – Saving money consistently is not an easy thing, especially with a salary that does not match the cost of monthly expenses.
High monthly commitments such as paying various monthly bills, family expenses, insurance, and bank loan repayment have left many people with no money to save.
The fact is, that no matter how high or low one’s income is, planning expenses is crucial to ensure financial stability, especially when faced with the unexpected.
Malaysia Deposit Insurance Corporation (PIDM) executive vice-president Wan Ahmad Ikram Wan Ahmad Lotfi said every working individual is advised to have an emergency fund to ensure preparedness in the face of unexpected situations, such as medical expenses or loss of income.
“When there is an emergency fund, survival is not affected so suddenly that you have to borrow money from friends,” he said in a statement recently.
He said mistakes commonly made in financial spending include impulse buying and following the FOMO (fear of missing out) trend on social media, as well as unplanned buying habits, especially using the ‘buy first, pay later’ service on a credit card, which leads to such a high debt burden that some are ended up blacklisted and declared bankrupt.
“The distribution of income and expenditure should be based on the 10-10-10-70 formula suggested by PIDM management icon, Chief BerUang, i.e. 10 per cent for savings, 10 per cent for emergencies, 10 per cent for insurance and 70 per cent for expenditure,” he said.
Wan Ahmad Ikram said every individual should also be aware of their current personal financial status to avoid out-of-control expenses, build resilience and reduce the potential financial impact during unexpected times.
“To help individuals initiate prudent financial management, PIDM provides an SPK Calculator that will provide a summary of monthly income and commitments, as well as excess cash to start saving in the targeted time,” he said.
The SPK Calculator is an interactive platform that balances individual income and expenses and calculates the amount needed for emergency savings.
Interestingly, the SPK calculator will provide proper savings for emergency purposes as well as provide tips to make it easier for individuals to make modifications to monthly expenses and commitments.
“This calculator helps individuals make adjustments to monthly commitments to achieve savings levels for emergency purposes within a self-determined period and this calculation is automatic,” he said.
There is also a personal pledge that can be downloaded as wallpaper to motivate individuals to continue saving and control their spending so that they can reach their savings goal.
He said individuals who want to build up an emergency fund can assess their finances for times of need using the SPK Calculator for free and without registration at www.pidm.gov.my/SPK.
“We want to help Malaysians build financial resilience and improve their financial situation without having to wait for events to impact their lives,” he said. – Bernama
