‘Create monthly budget to manage expenses’

PETALING JAYA: Young people, who complain about the ever-increasing cost of living in the Klang Valley, should relook their personal choices and lifestyles, especially if they do not have parents or siblings to draw additional funds from.

Financial adviser Annie Wong said a majority of individuals who are not living with their parents spend a large part of their salaries on accommodation and transport, especially if they own a car.

“Following that, essential items such as groceries and utility bills would have to be considered. In such a situation, it would be a smarter choice to share rent with others.”

Wong said as insignificant as it may seem, creating a monthly budget would help organise an individual’s daily or monthly expenses.

“The formula for savings should be ‘Income-Savings=Expenses’ rather than ‘Income-Expenses=Savings’.

“The first approach aligns with the idea that savings should come first, and expenses be managed accordingly.

“I would also suggest that increasing one’s earning capacity can make saving easier. For instance, if you earn RM2,000 per month, your maximum savings would be limited to RM2,000.

“However, if you focus on increasing your income, there is no limit to how much you can save. You could earn RM5,000, RM10,000, or even RM20,000 per month.

“Therefore, it is crucial to prioritise increasing income rather than solely focusing on savings, as income potential is limitless whereas savings have limitations,” she said.

Lack of self-discipline is one of the many reasons why individuals struggle financially.

“One can be financially sufficient despite all the expenses one has to handle. But when individuals put more importance on wants rather than needs, they will find themselves struggling at the end of the month.

“Another mindset that affects spending habits is the ‘Yolo’ (You Only Live Once) mentality. Some people resort to taking loans or using credit cards to finance expensive vacations or experiences, essentially spending money they have yet to earn.

“If someone is looking forward to a vacation, it’s recommended to treat it as a short-term financial goal. By setting aside 30% of their income every month, they can enjoy an overseas trip by the end of the year without compromising their overall financial stability and goals,” she said.

Customer service representative Naina Ravichandran, 29, said just getting by weekly was a challenge for her.

“I had to drop out of university due to personal reasons and started working as a customer service representative when I was 21. With only a high school certificate, that was the best I could find.

“My basic salary was RM1,500 monthly before EPF and Socso deductions. Back then, there weren’t any travel passes, so I spent about RM150 monthly on transport.

“The rent for my room was RM300, and after paying for the utility bills and my other necessities, I would have very little to spare. I also gave money to my parents and siblings whenever I could. With all these expenses, I wasn’t able to save much until after a year of working,” she said.

A data analyst, who wants to be known as Suba, 25, said the bulk of her expenses went towards transport.

“I live with my sister and her husband, so there isn’t much that I need to spend on. Rent, food expenses and utility bills are all covered by my sister. Since I drive a car to and from work, I only have to spend on petrol and toll. I earn about RM3,000 a month and I can save most of it,” she said.

Some people resort to taking loans or using credit cards to finance expensive vacations or experiences, essentially spending money they have yet to earn. – SUNPIC