In a survey conducted by the Asian Institute of Finance, only 28% of Malaysian millennials are confident in their financial literacy. According to Phang Kar Yew, Vice President of Malaysian Financial Planning Council and Executive Director of Harveston Financial Advisory Sdn Bhd and Harveston Wealth Management Sdn Bhd, millennials are tempted to spend beyond their earnings just to keep up with the Joneses. As a result, they are not channelling their hard-earned money towards more important life-goals.
“It is the best time to invest when the time is on your side,” Phang divulges. “The concept of compounding interest kicks in to multiply your seemingly minute savings into a large retirement egg nest by the time you retire.”
“Successful wealth management comes with a willingness to plan ahead and a desire to achieve financial freedom way before the conventional retirement age,” adds Phang. “Know how much is needed for retirement and what is sufficient. It is essential to establish a fixed monthly expense and draw out a monthly family cash flow and budget whilst strictly monitoring it.”
In addition, Phang advises that millennial’s improve their income by upskilling. “Investing in a professional, technical or an MBA programme is definitely a practical approach to improving the income earning potential in the long run.”
According to Phang, here’s how millennials can maximise their savings and gain financial freedom early.
Set priority
A disciplined approach towards credit control and careful budgeting is necessary. One must first determine what is, and what is not an essential expenditure. That means one must differentiate between the “wants” and the “needs” and set aside funds for the “needs” category first in the budgeting process.
Next, determine the amount for debt commitments, such as car loan instalments, credit cards and others.
Keep your credit limit low
In order to remove the temptation to overspend on a credit card, it is recommended that spending limits be reduced voluntarily and payments larger than the minimum amount be made on time.
Financial freedom
Financial advisers recommend the use of the 50/50 rule when it comes to managing salaries wisely – 50% for savings and 50% for spending. The 50% savings should be set aside first before spending comes in. These savings can be placed in savings accounts or in investments in order to grow them further.
To find out how to make your savings grow faster, click HERE
