Are there such things as financial rules? What about financial rules for Malaysians? These 3 financial rules for Malaysians (it seems) advice was trending recently.
Many were forwarding it and I do think the advice given makes perfect financial sense. Please follow #financialGory in twitter if you love more of these tips yeah.
#1 point it says is that one should not be renting a place and having to pay over 25% of one’s salary every month. I would like to add that the salary should be a net figure and not the gross number. Example, you are earning RM3,000 net per month then the MAXIMUM rental you should ever pay is RM750. If you are paying more, find a cheaper place or room (if you are still single and a nice human being).
Then #2 point tells us to only borrow money if it is to make more money. By the way, I think it is more for investing rather than for speculating or gambling yeah. As for making more money, just remember to only go into investments which we have enough knowledge about. Rushing into some investments which we have just heard for the first time? That does not qualify as investment at all. By the way, using credit card and not being able to repay it in full every month is also ‘borrowing’ money. Please do not use credit card money even if it’s to invest into stock market yeah. The risks are too high for most Malaysians.
Next is #3 point and that is to ensure how we spend our money stays the same as the time when we had less money, even after we start to earn more money. Your salary used to be RM3,000 and you could make do with RM2,000 every month, if you earn RM5,000 in the future, keeping your expenses at RM2,000 will help tremendously in wealth accumulation which is an essential ingredient for investments. Save first, invest later.
I have 4 more suggestions for financial rules for Malaysians since most Malaysians are working people.
#4 – Salary first. Work and take up more responsibilities especially to learn more skills and gain experience faster. There’s a huge difference in 5 years of working experience and every year learning different things versus doing the same job for the last 5 years. Once we are good, we could command a better pay and if our company does not appreciate us, some other company would.
#5 – Protection always needed. Remember that unforeseen circumstances especially those of accidents or medical complications will zap a lot of our savings in a short period of time. I had to spend RM25,000 for an appendicitis ops in Singapore because I was on a business trip there. Imagine what would have happened to my savings if I did not have a medical card which absorbs most of it. Insurance and medical cards, those are protection, not expenses.
#6 – Property or poverty. Now, I know, renting seems to be way cheaper than buying. Just remember that we may have to pay like crazy for 30 years and by the end of the 30 years, the actual amount paid may have more than double the property price. As for rental, I have not met any home owner who tells the tenant to stop paying rental after 30 years. Well, it means from 55 all the way to 80, your rental would have to continue… Surely it is not going to be cheaper than buying by then?
#7 – Another income stream. It could be driving a few hours every day and gaining enough to pay for the mortgage every month. It could be e-commerce, buying in bulk and selling it or even dropshipping. (google to learn). It could be weekend photographer or baker or even tour guide. There are lots of things which may interest us and could allow us to gain some extra money. These could be the seed money for more investments too.
Happy learning these financial rules for Malaysians and doing the recommendations. Cheers.
This article was contributed by Kopi and Property.