Covid-19 has hit the global economy on an unprecedented scale. Everyone from multi-billion dollar corporations to your neighbourhood nasi lemak aunty has seen their finances take a hit. Some of us have seen our incomes reduced or have even lost our jobs.
According to a survey conducted by the Department of Statistics Malaysia, most Malaysians do not have adequate savings (more than four months) for pandemic. No one expected this, so it’s not surprising that most of us are unprepared.
We’re creatures of habit and the MCO has forced us to change our lifestyles in the most drastic manner. We can no longer step out of our homes for a cup of coffee, and we’re learning how to be better cooks at home because that’s where we are, 24 hours a day. We’ve even learned how to carry out minor home repair and maintenance works on our own.
Our financial planning must take on a more sustainable approach. Exercising discipline has become second nature to us during this time, and we can actually take this a step further to help us plan our finances.
Get financially prepared for The New Normal.
If you have no savings, but also no debt, good news - this is the perfect time to start saving!
To start saving for retirement or an emergency fund, determine how long it will take to meet your target and how much you need to save each month. Talk to your bank for options on how to start or use the simple calculations below to kick start your savings plan:
To achieve your savings target, re-evaluate your expenses. Now is not the time to spend more than what you have. Assume you have 30% less to spend, and plan your budget around that amount. You’ll be surprised at how much you can save. Here’s an example of a basic monthly budget and savings sheet:
Expenditures (excluding loans) for household with 2 dependents below 18, 2 cars under hire purchase. Net combined income – loans/debt/insurance/takaful premiums: RM3,000
Offer your services and skills online to generate some extra cash or build up a small following. Join a barter network, where you can exchange goods and services without the use of money.
Turn a hobby into a money-maker. People are using this time at home now to learn new skills - offer your talents for a small fee to make extra cash.
Declutter your home and sell or exchange the things you no longer need or have not used in the last six months. The extra cash can be saved. A little can go a long way.
Invest your savings from the government initiatives. Your bank can help you get started on a solid investment plan. No amount is too little to start with.
If you don’t already have one. We’ve learned from Covid-19 that we have to be prepared.
Continue to be cautious with your spending
There are options such as personal financing and cash advances to help you get back on your feet. You can discuss refinancing your home or taking on an overdraft. However, only consider these options if they can provide you with the opportunity and time to improve your financial situation and will not inconvenience you in the future.
This is the time to minimise and prioritise. Adopt prudent spending habits, and you can also sell items you have not used in the last six months.