7 Solid Financial Tips To Help You Save And Grow More Money In 2021

After the Movement Control Order (MCO) was enforced in March, Malaysia's unemployment rate saw a sharp increase as businesses across industries struggled.

According to the Department of Statistics Malaysia (DOSM), the unemployment rate was 4.7% in October, the highest it has been in decades. Approximately 748,200 Malaysians are currently unemployed.

Additionally, while others may have kept their jobs, they may have been asked to take forced unpaid leave or accept pay cuts.

Even if your job remained secure, in light of the year we just went through, it's safe to say you just never know what may happen.

There are lots of different ways to create a budget. The most common budget breakdown is 50/30/20. This is how it works:

- 50% of your income goes towards needs, such as housing, transportation, food, and other essentials.
- 30% of your income goes towards wants, including vacations, travelling, massages and spa days, clothes shopping and so forth.
- 20% of your income goes towards your savings and debt repayment. 

To start building your budget, write down all your needs, wants, debts, and savings. Remember everyone's budget will be different, and things can change from month to month depending on different variables in your life.

The important thing is to ensure you pay for your needs, savings, and debt, before spending on your wants.

A great way to save more money is to track your expenses. When you see all your spending laid out in front of you, you're sure to see unnecessary expenses that can easily be cut out. Remember that even shaving off RM50 a month will lead to RM600 in savings at the end of the year!

Some items that you can consider cutting out of your budget for extra savings include:
- Eating out or ordering food delivery (instead learn simple recipes or meal prep for the week)
- Buying things on sale just because they're on sale (often you don't actually need these things, right?)
- Shopping for new clothes and accessories (you can always join a clothes swap or try thrift shopping)
- Drinking coffee from expensive cafes (a treat once in a while is fine, but you can invest in a coffee machine at home and save so much more)

There are plenty of free and paid apps that can track your expenses, including Zenmoney and Money Lover. Even many banking apps now offer the service for free. Make use of it!

While there are some fixed costs that offer no leeway, such as student loans, there are other costs that can be minimised.

For example, your rent. If you're able to work remotely but are still paying high rent to be closer to the city, you may want to consider relocating further to the outskirts where rent is cheaper.

Other fixed costs that can be relooked include:
- Transportation: you may want to consider public transport or carpooling.
- Utilities: lower your electricity and water bills by being more energy-conscious.
- Memberships and subscription services: from monthly gym memberships to online streaming subscriptions, look into what you really use, what you can go without, and cheaper alternatives that are just as good.

You don't need to have a lot of cash in order to start investing. A great way to get started is with unit trusts or fixed deposits.

A unit trust pools money from investors into a single fund. This pool of money is managed by a fund manager, who will help you invest your money in a variety of investments.

Meanwhile, a fixed deposit helps you earn higher interest rates compared to regular savings accounts. Depositors will be required to retain their deposits in the account for a pre-determined tenure in order to enjoy the returns.

You should speak to your bank for more information before making any decisions.

Other ways to invest include starting an education fund for your children, a retirement fund for yourself, or taking up an insurance plan.

If you already have a passion that you spend a lot of time doing, you can consider earning a side income from it too.

For example, getting certified as a yoga instructor and offering online classes or personal 1-on-1 sessions; teaching a musical instrument that you already specialise in; becoming a video game streamer and monetising your channel.

Other ideas to earn a side income include:
- Becoming a dropshipper or online seller for existing brands
- Freelancing as a writer, photographer, graphic designer, or any skill you already possess
- Home baking or cooking set meals
- Tutoring students online or in person
- Renting out the extra room in your home
- Working as a delivery person after office hours

If you have credit card debt, always try to pay more than the minimum payments each month, as the minimum usually only covers the interest and little to no principal.

Don't hold off on paying this debt, as the interest will continue to grow and if left unchecked, you may even end up getting blacklisted. :(

If you have one or more credit cards that are charged to the max, it may be worth consolidating your debt. A personal loan could be a good way to consolidate the charges into one monthly payment. Take note that this only makes sense if the personal loan has a lower interest rate than your credit card!

For example, if the interest rate for your credit card is 15%, you could get a personal loan with a fixed interest rate of 10% and save that 5%.

An emergency fund can help cushion you in the event of an unexpected expense, such as medical issues or job loss. Fingers crossed, you'll never have to use it, but just in case, it's important to have that safety net.

The recommended amount in an emergency fund is three to six months worth of expenses. Be sure to set up a separate savings account for this fund (so that you don't accidentally spend it), and set up a direct debit so the money gets saved there every month automatically.

That doesn't mean that you can't splurge or spoil yourself once in a while. Instead, save up for that special treat. It will mean so much more!

If you're fortunate enough to get a promotion, raise, or higher paying job, don't simply increase your monthly spending. Take it as an opportunity to save more for a solid financial future. 

Make the most of coupons, purchase pre-loved instead of new, keep money in a savings account and emergency fund, and start a side hustle.

A simple lifestyle doesn't mean it has to be boring. 

Check out what Malaysians have to say about their financial situations in 2020, and how they hope to improve it in the coming year: