Is It A Need Or A Want? M'sian Financial Planners Share Their #1 Tip For Saving More Cash

Discover the art of identifying your must-haves from the 'maybe-later' nice-to-haves!

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If you find yourself strapped for cash at the end of every month, it may be time to look at your spending habits

While we may have plenty of unavoidable commitments such as rent, bills, and loans, there are certain areas in our lives that can probably be trimmed down.

Do you find yourself regretting your purchases after a splurge? Perhaps you have a small pile of unused, unopened items stashed away in your home?

We spoke to four financial planners who shared their number one tip to saving more money. Here's what they said:

1. "Prioritise spending on needs as it directly impacts your health, safety, and overall wellbeing"

"Spending on wants should only come after you have fulfilled your needs; it is optional."

- Kuah Soo Yee, Senior Associate at IPP Financial Planning Group Malaysia

According to Kuah, understanding the distinction between needs and wants is vital for effective budgeting and financial management. Needs, such as food, shelter, and medical care, should take precedence over discretionary wants like the latest gadgets or fashion items.

She emphasises the importance of individual circumstances, acknowledging that the line between want and need can sometimes be blurry. Mindful spending and a three-day pause before making a purchase are recommended exercises to assess one's financial priorities.

2. "Be mindful of lifestyle inflation"

While it's acceptable to reward oneself, it's crucial to consult your budget to ensure that spending aligns with the defined ratio."

- Linnet Lee, Director at Resolute Planning Sdn Bhd

Lee highlights the risks associated with impulsive financial decisions, citing examples of individuals who followed trends without considering their risk profile. 

She emphasises the importance of financial planning, including setting aside savings before spending and adhering to budgeting methods like the 50/30/20 ratio

Lee warns against lifestyle inflation and recommends awareness and periodic budget checks to avoid falling into financial traps.

3. "Discipline, discipline, discipline"

"That’s the golden rule in achieving financial stability to unlock your ability to move up the financial ladder."

- Ian Wong, Founder of Uno Advisers

Wong stresses the need for setting achievable goals and disciplined cash flow management in financial planning. He advocates for evaluating purchases through a waiting period to distinguish between needs and wants. 

Wong underscores the importance of financial stability and ethical money practices, stating that learning from others' mistakes is less painful than experiencing the consequences personally.

4. "You need to have your 'numbers' sorted"

"For instance, to achieve a RM10,000 salary during retirement, you need to save or invest RM3,300 per month. This assumes a 5% inflation-adjusted return over 30 years."

- Ikhwan Hafiz, Managing Partner at Ikhwan Consulting Group

Ikhwan introduces the Maqasid Shariah framework, aligning needs and wants with essential, complementary, and embellishment categories. Essential needs, like food and shelter, take precedence, followed by complementary elements such as education. This framework provides a structured way to integrate Islamic principles into personal finance decisions.

He identifies impulsive spending pitfalls such as budgetary issues, debt accumulation, and missed financial goals. Hafiz emphasises the significance of financial literacy and having a well-defined budget to avoid common financial mistakes.

Saving money doesn't have to be complicated or difficult

The key takeaways are:

  • Prioritise basic necessities such as food, shelter, health, and safety
  • Be mindful of price increases and adjust your spending ratio accordingly
  • Practise mindful spending by giving yourself three days before deciding on a significant purchase
  • Understand your expenses by compartmentalising them into three categories: essential, complementary, and embellishment

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