How Much Is Your Saving?

It was reported that more than 30 to 40 per cent of Malaysians do not have enough money in savings to cover the cost of unplanned expenses.

Federation of Malaysian Consumer Associations (FOMCA) Deputy President Mohd Yusof Abdul Rahman said a recent study has found that most Malaysians are not financially ready to cover short-term expenses in the event of losing their jobs.

It's not new that Malaysians are terrible savers, saying that it is not surprise that some Malaysian families have no savings at all. Some even have less than RM1,000 in their checking and savings accounts combined.

Dato’ Paul, however, said that’s certainly not sole reason why Malaysians do not save enough, blaming Malaysians for their low financial literacy which makes them to spend unwisely and impulsive buying is a common behavior today.

Paul asserted that Malaysians need to learn about budgeting and saving to manage expenses and debt. Indeed, financial literacy is an essential living skill for all of us to build financial security and achieve financial well-being.

“Individuals with low financial literacy are less likely to take calculated risks and invest their money in stocks. Many have also fallen prey to financial scams and lost their life savings,” he reiterated.

According to the Malaysia Department of Insolvency, 41 Malaysians are declared bankrupt every day, with the majority of them being under the age of 44. The main reasons cited are inability to pay off car loans, poor control of credit card usage and a failure to pay off personal loans.

We all should keep things simple as it works best and knowing how to save money every month, and ways to save that money for the future.

For example, you can divide your savings into three different accounts namely, emergency savings account, savings account for major purchases as well as a retirement savings account. Alternatively, you can get started by simply putting your money into one savings account, and then grow your savings from there.

You can put money aside on a regular basis for a down payment for a house, a car, or for your retirement. To get started, all of this money can go into one account, and it can double as your emergency fund as long as you don’t have ‘emergencies’ on a regular basis.

Saving money is crucially important regardless of your financial background. Saving is worth the effort as it gives you peace of mind, and the more you save, the easier it becomes to accumulate additional savings.

Earlier, it was reported that one in three Malaysians does not have a savings account, and most have not saved enough to last them more than five years after leaving the working world, according to the Employees Provident Fund (EPF).

“Ninety percent of rural households have zero savings, while in urban households, 86% do not have savings. Malaysians need to be empowered and take charge of their own financial decisions according to their life stages,” said EPF deputy chief executive officer (operations) Datuk Mohd Naim Daruwish.

Mohd Naim highlighted that as of last year, 68% of EPF members aged 54 had savings of less than RM50,000. The report also stated that only 18% of EPF members achieved the basic savings quantum according to age, a far cry from EPF’s plan to get at least half of its members to meet the minimum basic savings according to age in the next five years.

With median monthly wages in Malaysia currently at RM1,600, according to the Statistics Department, that doesn’t always add up to much.

Worse, the cost of maintaining a household is rising at a faster rate than wages. According to the Malaysian Economic Planning Unit (EPU), the mean household income in Malaysia grew from RM4,025 in 2009 to RM6,141 in 2014; reflecting a compound annual growth rate of 8.8 per cent.

Meanwhile, the mean monthly household consumption expenditure increased from RM2,190 in 2009 to RM3,578 in 2014, which was a 10.32 per cent compound annual growth rate.

Reference:
http://malaysiandigest.com/frontpage/282-main-tile/652549-almost-half-of-malaysians-have-zero-savings-are-you-one-of-them.html
http://www.thestar.com.my/news/nation/2016/05/04/malaysians-not-saving-enough-for-retirement/
https://www.imoney.my/articles/9-in-10-malaysians-have-zero-savings-says-epf