The easing of the pandemic means that people have been going out and spending more. However, this also means that Malaysians may be feeling the pinch of the weakening ringgit, high interest rates and rising inflation more and more.
Licensed financial adviser, Dr Adam Zubir recently shared a few pieces of advice for Malaysians on how to get through tough economic times.
He states that now is not the right time to make ‘want’ and ‘new’ debt, which refers to loans for car upgrades, houses and so on. Instead, it is more sensible to start rebuilding an emergency fund.
Consequently, he advises Malaysians to put these debts on hold till past next year as the global economic situation is expected to face turmoil.
Avoiding debt
“My advice in managing finances is to first identify financial problems. Many do not take any initiative because they do not know that they have financial problems,” Adam told Berita Harian.
“They think it’s normal to have a credit card debt of RM10,000, RM20,000. Actually, that’s unusual. They don’t know that they’ve spent above their means,” he said.
According to Adam, many young people go bankrupt because of car debt. “They’ve bought a car that is beyond their financial means due to the influence from friends and wanting to achieve a certain lifestyle.”
“It is better to buy a cheap car first and if you want to upgrade, it can be done when you’re more financially stable,” he advised.
Building an emergency fund
Besides avoiding debt, Adam said that “Now is the time to rebuild savings“.
“My advice is to save enough for 6 months as an emergency savings fund, especially now that the world is (expected) going through an economic crisis.”
Adam said an emergency savings for a period of six months is sufficient in an environment of high interest rates and inflation.
He also added that many people in this country still do not have savings of at least RM1,000, therefore having six months of emergency savings is considered extraordinary and sufficient.
So if you are thinking of making any big purchases, maybe it would be wise to reconsider!
Also read: M’sians Believe That a Major Recession Will Happen in 2023 Since Companies Are Laying Off Staff
