[TEST] 6 Common Financial Mistakes That Too Many M’sian Millennials Make When Trying To Save Up

How many of you included “save more money” in your 2023 resolutions? ?‍♀️?‍♂️

If you did, then good for you! Being financially adept is a skill that all Malaysian millennials should strive for but we also understand that it’s always easier said than done. If you’re curious to know how to enhance your saving skills, just read on to find out the most common mistakes that Malaysians have made when saving up so that you’d know what to avoid!

1. Not setting a monthly budget for your spending

This is one of the most common pieces of advice you’d hear when it comes to saving money but there is a reason why it is so important to set a budget and to stick to it! A very basic (but still great!) budgeting rule that you can follow is the 50-30-20 rule where you divide your monthly salary according to:

• 50% needs & necessities
• 30% wants
• 20% savings & debt

If you don’t have a proper budget, there’s a higher chance you’d overspend on unnecessary stuff and as a result, you might not have enough funds for other necessities throughout the month (ie: food, gas, rent, etc). When this happens, you’ll end up draining your entire month’s wages which is why it might feel a bit hard for you to save up.

2. Taking out personal loans for non-essential things

Another very common mistake that Malaysians would make when it comes to saving money is having bad debt management skills. While we agree that loans or credit cards are not inherently evil, we do want to emphasise that you should take out a loan for necessities ONLY!

For example, taking out a loan to buy a car would be considered a basic necessity. Even so, it is better to abide by this rule of thumb whereby your monthly loan repayment should not exceed 10% of your monthly take-home salary. This is to ensure that you can meet this commitment monthly and still have room for other expenses such as petrol, insurance, etc.

But if you’re planning to take out a loan just to finance a lavish wedding or luxurious vacation, then you’ll be burdening yourself with unnecessary debt which will bog you down with heavy commitments in the long run.

3. Utilising the buy-now-pay-later method a bit too often

Nowadays, there’s a rising trend in using buy-now-pay-later (BNPL) methods where it allows us to shop and pay the total at the end of the month or we can also break it down into three interest-free instalments. While this method does have its own benefits (especially when it comes to purchasing big items), it can also be extremely easy to get carried away with it and you’ll end up with too much unnecessary debt.

To avoid this, you can put a limit of dedicating only 10% of your salary for any BNPL repayments each month. This is so that you can still have some room under your “wants” budget to get other things that you might be needing that month.

4. Not having coverage for yourself and your possessions

We all know health insurance is really important, but what many people tend to overlook is that it’s also just as important to have coverage for your possessions. The great thing is, almost everything comes with a warranty or insurance nowadays which can range from:

• Cars and motorcycles
• Electronic appliances such as water filters, air-conditioners, washing machines, etc.
• Gadgets such as phones, tablets, laptops, etc.

Yes, it might seem like an added commitment to be paying extra for warranties or monthly insurance on these things but if they do break down (which they most certainly will), the cost to repair them is usually very high and your savings would take a bigger hit without any coverage.

5. Paying too much for “convenience”

When it comes to being thrifty, it does include all aspects of our lives. This is why it would help if you can practice more ‘economical’ habits by not splurging on “convenience”. For example: go and tapao your food in-store rather than ordering food online so you can save up on delivery fees. Or, avoid buying packaged minced garlic and instead, just get fresh garlic and prep it yourself at home.

Yes, the thrifty way of life may require more effort but it can help tremendously to save money which is what we want to aim for!

6. Not having a good strategy when investing

If you’re someone who’s not familiar with investments, it can be a bit tricky to navigate the market. This is why it’s crucial to have a good investment strategy in order to make the most out of your capital and earn more money.

For example, we’ve seen the stocks for certain companies booming the past few years (Eg: Netflix, Spotify, Google, etc). Anyone who was persistent in doing their research would have been quick to notice the rising trends and invest, and they would be able to earn a lot within just a couple of years.

However, this may not be easy to do for everybody. So, to avoid major mistakes, some of the steps that you can take include:

• Making sure to invest in a stock or fund that you actually like
• Joining an investment app so you can engage within a community to spot new trends
• Keeping track of what the professionals are doing as well as the latest market news and updates

And many more. It’s completely normal to be overwhelmed by all of this. This is why we’d recommend utilising investment apps like AxeHedge so you can get all the help you need from your phone!

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• Having access to global equities
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