Making resolutions to improve your financial situation is always a common thing to do among many people especially at the beginning of the year. Regardless of when you begin, the basics remain the same. Here are my top ten keys to getting ahead financially.
1. Spend Less Than You Earn
It sounds simple, but many people failed with this first basic rule. No matter how much or how little you’re paid, you’ll never get ahead if you spend more than you earn. Often it’s easier to spend less than it is to earn more, and a little cost-cutting effort in a number of areas can result in big savings. It doesn’t always have to involve making big sacrifices.
One of my favorite subjects: budgeting. How can you know where your money is going if you don’t budget? How can you set spending and saving goals if you don’t know where your money is going? You need a budget whether you make thousands or hundreds of thousands of dollars a year.
3. Pay Off Your Credit Card Debt
Credit card debt is the number one obstacle to getting ahead financially. Those little pieces of plastic are so easy to use, and it’s so easy to forget that it’s real money we’re dealing with when we whip them out to pay for a purchase, large or small. Despite our good resolves to pay the balance off quickly, the reality is that we often don’t, and end up paying far more for things than we would have paid if we had used cash.
4. Contribute to a Retirement Plan
If you’re already contributing to EPF, try to increase your portfolio return by participating into EPF approved mutual funds investment. Please consider a private retirement plan if you doesn’t have one as EPF alone is not enough for our retirement need!
5. Design a disciplined savings program
The golden rule of personal financial success is: Pay yourself first! If you wait until you’ve met all your other financial obligations before seeing what’s left over for saving, chances are you’ll never have a healthy savings account or investments. Put aside minimum of 10% to 20% of your salary for savings BEFORE you start paying your bills into a monthly “Pay Yourself First” disciplined savings program.
Investment is the next thing to consider after your forced saving retirement plan. Adopt a Regular Savings Plan to utilises the ‘dollar cost averaging’ strategy that involves investing a fixed amount of money at regular intervals irrespective of market conditions.
7. Emergency Fund Account
Keep at least 3-6 months of your monthly survival income in FD account as emergency fund reserved.
You may want to set up second emergency fund account for any special investment opportunities arise. For instance, global stock market sudden crash down due to fear factor and it presented a great accumulation opportunity to investors with big cash in hand.
8. Enough Insurance Coverage
Your greatest asset in life is your own income earning ability. It’s important that you have enough insurance to protect your dependents and your income in the case of death, disability or diagnosis of critical illness.
9. Update Your Will
Most of Malaysian doesn’t have a will. If you have dependents, no matter how little or how much you own, you need a will. Protect your loved ones. Write a will.
10. Keep Good Records
If you don’t keep good records, you’re probably not claiming all your allowable income tax deductions and credits. Set up a system now and use it all year. It’s much easier than scrambling to find everything at tax time, only to miss items that might have saved you money.
VKA Wealth Planners Sdn Bhd is a licensed financial planning firm by Securities Commission and Bank Negara Malaysia. We provide a holistic financial planning advisory to assist our clients to achieve their personal financial goals in life. You may contact us at email@example.com or 012-380 9883 for further enquiry if any.
Javern CH Lim, Managing Director and Licensed Financial Planner of VKA Wealth Planners Sdn. Bhd.