“Shopaholics and poor management of personal finances - these best describe a good number of Malaysian consumers. On average, 41 are declared bankrupt every day, mostly due to credit card debts, while every weekend, about five million throng the 300-odd shopping complexes in the country.” ~ Shocking reasons why Malaysians are living beyond their means, The Star (22 September 2011)
It’s not surprising that most of us consist of the consumers mentioned in the above quote. Do we have at least a basic retirement plan being young working adults? This may seem tedious to think about but it is a must if you wish to retire comfortably.
Yes, even during the festive season, planning how you will spend your money and predicting the extra expenditure that might be incurred are important so that your money achieves its optimum usage. Ideally, our financial plan should look towards our retirement years to sustain us and our families, besides achieving our dreams and goals.
As we delightfully anticipate the upcoming festival of lights, let’s ponder how best to utilise our expenditure.
Why the need for financial planning?
With good financial planning we will be able to be in excellent control of our financial affairs. We will know not to spend excessively, manage our debts effectively and prevent ourselves from bankruptcy. We would not want to depend on others for money either.
It is a known fact that many domestic arguments stem from monetary issues. Being able to have enough money as a result of consistent and prudent financial planning will help avoid arguments and foster better personal relationships with family, friends and colleagues.
Always remember that it is extremely beneficial to live within our means. Feelings of financial contentment and happiness irregardless of social status will prevent us from worrying about our finances, receiving handouts from others, or even wanting to borrow money to make ends meet.
Having planned for your future, you will reduce or be released from financial burdens and worries. Additionally, you will also be smarter in gaining, using and protecting your financial resources throughout your lifetime for the benefit of yourself and your loved ones.
Cash vs Credit
Always keep in mind that borrowed money isn’t as great as money saved up. It is best to make purchases using cash that has been set aside.
If you decide to use your credit card, make sure you pay in full before your final payment date is due to avoid incurring additional interest charges. Imagine, in all your excitement to celebrate the festive season with a new plasma tv, you succesfully found an excellent deal with a huge discount during the festive sale. If you had paid for the TV in cash, wonderful! If you had paid by credit card to gain some reward points and then paid the full amount upon receiving your credit card statement, great!
However, if you paid by credit card and did not pay in full, or only paid the minimum payment, would the discount you received from buying the TV be really worth it if you ended up paying interest charges on your credit card? Would there be a difference in savings with regard to that TV purchase you made?
Don’t hurry into making purchases.
Necessity vs Want
What items can you buy cheaper elsewhere instead of one mall or hypermarket? It may seem convenient and quick to buy everything you possibly can find in a supermarket. However this may not necessarily be beneficial for your money’s worth. How about putting in a little effort at outdoor wet markets or specialty stores such as a cake ingredients store or shops specifically selling fruits or poultry? Wet markets particularly may be a tad uncomfortable but you may find better deals out there or even bargain with the sellers for cheaper deals especially if bulk purchases are made.
Have you planned your savoury dishes and desserts beforehand? Baking your own cakes and cookies is much cheaper than buying them off the shelves. All you need is a little time and effort. Branded food such as spices, baking ingredients and meat could be more expensive than its brandless competitors. Compare prices. Many grocery markets and shopping malls hand out free price catalogues for the benefit of consumers.
Last but not least, let’s prevent wastage. We spoke about being smart about our finances during the festive season in our last bumper issue. Do you really need that new curtain or set of cushion covers or can you reuse your previous years’ ones by decorating them differently?
Only buy and invest in what is necessary to ensure you have enough to save.
Let’s gain peace of mind knowing that we are in control of our finances. AKPK hereby hopes you spend prudently as Deepavali draws nearer while making the wisest purchasing decisions where your savings is concerned.
We end this article with sincere warm and wonderful Deepavali wishes to all Malaysians, from all of us at AKPK.