Why you should start financial planning early

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When you start earning, it is very important that you begin a saving and investing program.

The reason is that habits die hard and once you start spending more than you earn, trying to get out of debt will take a long time.

There have been many studies conducted to gauge if Malaysians have sufficient financial knowledge or are even currently saving enough for their future, especially when they retire.

Credit Counselling and Debt Management Agency’s (AKPK) chief executive officer Azaddin Ngah Tasir says that everyone should have a plan for their retirement as soon as they enter the workforce.

He cites a recent study by Bank Negara Malaysia that states 57% of Malaysians have a good understanding on the importance of financial stability.

He believes that there is still room to educate the youth, especially on how to save while managing their monthly expenditure. There are still many Malaysians who do not have enough savings upon their retirement.

Hong Leong Bank group managing director and CEO, Domenic Fuda, says that a survey the bank conducted in collaboration with iMoney, a financial comparison aggregator, indicates that 75% of the respondents rated their financial knowledge as low or average, and 68% believe they do not have enough savings.

Fuda says that most people think financial knowledge means knowing how to save and manage borrowings, but there is more to it than that. The sooner you grasp this concept, the sooner you can cultivate financially responsible habits which will enhance your future financial freedom.

It’s super important to distinguish between understanding the importance of financial planning versus understanding the method on how to earn, save, invest and preserving all that you have.

Savings alone used to be enough a long time ago, but this is no longer enough today. It’s all about staying well ahead of inflation. Savings at best allow you to hedge against inflation, meaning, nothing gained, nothing lost.

Thus, building wealth through investing is going to be the key to financial stability for your future.

Do read lots of articles about achieving financial freedom as well as guides on how, what and where to invest your money.

Happy saving and investing.