Written by Ardi
As the MCO continues on in the lives of Malaysians, it is beginning to take a toll on not just the mental state, but financially as well, and it’s time like these where money management skills come into play into what’s advisable to do, and what’s not advisable to do.\
There were a lot of questions and uncertainty going through our minds so we decided to talk to Aiman, a Strategic Change Manager for a well known bank and asked his opinion on what is the best way to use our money, how to keep our savings in place and what steps we can take to better our condition.
Ardi – Tell us about your background and the job that you do.
Aiman – I work as a Strategic Change manager for an international bank. I am part of a small team tasked with digitizing the commercial banking arm of the bank. My role involves identifying pain points within our current processes & implementing solutions to make it a simpler, better & faster experience for our customers & colleagues. It’s an exciting role as no two days are the same, but an intense one with high expectations and tight deadlines.
Ardi – Can you tell us about the current economic situation in Malaysia? What is happening and what issues are caused by the pandemic?
Aiman– It’s quite clear that our economy is negatively impacted by the outbreak. As a country, our sources of income have been restricted. Businesses & developments have been put to a halt, along with many jobs. At the same time, a large amount of our resources are being spent to address the effects of the pandemic. As a result, there is every possibility that our economy will go into a recession, which will mean loss of jobs, businesses shutting down and a bigger income gap.
Perhaps more importantly, people are suffering. Those in the lower income & under privileged groups are especially at risk, as many still lack access to adequate food, shelter & healthcare despite the government’s efforts in introducing financial aids. We should not lose sight of that.
After knowing what issues we may be facing, it was important for me to know how to properly save money and what does a realistic saving plan looks like
Credit: @sharonmccutcheon (unsplash)
Aiman – When it comes to savings, I believe in these very simple but effective rules:
- Set a goal & intention – have an idea of how much money you want to save within a short term (a year) and long term (10 years, retirement) and what this is for. Then, work out how much you need to save monthly to achieve that. While the general rule of thumb is to save 20% of what you earn (after tax), I would recommend starting off with at least 30%, and scale down if you think it is too difficult to manage.
- Track your spending. This helps you to understand your spending habits and refine them as needed. When I first started tracking, I realized I was spending almost RM200 a month just from coffee purchases, which I felt was unnecessary so I decided to cut that off and bring coffee from home. There are many free apps available to help you track with ease – personally I use Wally.
- Don’t touch your savings, unless in an emergency. It’s important to remember that your savings are not your travel fund! They should be kept separate. While I admit it is very tempting to touch your savings, I find it helpful to impose certain measures to make your savings less accessible to you. Firstly, if you can, open a specific savings account with a different bank from your main salary account. Then, create a monthly auto-transfer to that savings account. Finally, do your best to forget that you have that account!
I find iMoney and RinggitPlus to be useful sources of help with a localised context. I encourage you to do your own research on personal finance and customise based on what works for you.
It is very important to realise, this period is not about saving, rather it is about survival. Many people have lost their source of income – so if you are one of them and you are not able to save, don’t be hard on yourself. Do what you need to do to survive, and use your savings if you need them. After all, this situation definitely calls for it.
Credit: @tierramallorca (unsplash)
Some of us may have some extra money left from having the deferred loans or our past savings, I asked Aiman if investing that money would be a wise choice in our current situation.
Aiman – Firstly, I would like to emphasise that I am not a qualified money expert, as I don’t work as a personal financial consultant or wealth manager.
With that said, I personally believe investments are very unpredictable at this moment. Even those that have typically been seen as reliably performing well in the past are no longer doing so.
My advice would be, if you have money to spare, put it into investments that are secure, liquid (i.e. can be withdrawn whenever needed) and can give you potential returns that are higher than the interest rate of your loans. Liquidity is important in this current time.
If you have a larger risk appetite, check out robo advisors – put simply, they help you to automate your investments based on your risk appetite, at a lower fee than traditional methods.
On deferred bank loans – please remember it is not free money and you will have to pay it back eventually. Also, my advice is to continue paying your credit card instalments during this period if you can, as the interest rates are high.
Credit: @micheile (unsplash)
Ardi – Are there any other options apart from investment that can make the money work for us and generate income?
Aiman – Use this time off to your advantage. Here are a few things I can think of to earn income while coping with the situation:
- Sharpen your skills or pick up a new one. If you feel confident enough, sell your products online. Quite a number of my friends have done so since the RMO started.
- Do a spring cleaning & sell off items that no longer ‘spark joy’ for you. Just make sure it’s yours to sell off, and not somebody else’s!
- Produce content online. If you have something to say or do that’s worth sharing, there are plenty of channels that you can use to monetize it. Use Youtube for videos, Medium for writing, Coursera for knowledge sharing, Podcast app for talking and plenty more.
Please do not be fooled by get-rich-schemes online! Sadly, there is no ‘easy’ way to make money. At the end I asked his personal opinion and advice on what actions we can take to get through such hard times, easier.
Aiman – Every storm has a silver lining. COVID19 has introduced an opportunity for us to adapt to a new way of living, one that is more digital, conscious & purposive. In my line of work, we have had to come up with out-of-the-box solutions to help our customers. We are also accelerating our digitisation initiatives to address the physical barriers introduced by this pandemic. In my personal life, I am putting more effort in reducing waste and supporting local businesses as well as groups in need.
We are all doing our best adjusting to the new normal of isolated living. My advice would be to find a healthy way to cope that works for you. If meditation helps, great. If not, maybe art, cooking or fitness will fit you better.
Finally, be kind to yourself and others. If you are privileged, practice compassion to those in need. If you are in need, do reach out for help. Remember, we are all in this together.
It was good to understand the situation clearly and to know what steps we can take to help yourself survive and past this storm! So if you are affected by the COVID-19 in any type of way, don’t be shy to ask for help and make sure to keep your mental health in the right track!