25 Jan - 6 min read
Discovering and planning your financial goals is the ticket to staying fiscally fit as you lay the foundation to maximise the value of your cash.
With a specific set of financial aspirations underlined, you have in your hands, a powerful and motivating tool to keep you making good money-management decisions all year round.
But just how do you get the wheels in motion for your all-important money goals?
Financial goals are just like any other, in that before you do anything, you need to first have them defined.
So just what are your money goals? Use these helpful hints to identify and craft attainable goals:
Before you progress towards other targets that maximise the value of your money like investing or buying a second home, here are a few essential objectives to check off your list first:
In a recent survey by Bank Negara Malaysia (Financial Capability and Inclusion Study 2015), only 6% of Malaysians possess savings of six months or more to support themselves in the event of sudden loss of income. It is clearly time to make changes to improve our reserves. Try these handy suggestions to develop your own savings:
One trip to the hospital can severely dent or even wipe out your hard-earned nest egg – this is why medical insurance is an indispensible (and indirect) shield for your savings.
As a start to cover hospitalisation costs, do look into procuring a basic medical insurance card and when financially able, you can move on to comprehensive policies for greater coverage.
Consider also, life insurance policies that come with a cash value or savings feature which could be used as a retirement bolster (read more about retirement savings below).
Alternatively, a cheaper, basic, term life insurance policy can protect the financial wellbeing of your dependants and provide monetary support in the unfortunate event of permanent disability.
It’s no secret that your EPF savings alone is not enough to cover your retirement living costs, yet it’s one of the most neglected goals for young folk who view retirement as a long way away. But times flies and earning capabilities dwindle for most, thus, you’ll need to rev up contributions from now to see at least a decent sum.
Basic EPF contributions should see around 23% to 24% of your monthly income (total minimum contributions by employer and employee) go toward your retirement. Still, research by the Private Pension Administrator Malaysia (PPA) suggests that to even cover two-thirds of your current income in your retirement years, you’ll need to put aside 33% of your monthly income.
In other words, you’ll need to apportion another 9% or 10% of your income for retirement savings to enjoy adequate income replacements in your golden years.
To help you make bank for your retirement, try saving through the Private Retirement Scheme which even comes with a tax rebate and if you qualify, a RM500 contribution from the government under the PRS Youth Incentive.
The most important financial goal that we have saved for last is related to how you can take charge of your debt. Now, while each of us may define being debt-free differently, the main aim of managing your debt is to minimise fees and interest costs associated with credit and borrowing.
Here’s how to shrewdly keep debt levels controlled:
“A dream becomes a goal when action is taken toward its achievement.” – Bo Bennet
Achieving your money goals requires a whole lot of planning, persistence and motivation but most of all; you simply need to get started!
Now is the perfect time to take stock of your finances and put together a plan for where next year’s earnings (and beyond) can take you.