11 Feb - 4 min read
One of the major highlights of celebrating Chinese New Year is the custom of giving and receiving ang pows. Even amidst the current Covid-19 pandemic and reimplementation of the movement control order (MCO 2.0), people are spreading cheer to loved ones faraway by sending e-ang pows.
Depending on the generosity of your married friends and relatives, you can actually rake in quite a substantial chunk of cash over the Lunar New Year period. The question is, what will you do with your ang pow money? Instead of spending it all or just depositing it into your bank account, here are some things you can do with your ang pow money this Chinese New Year 2021.
The Credit Counselling and Debt Management Agency (AKPK) – a credit counselling agency set up by Bank Negara Malaysia (BNM) – revealed in 2019 that credit card loan accounts for 55% of its total debt portfolio. Although it isn’t the most thrilling way to spend your ang pow, debt repayment should be prioritised whenever you have any extra money coming your way. So, do the responsible thing – use that ang pow money to break free of paying interest rates and clear off your credit card debt as fast as possible. If you have outstanding payments on multiple credit cards, consider consolidating your debt by using a balance transfer.
It’s all too easy to spend all your ang pow money if it sits in your main bank account that you withdraw from regularly. Make a commitment by opening a new sub-saving account (or a separate account altogether) purely for your savings and deposit your ang pow money here. This can be the push you need to start making regular deposits into this dedicated bank account and avoid withdrawals unless an emergency crops up. You can even opt out of getting an ATM card for this account as the hassle of going to the bank counter will make you think twice about any illicit withdrawals. Remember to shop around for savings accounts with higher interest rates!
If you’re not keen on opening a separate savings account, there’s another way you can keep your ang pow money safe from your spend-thrift hands. You can start a fixed deposit with as low as RM500 and the interest rates from a fixed deposit are generally higher than that of a savings account. Moreover, you usually can’t withdraw from fixed deposits for a fixed period of time without losing your earned interest, which is a good way to keep yourself from dipping into your ang pow savings at a whim.
Sure, the EPF is there for retirement purposes, but a majority of Malaysians agree that EPF savings alone are not enough for retirees to stay out of poverty after retirement. It makes good financial sense to start additional savings for your retirement early on, but a majority of young Malaysians have not practised this habit. Putting your ang pow money into a private retirement scheme is a good way to start the practice of saving for retirement. PRS operates on a voluntary basis, so you decide when and how much you contribute to the scheme. Using your ang pow money to invest in PRS can help you kickstart the habit of regularly setting aside some money for retirement as you go along.
Another thing you can consider is putting your ang pow money into investments. You can choose to invest in investment-linked insurance policies, unit trusts, shares, or property, just to name a few. Of course, the issue with investing is that it has the element of risk – returns on your investments are not fixed and you might end up with less money that you put in. Investing requires a prerequisite amount of knowledge and understanding on your part, so make sure you do your research before putting any amount of money into investments.
So, this Lunar New Year, choose to exercise some financial discipline with your ang pow earnings instead of losing track of them completely. After all, at some time in the future you may be on the giving end of those red packets instead of receiving – so make the financially smart choice now and thank yourself later!