Money Matters

During this time of financial uncertainty, it's more important than ever to reassess your spending by prioritising the essential expenses and learning how to budget better. When you're feeling worried or confused, a budget can serve as your anchor to financial security. No one knows how long this pandemic will be over but there are things you can do to protect your finances.
 
Here are some ways to turn a potential financial tragedy into a temporary setback to lessen the impact of a crisis, such as this COVID-19 pandemic, on your finances.

1. Recognise changes in your income
Due to the pandemic, Malaysia’s unemployment rate has spiked tremendously and caused many hardships. Are you one of them? Did you lose your job entirely? Did your working hours and salary get cut?
 
The first step to an effective budget when you’re facing a crisis is to recognise the changes in your income, including your spouse’s or partner's. You have to work with this new number and embrace it. Look at your savings to see how far your emergency fund will carry you. Do not hold onto the thought of your pre-crisis income or the income that you expect once the crisis is over.
 
What matters is your reality right now. With any reduction of income, it’s important to consider ways to cut back on your lifestyle. For those who are among the lucky few with a thriving take-home pay, get into a savings mindset to be prepared for any downturn down the road.
 
2. Prioritise your expenses
Once your monthly numbers are set, prioritise the necessities that are essential to protect and sustain your family such as the ones below:

• Food and medicine
• House: mortgage or rent payments
• Utilities: electricity, water, internet bills
• Health and life insurance

It’s important to remember that while food is essential, feasts and treats that are usually reserved for weekends or special occasions should be done less frequently now that you are on tight budget for whole family.

3. Cut off large expenses that you had planned for earlier
With COVID-19 catching us all by surprise, it’s crucial to give a second thought to some of your plans such as buying a new house or car as job insecurity is currently high. Remember that by making a decision today, it can reduce your mental and financial burdens tomorrow. More than anything, this gives you freedom and peace of mind to chart a brighter future.

4. Minimise your monthly bills
Downsizing big-ticket items such as your rent, mobile phone plan, electricity, and internet bills can rapidly reduce your expenses and free up much-needed cash. Here are some things you can try:

• Negotiate the rent with your landlord or, if your situation permits, start looking for cheaper accommodation.
• Cancel lifestyle memberships such as gym or spa, especially if you don’t plan on using these facilities right after quarantine.
• Downgrade your mobile phone and internet plans or switch to a pre-paid option. This way you have more control of your expenses and only pay for what you use.
• If you get an itch to shop online, no matter how good the deal, always evaluate if it's a need or just retail therapy.

 
Extraordinary times call for extraordinary and creative measures - and it's better to be proactive about it. Eliminating these expenses doesn’t have to be permanent, but could free up some much-needed cash. Find out how you can protect your finances with our protection plans to ensure you enjoy a healthy financial future.

5. Build up your emergency savings
It's hard to save any more money in the middle of an emergency. The good news is your new budget can leave you with new-found cash that can beef up your emergency fund and provide you the wiggle room and confidence to recover.
 
Take the most out of this opportunity to cultivate the saving habit in you. For some guidance, you can try the 50/30/20 budgeting approach to determine your cash inflow and allocate 50% for needs, 30% for wants and, 20% for savings or paying down debt.
 
Remember, you are not alone. Some may have felt the immediate effects of COVID-19 on their pockets earlier than others - but take on the mindset that no one can be spared.
 
Talk to our advisor now to help you make the bright financial moves so you can be prepared to deal with life’s uncertainties and be protected for a brighter future.