Personal Finance 101: Are you able to save RM1,500 per month?

Personal Finance 101: Are you able to save RM1,500 per month?

Do we need our salary every month?

I think majority would answer YES. In fact, most of the time, during the beginning of the month when we have just gotten the pay, we feel super rich and the way we spend money differs from the end of the month when funds are running low or even nearly fully depleted. Read here for understanding why I say so: Personal Finance 101: 5 things that could happen when we have extra money In fact, spending habit is one major reason for insufficient money every month NO MATTER how much we actually earn every month. Financially though, Malaysians are not in a good shape. Read more.

Article in nst.com.my Data from the RinggitPlus Malaysian Financial Literacy Survey (RMFLS) 2022 revealed the following:

“A total of 70 per cent of respondents indicated that they save less than RM500 per month or do not manage to save at all.”

“This is the worst ever result tracked by RMFLS in five years,”

The number of Malaysians who save more than RM1,500 per month has also dropped significantly, it noted. “From 20 per cent in 2020, the figure has dropped four times lower to just 5 per cent in 2022.”

53 per cent of respondents stating that they can survive for three months or less with only their savings (52 per cent last year).

“A similar pattern is also seen where 55 per cent of Malaysians spent exactly or more than what they earned each month (44 per cent last year), essentially living paycheck-to-paycheck.”

“More credit cardholders are not paying off their bills in full with just 55 per cent (doing so) in 2022 compared to 70 per cent last year.” Article in nst.com.my

Could we save between RM500 per month?

If we could save RM500 per month, we are within the top 30% of Malaysians in terms of savings per month. Never mind how much we earn, if we could not save, it does not matter. Question is this, are we in the top 30% who could save RM500 per month for RM6,000 per year? If we could save the same for 10 years, we have RM60,000! Or are we within the 70% who could not save RM500 per month and thus may have very little savings even after working for 10 years?

Top 5% of savers per month in Malaysia?

It’s not easy to believe but if we believe the survey done by RinggitPlus, then if we are able to save RM1,500 per month, then we are within the top 5% of Malaysian savers per month. Yes, top 5% yeah. Ahead of 95% of all other Malaysians no matter how much they earn. If we could save RM1,500 consistently per month, that’s RM18,000 per year. Just 10 years down the road, it would have been RM180,000.

For someone who works 30 years before retiring, just the savings alone would be RM180,000 x 3 decades = RM540,000. We did not yet include the EPF, we did not include the returns from the investments, for example from the fixed deposit etc. We can see that if we could just save RM1,500 per month, our life would not be too bad when we retire yeah.

How many months could we survive without any salary?

This is a key question yeah. However the answer varies tremendously. The reason is because our expenditure is usually determined by our wants versus needs. We could eat at the local kopitiam and pay RM10 inclusive of drinks or we could have a lunch set at a cafe with a latte and pay RM25. The difference in one meal per day is RM15. If we repeat this for three meals, then it’s RM45. RM45 x 30 days = RM1,350. Every ten years, we are spending an extra RM13,500 just for these 3 meals yeah.

Well, 30 years later when we retire, we should realise that we could have an extra RM40,500 if we did not overspend on meals. RM40,500 extra means we could have invested the money for more returns. Or at the very least, we could use that amount to travel. We could even bring our family along too. Imagine if we did not spend all these extra money, how many extra months could we survive when we suddenly do not have any salary? Think hard, take the right actions too.

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