By Muhammad Taufiq Fauzan Bin Azmi
Have you ever thought that someday you might get involved in emergency or near emergency situation: out of pocket money to buy food or ticket to go home, losing your phone (since handphone is one of the most important communication tools currently), involving accidents, and the likes. If your answer is to get money from your parents you can forget these problems. But if you want to help your parents by being financially independent, so you should learn how to save your money even you do not have income yet. For your information, saving money habit is the first step for those who want to become a master of money.
You might have heard about savings probably since you were child. Everyone including your parents, teachers, and perhaps your friends encourage you to save. Hopefully, they also tell you how to save. Usually, the moment students get money from PTPTN (Perbadanan Tabung Pendidikan Tinggi Malaysia) loan, as an example, they will set aside some money for expenses – food, drinks, and shopping. Afterwards, if there is extra money (often time there is none), that is what they often save.
This article will show you different techniques on how to save money efficiently, instead of saving from the PTPTN loan. The moment you get the money, it is recommended that the first thing to do is to set aside some money as your savings, then the rest as your expenses. Why? This strategy enables you to take control of your money, so that you will have some money to be used in case of emergencies.
The next question is how much to save? Try to set aside 10% of your money to save. If the figure is below than 10%, then it is insufficient to grow your savings. If you can save more than 10%, then it is better. As an example, if you get about RM2500 from PTPTN, set aside at least 10% from it; about RM250.
Then, the next question is where to save money? If you are the kind of person who love to withdraw money from ATM whenever you want, so savings account at a bank is not recommended for you. This article recommends you to save money either in Fixed Deposits (FD) offered by most banks or in any investment plans that suit you.
As for Bumiputras in Malaysia, you are recommended to save your money in the Amanah Saham Bumiputra (ASB) as it gives you some returns at about 8.7% a year (based on 31st. December 2013 as reported by Berita Harian dated 20.12.2013). Hence, it is better than having a savings account. Besides, the risk level is minimal and the returns are usually higher than the rates of inflation. The more you save the more money you will gain from the investment. Another reason for choosing ASB is that it discourages frequent withdrawal. You might feel reluctant to withdraw money from ASB where you need to fill up forms and line up for a long time. Due to that your money will still be in the account and you will earn the dividends.
Savings account on the other hand, does not give you high returns and you might lose your money if the bank deducted your money for the fees. By the way, the savings should only be used for emergency situations only. If none arises, then the money should remain there and grow. As you get to manage this pattern of savings, try to increase the 10% savings to 15% and even higher because the more you save, the more you gain.
Lastly, you must be consistent in doing it every month or every semester, without fail. If you only save when you feel like doing it or you save only when there is money left, then you might lose the opportunity to become the master of money. You must be consistent in practicing the method regardless whether the money is sufficient. You must save, so that, at least you will have some kind of assurance emergencies. Even if this method may not make you rich, it is there to minimise your burden during emergencies.
Photo courtesy of Wikimedia Commons.