Are you thinking about your salary increment lately? There are millions of other Malaysian employees out there who are facing the same dilemma. Average wages of Malaysians are on the rise in 2017 rose 7.7% per annum to RM2,160 from RM2,000 in 2016 which is expected to increase this year as well. If you are fortunate enough to be rewarded with a raise, it may not be a huge increment.
For an employee working in the urban area have only seen an increase of 6.6% per annum to RM2,260 it certainly won’t have a significant impact towards you financially. That said, a minor increase will improve your financial state granted you utilise it in the right way. Regardless if you are earning an extra RM150 each month or RM1,800 in a year, here are a few suggestions on how to spend your extra wages wisely.
Pay off debt
Borrowing money isn’t a chose for most of us, which is why most of us think that debt is essential. When it comes to deciding between paying off debt or saving or investing money. Making minimum debt payments should be prioritised before allocating money toward other goals. Not making commitments towards debt payment or delayed payment can lead to financial failure such as complications on borrowing money from banks. Once you have sorted your minimum debt, you can decide whether to sort out other payments to quickly clear them off or move on to different goals.
Save for an emergency fund
Unlike retirement saving, vacation or a down-payment fund. We all need a safety net as well if an unexpected event occurs that could severely affect your finances. There are various reasons that could lead you into a financial problem such as:
- loss of a job
- sudden medical or dental expenses
- household or vehicle repairs
- unexpected travel expenses due to family emergencies such as funeral
Having money that you can access immediately when the time comes can help you overcome crucial life events. When you have emergency money saved:
- you won’t have to end up I a debt once you have resolved an emergency situation
- having sufficient money to cover medical and dental expenses
- you can still pay bills despite being unemployed
- you can make critical repairs if there is a problem at your home or your transportation.
Save for retirement
It is a good idea to allocate the extra money from your raise to the retirement savings. The optimal way to determine your savings is to utilise an online calculator as it will help you identify how much you should save and how much you must allocate while trying to reach that target. It is best to keep update your calculation savings every year so that you are able to keep track. Also, it will help you to maintain your annual expenses at the nominal level which would in turn help maintain your current lifestyle.
Save for college
College costs are on the rise and if you are thinking about setting some money aside for your child’s education, it may just be the right time for you to save up now. By having a saving plan ahead can shield you against inflation. On average, parents may spend at least RM50,000 a year on their child’s tertiary studies and it certainly not possible to predict how much the cost will increase each year.
The average course fee at best divided by four-year duration will require you to save roughly RM1000 or less each month. The cost would certainly be higher for overseas studies compared to local ones also considering the undervalued currency and increase in the cost of living. It certainly won’t be easy to accumulate sufficient savings but it would certainly help to reduce the burden of loans and external costs.
Most people would think that investing requires one to commit with a huge sum of money. In truth, you can start at the minimum RM100 if the share price is at RM1 per unit. If you want to make investing as a habit, start by putting away some money every month. Once your habit starts to kick in, you will be standing in a strong financial position. Most importantly you will need to figure yourself which stock investment style would serve best for you.
Invest in your skill set
If you are looking to advance your career further, start investing by learning new skill sets. The simplest way is to further your education. Regardless if you possess a master’s degree or not, putting your money in education will pay off in the long run and will arm you better to excel in the workplace. Look into online courses or enrol yourself into colleges.
If you have a full-time job, reach out to your HR in regards to furthering education policies. Your employer can cover your training fee especially if the courses and conferences are relevant for your job. By attending the right conferences will provide you with the opportunity to network with key influencers and engage with corporate executives who could potentially provide you with job leads or getting yourself a business mentor.