piggy bank

Having some savings as a cushion for yourself plays an important in managing your finances. It is one of the most basic step your should take in building your wealth before going into personal finance components which are more complex such as having personal investments, property/ asset management and building your own business as a source of income.

In Malaysia, there are plenty of millenials out there approaching their 30s who are still clueless about where to start in terms of saving money, here is a guide for you to determine the amount of money that you should save by the time you turn 30.

Why 30 years old?

This may not speak for everybody. However, at this age, usually you should be more matured and rational in terms of making decisions in  regards to your career, investments, relationships and even for life. Hence,  having set goals for your personal finances at this age will help you to clarify action plans you need to make to achieve in your 30s.

Additionally, it is also hard to determine the amount of savings an individual should have by the age of 30 as there are different people with different starting salaries and the years of working. However, we have derived a formula that will help you to quantify your savings you need to have on a monthly basis in order to be financially bulletproof.

Formula To Determine Your Savings

*Disclaimer: The following formula and suggestions are only for information and reference purpose only.

Formula of Savings = [23% (Retirement) + 10% (Emergency) + 10% (Specific Purposes)] X Monthly Gross Income (Before Deduction of EPF)

For example, Amin earns RM3,500 a month as an accountant at the age of 24. He will need to save a total of RM1,505 to consider himself a financially secure individual. With a disposable income balance of RM1,995 after 43% of savings, he still can own a car with a monthly auto loan repayment at about RM500 and live modestly with the rest of the money.

Let’s look into each component of savings and the justification for the allocated percentage so you can better understand the science behind this formula.

Retirement Savings


                                                     Image source: smartinvestor.com

Earlier this year, the Employees Provident Fund ( KWSP) announced that it has increase in the proposed minimum amount of savings of RM228,000 for its members by the age of 55, from RM 196,800.

The Basic Savings refers to the amount that its considered to be sufficient to support basic retirement needs for 20 years from the age of 55 to 75 parallel with the average life expectancy of Malaysians. The new quantum is benchmarked against the minimum pension for the public sector employees, which has increased froom RM820 to RM950 monthly from ages of 55 to 75,” EPF quoted.


    Image source: KWSP

According to this table, we would require to have at least RM29,000 in our EPF account by the time we turn 30 in order to be on the right track to meet the minimum amount of money needed to retire and sustain ourselves till the age of 75.

We will also be required to save more than that if we have to beat inflation and live a more comfortable life when we enter retirement. Private Pension Administrator ( PPA) CEO Datuk Steve Ong suggested that every Malaysian should save at least 33% of their monthly income for retirement savings.

You will need to save about at least 9 to 10% of your savings every month after deducting 11% from your monthly income including 12% of your employers contribution to your EPF account. Henceforth, you will need to deduct 23% from your gross monthly salary to save up for your retirement.

Important thing is that your EPF contribution is set to about 23% (combination of employee and employer’s contribution) and you will need to find alternative investment products to save the remaining 10% for retirement.

Next, you can also choose to invest in one of the 56 private retirement schemes in Malaysia that are provided by licensed and governed banks and financial institutions, depending on your preference.

Emergency Savings


                                                                                                    Image source: canstockphoto

Any unforeseen incident may also occur and cause some unexpected financial shock that will require you to have sufficient money in your savings. These type of incidences may include certain things like medical issue, car breakdown, retrenchment, or a new door for your house or replace any broken/spoiled parts of your car or household items

Let’s be honest, there are still plenty of Malaysians that continue to take this matter lightly because of their ” tidak – apa” attitude towards uncertainty and its consequences. We saw multiple retrenchments announcement from several corporations when the economy suffered a setback and caused a fall in the oil prices including the value of Ringgit.

Bank Negara Malaysia has also found that only 6% of salaried Malaysians are able to sustain themselves for more than six months if they lose their main source of income according to its Financial Capability and Inclusion Study back in 2015.

While it may be toug to have a buffer of six – months worth of savings, we have to start from somewhere as we all need to be prepared for the uncertain future and the worst case scenario that comes of with it.

By allocating 10% of RM3,500 in a liquid or flexible savings account, you can easily save up to RM 3,500 in just ten – months and by doing so for 5 consecutive years, you are also practically saving up for 6 months when it comes to facing the worst time in the future with an amount of RM21,000 in your savings.

Specific-Purpose Savings


                            Image source: hubpages

Everyone has their own financial goals in the long run, Be it like travelling, property mortgage, down payment for your car or funding your own wedding in the near future. Since your retirement savings is covered, you can allocate another 10% of your gross monthly income for these goals.

You can also allocate this amount of money in a unit trust or fixed deposit to earn yourself some interest over time.

Start Today and Go Further

It is never too late to start saving up your own money by yourself. Instead of just relying on a single source of income, try getting a part time job or freelance job to gain some extra income while you are it. And lastly, do not neglect any debts as it will accumulate and bleed out your savings no matter how much you save at the end of the day.

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