Did you know that most Malaysians are borrowing money more than saving it? There are certain types of savings that we must take note of and the reasons why.
The State of Households reported that only 10.8% of households will be able to survive a sudden loss of income or financial shock. With a population of more than 31.76 million, that is only about 343,000 households only! It doesn’t hurt to be prepared for the rainy day.
Reasons Why You Should Saving Your Money
- We’re living off the money that we don’t have. – Come to think of it, we are simply not saving enough money. The report itself shows that Malaysian household savings are low and households with lower income aren’t financially resilient and literate. The more alarming factor is that the households debts remains very high. In addition, Malaysia has one of the highest household debts in the region and with the largest debt that makes up the high debt are household debts. This means that we are simply simply adding more debts into our lives and living beyond our means rather than setting aside money for savings.
- Things are getting expensive and there is a need for us to grow our wealth. – Inflation rate in Malaysia is said to be at 3.5% which is the highest ever recorded in the last 2 years, which means that you’ll get fewer things for the same amount of money. In 2005, one can buy roti canai at a cost of RM0.50, fast forward 10 years later, you have to pay more than double to get the same thing. Food in Malaysia is also getting more expensive and those who are earning less than RM2000 a month spent about 38.5% on food alone. That is almost half of their income! Inflation is something we can’t avoid, so this is why we need to set aside some money in order to stay ahead of inflation. Setting aside money alone isn’t good enough, suffice to say if you put your money inside your savings which gives you returns lower than the inflation rate, then you will still be at risk. In order to win the game of beating inflation, one must invest smartly by looking for investments or savings that will guarantee you returns higher than the current inflation rate. Grow your wealth with investments and savings.
To survive during the retirement as we are living longer. – We are living longer which is the reason why we need to start saving as early as possible. Female babies which are born between in 2015 are expected to live until the age of 77.4 whereas male babies are expected to live until the age of 72.5. This is an increase in age expectancy and we are living longer. However, do we have enough savings to last us through our retirement? Aside from basic living expenses such as food, electricity and transportation, we also have to take medical bills into our account. Some Malaysians may not have enough to support themselves past the year of retirement because one in five EPF members nearing retirement have less than RM10,000 in their savings.