The first step in a financial journey is to start with saving. The original version of this article was published on FundingSocieties.com.my.

In a challenging financial climate, it can be difficult, to manage your savings, and to live within your means. The good news is that knowing how to kickstart your savings plan and achieve your first RM100K in savings isn’t so much about figuring out an elaborate plan as it is about making simple changes to your lifestyle and thinking about money in new ways.

This step-by-step guide will show you how to start saving money and achieve your first RM100K in savings by breaking down the process into manageable chunks and highlighting some useful tips that can work for beginners and more advanced savers alike, helping you understand how setting saving goals is important in financial management.

The First Step: Keep Costs Low

One of the simplest ways to save money is by knowing how to reduce the cost of living in Malaysia. The less you spend on things that don’t matter, the more you have left over at the end of the day.

To start, here are some tips and tricks for how to reduce the cost of living in Malaysia so you can get ahead financially

  1. Do most of your shopping online. Many items are cheaper when purchased online than in-store, which means you could save both time and money in the long run.
  2. Sign up for loyalty programs wherever possible. If you’re loyal to a particular restaurant chain or retailer, signing up will often get you rewards like points or discounts that will help lower your cost and give you peace of mind knowing that if something breaks or malfunctions, it won’t break the bank to replace it!
  3. Pick up the habit of searching for coupons to use before making a purchase. In the olden days, you could only rely on physical cut-outs from product brochures or newspapers. Today, coupons are everywhere, on social media, in digital ads, and in your own inbox, so make sure to give your favourite brands a follow or subscribe!

The Second Step: Create Short-Term Saving Goals

To create your short-term savings goals, start by saving RM1,000. You can do this by setting aside a small amount of your paycheck each week or month. Put it in an account where you won’t be tempted to spend it (a checking or savings account).

Once you have that RM1,000 saved, put it in an even higher-interest account and save until you reach RM10,000. If you are diligent about saving and the interest rates on your money go up over time, then at the end of five years, you could have as much as RM40,000!

The Third Step: Reduce Your Interest Burden

Interest is the price you pay for living outside of your means. If you want to save money and grow your net worth, you must reduce your monthly interest expense:

Your first step should be to review your debt. Depending on your preferred debt repayment method (snowball or avalanche), your list can be either the highest-to-lowest interest or the lowest-to-highest interest.

  1. With the snowball method, you should aim to repay the minimum amount of your smallest debt. Once you are done, move on to the next smallest dent, and eventually, you will have a reduced interest burden.
  2. With the avalanche method, you should aim to repay the minimum amount of your highest debt. Then move on to the next biggest dent, and eventually, you will have a reduced interest burden.

In summary, the snowball method is more financially friendly than the avalanche method as you will require a stronger cash flow to even begin repaying.

By using either one of these two methods, you can effectively reduce the interest rates on all of these accounts at once and have more money available each month that can go towards other goals.

The Fourth Step: Generate Additional Income.

This will help you offset costs that might be out of your budget. You can do this by starting a side hustle on the weekends or nights, such as doing freelance digital work, singing and even consulting work. Some people may find it easier to start with freelance writing since they are sitting at their computers anyway.

In taking this fourth step, the key is finding something that allows you to monetize your skill set and lets you set your hours so it doesn’t interfere with family time or sleep.

Another tried and true method is to invest in stocks and/or real estate properties, but that may be tricky if you are already in debt. But if you aren’t, a good place to start is to research and understand how varying financial investments can net your passive income.

Final thoughts – Cultivate the Right Mindset

Everybody was once a beginner. There will be tough days, but every day brings an opportunity to learn something new and grow as a person.

  1. Avoid spending money where possible. If you need something then make it yourself or go without until the next paycheck comes in.
  2. Be patient with yourself! You may not get it right the first time but remember there is always tomorrow to try again.
  3. Stop listening to people who tell you what’s best for you. Be open-minded and find out what works best for your lifestyle.
  4. Make good choices when deciding how much to save. For example, put 10% of your income into your savings account each month.
  5. Keep dreaming! It’s okay if saving RM100K seems impossible at first because dreams are meant to be reached.

Whether you’re just starting to manage your savings or trying to get a better handle on where your money goes, it helps to have a set structure for your savings habits and understand how setting saving goals is important in financial management. We hope that these tips have helped to serve as an effective framework for incorporating better budgeting habits into your lifestyle.

 

What other financial advice do you have for those who are focusing on saving? 

 

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