Not everyone is lucky enough to learn financial literacy at an early age. But that doesn’t mean that you can’t start now.
What is financial literacy? It is a term that may be unfamiliar to you until later in life. Yet, it is an essential life skill that empowers individuals to make informed and effective decisions with their financial resources. Being financially literate means you have the ability to understand and effectively use various financial skills such as personal financial management, budgeting, saving, investing, as well as debt management. According to Financial Education Network (FEN):
Only 16% can sustain their lifestyle for six months if they lose their income
53% of bankruptcy cases in Malaysia in 2022 were among 24 – 44-year-olds
If this is your first time learning about this, it is likely that you are not the only one. And it doesn’t have to be overwhelming. It is still not too late. As the saying goes, the best time to start was yesterday, the next best time is now. Ouch! has prepared a simple guide on how to get you started on your financial literacy journey.
Why is financial literacy important?
- Empowerment: It enables you to make informed decisions about your money
- Financial Security: Helps you build a safety net for emergencies and plan for the future
- Debt Management: Reduces the risk of falling into debt and helps to manage existing debts
- Investment Growth: Allows you to grow your wealth through informed investment choices
In an era where financial matters become more complex, and frauds become more sophisticated, managing your finances is an essential skill in navigating life in this world not just for your sake but more importantly, for the sake of your loved ones. According to FEN’s survey, 39% of the respondents have been a victim of financial fraud. By equipping yourself with financial literacy, it would enable you to make better financial decisions to help yourself and keep your loved ones secure.
How can you get started?
Here are the basic steps that you need to learn and understand in order to get your finances in check.
“It is still not too late. As the saying goes, the best time to start was yesterday, the next best time is now”
- Start saving your earnings
The first thing you need to do is to start a habit of saving a percentage of your earnings. Start with allocating 10% of your earnings to your savings, and you can increase this amount accordingly as your financial position becomes stronger. 84% of Malaysians do not have regular savings every month. This is worrying and can lead to a snowball effect on your financial woes. Most people save when they can instead of having regular fixed amounts. Being disciplined with your savings will help you set a strong base to strengthen your financial position.
- Manage your expenses
Track your income and expenses to understand where your money is going. Differentiate your necessities from your desires. List it down to create a budget and this will help you to control your spending and save more. If you have existing debts, work on paying it off.
- Put your earnings to work
Once you have a solid savings habit and have paid down existing debts, you can begin to explore investment options. You can invest in shariah-compliant products such as sukuk and Islamic mutual funds. Amanah Saham Bumiputera (ASB) is one of the shariah-compliant investments you can consider. There are also robo investment advisor apps to help you make calculated risks in making your money work for you. The earlier you start, the more time your investment has to grow, compounding the returns to work in your favour. Remember to first take the time to understand risks involved in investments.
- Prepare for retirement and rainy days
Preparing for retirement is a critical aspect of financial planning that ensures you can fulfil the needs of growing age and protecting your family in case anything happens to you. According to FEN’s report, 47% of Malaysians have difficulty raising RM1,000 for emergencies. 53% said they will rely on their Employees Provident Fund (EPF) for retirement, yet according to EPF, only 30% of its active members meet basic savings by age. More worrying still is the fact that 48% have not started to plan for their retirement. Diversify your investments to include a mix of low-risk and high-growth potential assets to build a stable future income. Also invest in takaful coverage to ensure your family is secured even in your absence. It doesn’t even have to be expensive. Pusara Pro by Ouch! gives life protection from as low as RM4.13 per month and you can easily sign up through the app here.
Understanding and practising financial literacy is a journey. Start small, stay consistent, and gradually expand your knowledge. By making informed financial decisions, you can achieve greater financial security and peace of mind. Remember, financial literacy is not a one-time effort but a continuous process of learning and applying what you learn. Ouch! wishes you happy learning and may your financial journey be successful and fulfilling!
Find out more about Pusara Pro by clicking here or download the Ouch! Takaful mobile app from the Google Play Store or Apple App Store today.
Disclaimer:
The information in our blog articles and provided by our brand ambassadors/ KOLs is for general insights only and not legally binding. We strive for accuracy but cannot guarantee the information’s completeness or reliability. For legal matters, consult official documents or contact an authorised Ouch! representative.