The rapid COVID-19 outbreak poses a world-wide health crisis and disrupted the workflow around the globe. Uncertainty in stock markets, the declining economy, and rising unemployment rate have created restlessness among the people. In Malaysia, people have been losing their jobs since the imposition of Movement Control Order (MCO) because cash-strapped businesses had to reduce their operating costs by laying off workers. Though COVID-19 will continue to have a negative impact globally, a few smart decisions may help people in saving money to survive an economic crisis.
Loan Repayment Moratorium Period Ends, So What’s Next?
No pun intended, but the last quarter of the year would likely be severe. In March 2020, the Prime Minister of Malaysia had announced a six-month moratorium on loan repayments ending 30 September 2020. This is to relieve the burden of people who are directly affected by the impact of COVID-19. Loan repayments during this period need not be paid but borrowers that take up the scheme will accrue additional interest. A moratorium is not an “interest holiday”. Instead, borrowers should take this time to strengthen their finances and savings. On the other hand, is this temporary reprieve a big debt trap instead for borrowers?
I honestly think the decision made by Bank Negara Malaysia (BNM) to extend the average loan for six months is a good move. The moratorium provides a leeway until borrowers are more stable to resume repayments completely. Although we should appreciate the change to allow for a loan moratorium, the harsh implication of using this facility is still wise. It is sad to say that an increase in bankruptcy will be evident once the extended moratorium ends. People have just started to make progress after the MCO was lifted. And they are not financially stable yet to make a one-time payment on the accrued interest.
Basic Financial Tips That Everyone Should Master
The link between COVID-19 and financial planning is that all plans have been negatively impacted in varying degrees due to this unprecedented calamity. People are struggling everywhere, not only physically but also financially. And this forces people to think of many different ways to save money. Being prudent with our current spending is a good start. Let’s be honest, saving money is not as easy as we know it.
One of the best ways to save money during a crisis is to avoid instant gratification. Do wait for a while to decide on a purchase as it will save us from spending unnecessarily. This is crucial because millennials and fresh graduates tend to spend more than what they initially earn. Truly, strong self-discipline is definitely a must when it comes to financial planning. However, by following the 50/30/20 rule, I am certain it’s able to enhance one’s money management skills.
How Does The 50/30/20 Rule Work In Saving Money?
This 50/30/20 rule can act as a guide on how much we should save and spend in a month. I like this budget rule by Elizabeth Warren because mainly it’s simple to follow. Firstly, what we have to do is to divide our income into three categories which are needs, wants, and savings. Allocate 50% of our income to pay for necessary bills such as rent, insurance, groceries, and utilities. Just a heads up that Netflix, Spotify, and Astro do not fall under this category.
I believe that we often encounter with over-budget on inessential things that are optional to have. Then, for another 30%, it’s to fulfil our desire to buy a new handbag, go for a holiday or subscribe for entertainment services. In a simple word, spending money in this group implies making our life more comfortable and enjoyable. Regardless, please bear in mind that our wants and needs vary from one another. Therefore, it is important to own things that are within our earning capacity and commitments.
Technically, the remaining 20% of income should go to savings and investments. This involves putting funds into a bank account and also investing in the stock market. It is advisable to conserve at least three to six months of emergency fund if something unexpected occurs. Additionally, you can use a Savings Goal Calculator to start working towards your savings goal.
Saving Money Through Online Shopping
Have you noticed how much you have changed since the lockdown? That you’d prefer to shop online rather than shop in-store these days? Staying at home has undeniably triggered the surge in online shopping in Malaysia. According to The Star Online, Malaysia’s online retail revenue rose by 28.9% in April 2020 due to the MCO. It is apparent that the restricted movement during this period has propelled people to shop online. Especially for essential items like groceries from Tesco Groceries, HappyFresh, and Jaya Grocer.
Although online shopping is devoid of sensory experience, it compensates shoppers by offering better bargains compared to retail. Thanks to massive savings on operating costs from rent and manpower. With the sudden influx of online vendors, consumers are spoilt for choice of best deals. The high cost of living nowadays compels us to cut cost and save as much money as possible. Our lives might have taken a 360-degree turn, hence we should shop smart and save hard.
Brace Yourself With Volatile Job Market, Fresh Graduates
As a final year student who is pursuing a Bachelor in Business Administration (Finance), I, too, get anxious with the collapse of the job market. Graduating in a new decade is terrifying because I’m afraid that I won’t get a job after I obtain my degree. Even though Malaysia’s unemployment rate dropped to 4.7% in July 2020 from 5.3% in May 2020, yet it would be hard for fresh graduates to compete for a job against experienced workers. The career path may be bumpy. Hence the reason why we should seize every job opportunity that comes along our way. Having any job is definitely better than no job at all. Because at the end of the day, we all need money to survive.
Instill The Right Attitude Into Job Seekers
The foregoing advice on saving money and looking for the best deals from online shopping comes from a veteran in the accounting and management services field. Ms Ong Li Chiou has spent almost three decades working in the corporate and private sectors. Subsequently, she founded OLC Management Services in 2008. During the course of her work, she has interviewed scores of job applicants for the companies she had worked for and for the SMEs that she is currently serving. As hiring and firing is part of her added service, she has this salient advice to share with every job seeker:
“Have the right attitude, be hardworking and don’t be picky. Learn as much as possible while on the job and if possible, to constantly upskill yourself.”ms ong li chiou, founder of olc management services
These will certainly be my job mantras!
Ms Ong instills the same principles into her SME clients and their staff. And because of her positive trait, she has even helped her clients to turn their ailing businesses around. For more information about her accounting and management services, she is reachable at +60 12 289 1080.
It’s Never Too Late To Start Saving Money
The pandemic has taken a harsh toll on the financial health of many people. For those who have experienced pay-cuts and job losses, it is indeed a difficult time. Saving money by cutting down on unnecessary expenses and shopping smart are perhaps the quickest ways to improve our finances.