According to the Financial Education Network [FENetwork], many Malaysians find it more difficult to face unexpected life events. Around half (52%) of Malaysians struggle to raise emergency funds of RM1,000 or more. It's also been found that only a quarter (24%) are able to sustain living expenses for at least three months if they lose their main source of income.
Set savings goals. Setting goals helps you to track your progress and measure your success. Plan to build up enough savings to cover at least three months of essential outgoings, in case of emergency. Anything else that you want to save for (like a holiday) should be on top of this.
Another thing to consider is to discuss your savings goals with your loved ones. Explain what they are for and why they are important. Sharing a savings goal with those around you can help you to stay on track.
Keep your emergency funds separate from the money you use for everyday spending, or to pay your bills. Research shows that doing this may stop you spending it1, Role of mental accounting*. Setting up a separate savings account can usually be done quickly online.
*The Role of Mental Accounting in Household Spending and Investing Decisions, Client Psychology, 2018.
Try to save regularly and automatically. Rather than try to save what you have left at the end of the month, set up an automated transfer from your regular bank account to a savings account on the day you are paid.
If you can’t save a lot, it can be hard to get motivated to save at all. But saving any amount (however small) is helpful, and can build up a valuable emergency savings fund over time.
Leaving your funds untouched will increase the amount of money you have in the long term, as long as it's in the right place to begin with.
But if you save your money in an ordinary savings account, you'll be missing out on a better profitable interest that could grow over time.
An HSBC Everyday Global Account offers a competitive interest rate that will grow your money faster than a regular savings account.
If you're not already an HSBC customer, you can easily apply for an Everyday Global Account online in just 10 minutes. All that’s then left to do is to confirm your identity (MyKad & Driving License/Passport) in the next 30 calendar days at any branch.
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