Remain resilient in managing your finances

“Money does seem to play a role, be it large or small, in helping us achieve everything that is important to us, ’’ said Rajen Devadason.

HOW to remain resilient during the prolonged Covid-19 pandemic, which soon will turn endemic, was one of the topics discussed during the recently concluded Securities Commission’s Invest Smart Virtual Fest-2021.

As the vaccination rate rises and economic activity begins to pick up pace, there will be some semblance of pre-pandemic normalcy returning.

However, the lifestyle and financial management changes that were made to cope with the pandemic should serve as a guide for the future, even though there is really no clear end in sight for the pandemic.

“We are phasing away from the pandemic to an endemic. While we can celebrate a little victory, we cannot let our guard down.

“We have to remain cautious as to how we live life everyday, manage our social interactions and professional life, to managing our finances,’’ said national council member of the Malaysian Financial Planning Council, Mohamad Khairul Daim Ahmad Shamsuri.

Group executive director/head of investment services and co-founder of Harveston Financial Group, Phang Kar Yew, felt there was a need to pay attention to mental health to remain positive alongside financial management.

This is simply because financial and physical wellness are interlinked. Financial stress aggravated by the pandemic can lead to disruptions in life, work and finances.

Financial literacy in the country is also said to be low, as one in three Malaysians felt that they had a low level of financial knowledge, according to a survey conducted by Bank Negara in 2018.

Financial literacy among youth is also said to be low.

Even though some progress has been made towards educating the youth and others on financial management, there still are gaps that need addressing.

Many people do not have a written financial plan as they find it too complicated, or don’t have the time to work on one.

Seeking help and advice is necessary if one cannot manage their own finances or even health. By so doing, they are able to break away from the bubble they are in.

Rajen Devadason, a licenced financial planner with Manulife Investment Management (M) Bhd, said there will be more crises in the future and they will come from different directions and forms, and will be difficult to predict.

“Every crisis is different. What you need to do is have a holistic financial plan that takes care of wealth creation, accumulation and distribution. So (in this crisis), close up the cracks and begin to build a complete plan,’’ he said.

Phang said the top two financial lessons from the current crisis is having good habits at cash flow management, which must come with a budget plan, and valuing your life and the lives of your family members.

This should form the crux of priorities in managing your life and finances ahead.

Do not spend before saving as it leaves too little left for savings, that is what the experts said.

Save first and then spend accordingly. The pandemic has taught us lessons on cutting down on excess spending, which should be followed through.

“Know your must haves, and what we can live without including embellishments. Get to know our life’s priorities,’’ Mohamad Khairul said.

Wealth Vantage Advisory Sdn Bhd’s managing director Rafiq Hidayat Mohd Ramli said the pandemic has taught many the need to have an emergency fund or buffer. He said for a salary earner, it should be equivalent to six months of monthly expenses. For businesses, it should be 12 months.

He also pointed out the need to re-prioritise life goals. It makes sense to seek help with licensed financial planners and find new opportunities.

However, he pointed out that since the onset of the pandemic, a number of financial experts or financial gurus have emerged on the Internet and are lending financial lessons/advice.

Some are unlicensed financial planners.

“Understand what advice they are giving and (ask yourself), what is in it for them (in trying to advise you),’’ he said.

Rafiq added that it was important to acquire financial knowledge, cut unnecessary expenses and spend wisely.

Devadason added that ‘’no financial adviser cares about your money more than you do.’’

While the crisis may have taught many lessons, there is also an issue of longevity risk that needs to be addressed.

“Beware and be aware of the longevity risk as some people may outlive their retirement funds,’’ Devadason said.

Many had to take out funds under the Employees Provident Fund’s (EPF) i-Sinar and i-Citra initiatives, which were aimed to provide affected members with supplemental income to cater for their needs during the pandemic.

Those who withdrew their savings had their own reasons to do so, but as economic activity improves, they should think of ways to replenish what they took out.

The EPF also allows for voluntary contributions of up to RM60,000 a year which any member can deposit to bump up their retirement savings.

“Be tough with yourself over the next three (years) as you are on rehabilitation mode. Ramp up the savings, work harder than before,’’ Devadason said.

Rafiq added, “Work harder but also work smarter.”

To earn more, Phang said some may even need to get some vocational training or enhancement courses to improve their income.

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