Created: 6 June 2020
Most of us could not see Covid-19 coming nor imagine how life could alter 360 degrees almost overnight. If every struggling business or laid off individual affected by the MCO could have anticipated how devastating the effects of Covid-19 would be on our economy—one thing’s for sure: we would all have SAVED. Big time.
Pardon the association with cute little yellow critters if you’re a fan—but ‘wishful thinking’, in times like these, is, well, ‘minion thinking’:
The government recently announced an economicto tide Malaysians over the months ahead. Just as the government falls back on massive cash reserves and liquidity to preserve livelihoods in times of crisis, don’t you agree that it is equally (if not more) critical for us individuals to have our own emergency funds in place?
Let’s review the basic definition of savings: An emergency fund is a savings account with money set aside to cover large, unexpected expenses, such as:
In short, think of your savings fund as your very own future stimulus package. Save yourself from minion thinking of the like:
Bank Negara foresees a rise in or 620,000 individuals this year, up from 3.3% in 2019. Compare that to the global financial crisis when the country’s unemployment rate stood at 3.7% in 2009; and the Asian financial crisis (1998) at 3.2%—and we’re looking at a severe global recession with far-reaching effects.
In light of this crisis, how much should you save? Most financial advisors say: at least three to six months’ worth of living expenses. Now that we’re faced with a pandemic however, any forecast or financial advice by experts will largely depend on how fast the world can overcome this virus outbreak...
Start NOW if you haven’t already and save FIRST, not as an afterthought.
Savings should not be approached with a “wait and see how much you have left over at the end of each month” mindset, but rather with a “pay yourself first from the moment you get paid”. Put aside money towards your emergency funds before you do (or pay for) anything else. Every time some form of money frees up for you, say, a salary bonus, tax refund or any other cash bonus, transfer that money over into your savings fund where it’s out of sight and basically untouchable.
Again, don’t let ‘minion thinking’ squash your self-preservation instinct to grow your savings!
Here are two smart suggestions to help you steer your savings in the right direction:
There are many means and tools to save, just be sure to start now!