WHY would I want anyone to know about my finances, least of all get help?

That would be the average response of anyone when asked, "Would you like some help in your finances?"

Pride gets in the way.

Sometimes a little help can go a long way; in some cases, financial management assistance is crucial.

We need to first look into our current financial health.
Ask yourself these questions: Do I feel guilty after swiping my credit card to treat my family? Am I struggling to keep the rest of my income after two weeks of payday? Is my credit card balance on the rise every month? Does all my income finish after paying off bills? Do I have to skimp on meals just to pay off my monthly bills? What happens if I lose my income, will I run dry within the next few months? Should I seek Ah Long's help to pay off an emergency expense?

If your answer is "yes" to at least one of the questions, then you need help in financial management.


So, let's begin by helping ourselves. To some, it takes a bit of organising and discipline. To others financial management assistance may mean spending on professional advice.

Perhaps for you, it is just a matter of changing your spending pattern. However, changing habitual patterns may be an uphill task. Getting out of debt is just like losing weight.


Let's look which category you fall under.

Category A: Student, living on an allowance

Category B: New employee, just started earning own money

Category C: Steady income earner, having worked for a few years

Category D: Business-person/ freelance agent, with inconsistent income

Category E: Retiree, living off pension and savings

Now consider the financial management help you may need if you were:

- Category A: I'm a student with no commitments and no liabilities so I wouldn't have any financial problems. Indeed, but your allowance doesn't even take you through the whole month. In fact, you can't survive unless Mum and Dad bail you out. However, for those of you who do not have such funding facilities, budget your monthly expenditure. List out your regular expenses, such as food, study materials and entertainment. Spend within your means. Any surplus should be saved.

- Category B: Great, I'm earning money at last. Now I can buy all those things I've always wanted but could not afford as a student; get a new credit card, have a lifestyle, etc. However, you must still maintain a monthly budget. As a new employee, you'll probably need a car but do you really need an Alpha Romeo at this stage in your life? This is actually when you need to start saving and investing as you have a whole future ahead of you. So don't spend tomorrow's income today.



- Category C: I'm in a comfort zone. My employment has assured me of an increment every year, which qualifies me to borrow more money from the bank so that I can buy bigger personal items (fancier cars, vacation homes or a yacht). In fact, your lifestyle has never been better. Bravo, if you are still spending well within your budget, with sufficient monthly savings. A very important note: Money is not wealth; the stuff money buys is wealth. At this stage in your life, your household members would have probably increased, hence increasing expenses.


- Category D: I'm an independent entrepreneur; my income is not bound by the small increments awarded by my employer; the sky's the limit. Hats off to you for what sounds like financial freedom. But is it really financial independence? You may earn RM30,000 on a good month but may not see any income for the next three months. Your monthly budgeting needs to include cash flow forecast. Don't live from hand to mouth. If you are really living a financially independent lifestyle, your assets will be working for you, your businesses paying most of your expenses and you will have few, if any, personal debts.



- Category E: I'm retired and no employer controls my time, I have lower expenditure needs, zero dependents and I have just withdrawn my Employees' Provident Fund. If you had planned your retirement well, you could be living the lifestyle you desired without financial woes. Your expenditure needs would probably be lower but there are other expenses. For instance, health expenditure escalates at this stage in life. Most Muslims would be utilising their funds to perform their haj during their retirement. Don't deplete your assets, you should still be investing further; this is not the time to take up new liabilities. And, of course, write a will.

Not withstanding which category you fall under, the rule of thumb is to have a monthly budget as a benchmark. Any surplus of monthly income and savings over expenditure is definitely a bonus. The solution is to just stick to the budget.

If you're in debt, try to pay off liabilities that are most costly to you and/or the smallest loan. The last thing you need is to be blacklisted in your credit assessment report. The credit card charge of 18 per cent per annum is a very costly debt. Pay it off as early as possible.

Next, have an emergency fund worth at least six months' expenditure at any one time.

The trick behind saving is to start early. Consider paying yourself first. Put aside at least 10 per cent of your salary as savings before paying bills. Employees have EPF benefits where your employer contributes at least 12 per cent of your salary. Your own 11 per cent contribution is a form of forced savings. The balance is surplus. Increase your investments whenever you can. You may need the help of an investment adviser to assist in suggesting a portfolio which suits your risk profile. Your profile and risk appetite changes over the different stages of your life.

The best time to take up a life insurance policy is when you start earning your own income; premiums are low and your parents may be your only dependents.

As you move into other stages of your life (marriage, owning a home, children), you will need to revisit your insurance needs as you have more to protect. Your capacity to earn needs protection, your mortgage needs to be assured, your children's education to be saved, hospital and surgical expenses to be covered.

It is never too late to plan for your retirement. Based on an EPF survey, 70 per cent of those who withdrew their EPF contributions upon reaching the age of 55 finished all their savings within three years. Don't fall into this trap.

There are many sources of funds other than your pension or EPF. Perhaps your life insurance would have now matured. Consider selling your big family home, especially if its value has doubled or trebled; since your children would have left home by now. You could comfortably live in a smaller home with lower maintenance and the surplus from the house sale is yours.

Agensi Kaunseling Dan Pengurusan Kredit (AKPK) is an agency set up by Bank Negara Malaysia to provide financial education, credit counselling and debt restructuring services to individuals. All services offered by AKPK are free of charge. For further information, please visit www.akpk.org.my or call toll free number 1-800-88-2575.