Time to control your impulse to spend, but to save for the rainy day!
Despite tough times ahead with the ever-rising cost of living, Malaysians are presently still entrenched or caught in a vicious cycle of bad spending habits which are leading them towards a downward financial spiral. What not with the endless shopping sprees and poor financial management of their money. With such a grim financial outlook and poor socioeconomic status, Malaysia is bound to lose out in the ongoing rat race among the economic giants within this region. With the impending Vision 2020 just around the corner, it would seem that achieving developed status will be a far-fetched dream if our citizens continue with their spendthrift ways. Household debt in this country continues to grow at an alarming rate annually. Prevalent cases or incidences of personal bankruptcies continue to skyrocket unabated. More and more Malaysians are being declared bankrupt almost daily with multiple indiscretions in loans and personal financing. Poor financial planning is often credited as being the number one reason behind the mounting debt among Malaysians. It has become more important than ever to differentiate between one’s needs and one’s desires – the ultimate bottom line being to spend wisely. Coping with the escalating cost of living might be easier said than done. There are a myriad of reasons to curb our spending; be it the rising cost of living, global oil price slump, or abrupt subsidy cuts, among others. What matters most is the realization that we can no longer afford the luxury to spend the money we do not own. The carefree and spendthrift ways of the past is unsustainable in an uncertain and ever-changing global economic environment.
Budget yourself wisely and prudently
There is no dignity quite so impressive, and no independence quite so important, as living within your means. Whatever the country’s socioeconomic state and respective government policies, managing one’s personal finances is still the sole obligation of every Malaysian citizen. Spending wisely is only a preliminary step towards prudent financial management. No matter what public policies the government implements, the important thing is that consumers need to manage their finances better, period. Malaysian youths are particularly susceptible to overspending and accumulating personal debt. Mounting debt issues and other insolvency cases are major contributing factors to social ills which give rise to opportunistic crimes in society. The great divide or disparity in wealth distribution within society is also largely to blame for the soaring crime rate in the country.
Living beyond one’s means is also equally as dangerous, as it is a financial time-bomb waiting to implode, much like a real estate bubble waiting to collapse. Large chunks or portions of bankruptcies are also attributed to social greed and the lust for debt. The fundamental issue or problem with Malaysians is that they are literally big spenders but poor planners. Most of them are simply ignorant on how to budget themselves. Also, being prudent is all about counting the pennies – saving up the shillings which add up to the dollars. It is an easy excuse to blame it on the rising cost of living, but there are cheaper options available – you just need to be savvy about spending money. So instead of choosing upscale malls to do your grocery shopping, why not switch to wholesale hypermarkets instead? Being financially empowered and knowledgeable in money is truly the crux of the issue!
In addition, the worrying trend of household debt increment as well as escalating cost of living is a real cause for concern for many. Low-income and middle-income earners are often hit the hardest by surging costs and inflating prices. People are constantly being squeezed and pressured into a tight corner to compensate for their financial shortcomings. Many resort to borrowing money from loan sharks and unlicensed money-lenders to relieve their hardships and predicament. It is much tougher than ever for consumers in general, as things are going to get a lot worse if left unchecked or unrestrained. Yet, we continue to overspend no matter what the circumstance. It is a stark fact and sad reality of Malaysian life indeed.
The truth of living beyond one’s means
The price of basic necessities continues to rise, and they are not showing signs of a slowdown anytime soon. Living costs within the city may be significantly higher in marked contrast to rural areas, yet the margin of increase is substantially higher compared to merely three years ago. Henceforth, it is of little surprise if inculcating a culture of savings among Malaysians comes to no avail if citizens are continuously burdened with steep increases in prices of goods and services nationwide. Household expenditure has effectively doubled over the past five years, but our overall incomes or salaries have remained somewhat unchanged or stagnant for years. During desperate economic times, paying the monthly rent often poses as much a challenge as to covering your daily household expenses.
Needless to say, many a times we hear of bankrupt individuals committing suicide or resorting to crime over failed trade deals as well as businesses turned sour. Some business owners and entrepreneurs who used to spend lavishly now find it rather difficult to maintain their previously luxurious lifestyle. There will come a time when even the rich and wealthy will have to learn how to save money and to curb their spending sprees. No more buying branded items or dining out at fancy restaurants. However, what is ironic is that numerous unscrupulous traders even go so far as to reduce the portion of their products, which are sold for exactly the same price before the price hikes, in order to maintain their profiteering ways. It is one thing to tighten our belts, but to lower our standard is quite another story.
Our general standard of living remains the same, but the total living cost has gone up quite dramatically. All we can do is to cut down on our expenses and look for cheaper options or alternatives. On the contrary, being concerned with rising costs is another reason for frugal spending and leading a modest lifestyle for the majority of us. We must be willing to adapt and change the way we live to combat the issue at hand, rather than playing the blame game and finding unending excuses. Cutting down or limiting oneself on luxury spending and unnecessary excesses certainly goes a long way towards promoting a healthy personal finance.
Noteworthy examples include carpooling to your workplace and packing lunchboxes from home. Obviously, there will be obstacles in implementing change, but you must also have the will to change. More importantly, is how to survive change and to sustain one’s survival amidst continual change. Malaysians must take a proactive step, measure or approach to committing our earnings in curbing our lust for spending. Wishing all shoppers Happy Merdeka 2016! – HFM