How Should Young Professionals Manage Their Money Wisely?

Following the 50-20-30 rule

Divide your money into three categories: essentials, lifestyle, and future.

50% of your income goes into your “needs” pool, which includes things like home expenditures and loan payments.

20% goes into your “future” pool, where you can save or invest your money.

30% goes to your “lifestyle” pool, which you spend on shopping, vacation, gym memberships, and other things that improve your life.

Enjoy things that make you happy

List the things that give you satisfaction based on your strengths and eliminate the ones that don’t. For example, if you prefer cycling over going to the gym, it may be time to reconsider your gym membership.

Consider your options for the future

As a young adult in your twenties, you may believe that planning for life in your sixties is premature. However, in fact, it is never too soon. Beginning retirement preparation in your twenties is important and helps to more comfortable older years. With retirement planning, ensuring that you have adequate finances and assets to maintain your retirement years financially stress-free.

Save your extra allowance

Make it a habit to preserve any balance from your daily allowance in a physical container, whether in your room, your car, or even next to your washing machine. Even if your remaining cash is only RM1, any amount can assist fuel your emergency fund, especially towards the end of the month before your next income arrives.

Set Up Auto Transfers

Setting up an automated transfer or standing order to set away 15%-20% of your paycheck may and will offer you more control over your spending.

Talk about money with your other half

If you are married, it is critical that you and your spouse remain honest with each other when it comes to money, whether it is personal or household finances. Find out about each other’s credit score, income, and debt. If one of you is experiencing financial difficulties, it is preferable to collaborate to find a reasonable solution. Working with a registered financial planner might assist if you require expert advice from a neutral third party.

Have a minimum of RM 1,000 for emergencies

Having an emergency fund is critical for getting you through an emergency or unexpected scenario. While you are still young, work on building an adequate emergency savings.

Only have one credit card

Break yourself from credit card addiction by owning only one credit card and using it only when you don’t have cash on hand. If necessary, cancel all of your other credit cards and stick with the one with the longest positive credit history.

Know your credit score

Your credit score is determined by the amount of loans and credit cards you have, as well as how regularly you have paid them off. It is a thorough examination of your debts and capacity to repay them, as well as a check to see whether you have missed any important payments.

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