3 Intelligent Approaches to Financial Management for Youths

The usual monthly paycheck, a nice little work bonus, festive allowance from uncles and aunties — we all know the adrenaline rush of having some extra cash on hand.

But let’s be real: more often than not, that money’s out of the bank just as quickly as it came in! While it could have gone to buying that shiny thing we’ve been eyeing for months, the reality is that many of us young adults know we can’t always blow it all on a luxurious lifestyle. We’re more likely to put it towards a loan we’ve been servicing, or a big (but essential) purchase that’s been put off for months, or even just clearing the monthly mountain of bills.

In fact, that’s the case for an alarming 73 per cent of Malaysians aged 18 to 40: we’re all repaying some form of debt.

We can promise ourselves that we’ll just “save more next time”. We can set aside stricter budgets for emergencies and rainy days. But with financial commitments piling up on top of ballooning costs, what else can we do on top of that?

It’s not entirely about sacrificing that daily dose of coffee or the occasional self-care treat. It’s about knowing where the money should go. 

1. Turning credit cards and BNPL into friends, not foes

We’ve all heard the horror stories: getting carried away by the convenience of living on credit, enjoying the financial freedom of delaying payment for expensive items that can be purchased immediately. Credit cards and ‘buy now, pay later’ (BNPL) platforms have long had a bad rep as massive debt traps, with some more careful Malaysians even avoiding the latter completely.

In truth, though, they can actually be quite good for our financial health — as long as we approach them with a slightly different mindset. 

Rather than seeing them as a means to postpone payment (which could awaken the payment procrastinator in us), we as young Malaysians should instead fully leverage our youth and consider them as ways to start building a positive credit score! This is more likely to motivate us to pay our bills on time and reduces the chances of snowballing interest rates. Better yet: it also improves our financial standing for the loans that will really count in the future, like a housing or wedding loan.

Mastering which purchases to use credit cards or BNPL for can also make us small profits. For instance, by using credit only for certain types of weekly or monthly purchases, we’re more likely to be able to pay each month’s bill in full — which many credit card companies now reward with extra cashback or reward points. Rack them up, and we may just be able to afford a fancy item off their redemption catalogue for free!

2.  Start investing early, small, and diverse

Investment can come off as an income stream for older folks who already have some spare money set aside. Less than 35 per cent of young Malaysians consider it a priority, an even smaller proportion than those who are prioritising their own businesses.

Truth is, though, investing is an important way of growing wealth — which is all the more important now in the face of rising costs. Effective investing is less about the amount of money put into it, but rather about knowing what to invest in to suit your current age group and knowledge of the market. Even the smallest investment can make a huge difference over time.

Often, young and inexperienced investors can be made to feel like they are “missing out” on more lucrative opportunities or that they are “misplacing” their investments. But I consider investing a lot like swimming: it’s always better to start small than jumping into the deep end from the get-go.

Low-risk investments like fixed deposits, unit trusts, or Amanah Saham Bumiputera are recommended to start off with, especially since banking staff or trust agents will always be on hand to answer questions or profile any investment needs. Moreover, passive investment apps or platforms can also be a low-effort, digitised way to grow your wealth on the side. 

Dabbling in small-scale investments is a learning experience that can boost confidence to eventually diversify to higher-knowledge or more volatile ones, like the stock and capital markets. (And as always, remember that reward is proportional to risk, so tread cautiously!)

3. Getting an expert opinion — that understands you 

With so many financial solutions and platforms out there, we’re not only spoilt for choice — we probably wouldn’t even know where to begin! It’s already natural instinct for us to turn to Google or social media to find information, so why not use that to connect with financial advisors that can cut through the noise as well?

Financial consultancy has come a long way from the middle-aged man with a suit and briefcase. These days, they come in the form of a US$104 billion market: social media finfluencers (financial influencers) and modern advisory firms like Intelligent Consultancy.

The financial consultant market is becoming increasingly younger, with advisors that are more relatable to the everyday Malaysian youth. They’re easier to connect with and understand: they do away with the fancy jargon, replacing that with easily digestible advice through social media content and personalised consultancy sessions.

Debt management, personal loans, credit checking, even small business financing — advisors can help young Malaysians manage their financial health and work out payment strategies that work best with the lifestyles we hope to lead. Moreover, consultants and finfluencers may also have their own areas of expertise that can be a valuable source of financial upskilling and knowledge for us: investment security, stock market analysis, and even up-and-coming financing alternatives like Bitcoin or cryptocurrency.

Even the best athletes have coaches, and for good reason! Financial advisors are uniquely positioned to help us devise strategies that not only meet our needs, but take us to the top: to future lifestyle aspirations, financial ambitions, and the big purchases we want to make — all without giving up that daily coffee.

By Keith Khor Kah Yong, Founder of Intelligent Consultancy

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