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Financial planning Savings Investing your money Getting financial products Loans and credit cards Protecting your money Getting help on financial matters Contact details of relevant organisations
The booklet is divided into two parts: Part 1 gives you guidance on areas directly concerning money management such as financial planning, savings and investment. Part 2 concerns other areas on money handling such as getting financial products, financial protection as well as getting help on financial problems.
Step 1: Set your financial goals Financial goals reflect things you want to do with your money for a given period of time. Setting goals will make sure you spend and save in a way that enables you to reach your goals.Your financial goals can be for short term, medium term or long term depending on factors such as your age, income, marital status and family commitments.
Term Medium
X X X
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Financial Goals
Clear credit card debt Buy a car Buy a house Save for retirement
Short
X
Long
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Step 2: Know where your money goes Next, you need to know how you have spent your income. Do this by noting down your spending over a period of time, say eight weeks.Your aim is not to cut your spending but to note where you have spent your money. Step 3: Examine your spending habits If you find that you have no spare funds or you would like to grow your savings, you need to examine your spending habits. Look through your list of spending and ask yourself if they are needs or wants.Trim off the wants and look for signs of bad spending habits that you need to change. Step 4: Create a spending plan Once you have studied your spending habits, you can now create a spending plan that will allow you to achieve your financial goals.You can use Bank Negara Malaysias Buku Pengurusan Belanjawan Keluarga (Managing Household Budget Book) which has been designed to assist users in creating and monitoring their spending on a daily, monthly and yearly basis.
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Savings
Start to save early. Dont wait for an ideal time.The sooner you start, the more your savings will be. Aim to save at least 10% of your income every month before you spend. Raise your savings as and when you receive extra income, e.g. when you receive a bonus. Keep your money in a fixed deposit account. With higher interest compared to a savings account, your savings will grow faster. Save before you spend and not vice versa. Most people do this: INCOME SPENDING = SAVINGS/ INVESTMENT The way to go: INCOME SAVINGS/ INVESTMENT = SPENDING In this way, you can be sure that you have some savings from the income earned each month.
Consider an emergency fund of three to six months of your monthly spending to meet sudden events and payments. In this way, you can stay away from getting into debt when there is a sudden need for money. However, do not use the money from the funds to meet your normal spending or to meet your financial goals. Steps in building an emergency fund 1. Work out your total monthly spending, e.g. housing, groceries, transportation, utilities and other debt repayments. 2. Decide the number of months of monthly spending you would like to have in your emergency fund. 3. Work out your total emergency fund, i.e. total amount of monthly spending in step 1 multiply by the number of months in step 2. 4. Put funds into your emergency fund.
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Before you invest in any product, find out the risks and returns of the investment. High returns mean high risks. If you are not prepared to take the risks, dont invest. Be careful of investment products that promise very high returns, e.g. those that promise returns that are much higher than the market rate.This is to avoid being cheated in a bogus investment scheme.
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You should only save or invest with parties licensed by the authorities so that your savings or investments are protected: The institutions accepting deposits that are licensed by Bank Negara Malaysia.You can check their licensing status from Bank Negara Malaysias website www.bnm.gov.my. Your deposits placed with the financial institutions licensed under Bank Negara Malaysia will be fully guaranteed by the Government through Perbadanan Insurans Deposit Malaysia (PIDM) until December 2010.This coverage is provided automatically at no cost to depositors.To find out more about deposit insurance, visit PIDMs website www.pidm.gov.my or call PIDMs toll free line 1-800-88-1266. Individuals and companies involved in investment activities are licensed by the Securities Commission. You can check their licensing status at the Securities Commissions website www.sc.com.my.
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Take your time to consider any offer. Say No if you do not need the financial product that is being sold to you. Be aware that some financial products like unit trust or insurance/takaful allow a cooling-off period for you to decide whether you wish to continue with the products after you have signed the agreement.
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Exercise more control when using credit cards since you are effectively having cash in hand. If you overspend, you may end up with a huge credit card debt. Remember, finance charges for credit card debt is high, it can be as high as 18% per annum. Talk to your banking institution as soon as you can if you have a debt problem.Your banking institution may be able to vary your repayment amount for a short period until your financial position becomes better.
Write to the Complaints Unit of your institution. If you are not satisfied with the decision given by your institution, refer your complaint to the Financial Mediation Bureau (FMB).The FMB is an independent body set up to deal with disputes between the public and its members (e.g. commercial banks, insurance companies, takaful operators, non-bank institutions that offer credit cards and charge cards).The services of FMB are free of charge.You can get details on the type of complaints handled by FMB from its website www.fmb.org.my.The decision of FMB is binding on your institution but not on you. If you are not satisfied with the decision of FMB, you may take your case to the court. If the complaint does not fall within the scope of FMB, you can refer the complaint to Bank Negara Malaysia.
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Assistance on debt management If you need advice on money management and assistance to deal with your debt, you can contact Agensi Kaunseling Dan Pengurusan Kredit (AKPK). AKPK is an agency set up by Bank Negara Malaysia to provide money management, credit counselling, financial education and debt restructuring services for individuals.The services of AKPK are free of charge. More information on AKPK is available on its website www.akpk.org.my.
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