3 Strategies to Raise a Financially Savvy Kids

By Helwa Sofni

Raising financially savvy kids to protect their financial future.

Most financial planners in Malaysia have witnessed firsthand the profound effect that financial literacy can have on an individual’s life. Imagine if financial literacy is given at an even earlier age.

Parents play a critical role in shaping their children’s financial futures. One of the most powerful ways to do this is by leading by example and showing responsible money management habits that children can learn and adopt.

Let’s delve into some specific strategies that parents can use to lead by example and to help ensure their children grow up to be financially responsible adults. Parents can help lay a solid foundation for their children’s future by incorporating these strategies into their daily lives.

1. Setting a Budget

Budgeting is an essential aspect of financial management. It involves tracking income and expenses, setting financial goals, and allocating funds accordingly.

By creating a budget, Malaysian parents can teach their children the value of living within their means and making informed financial decisions.

Example 1: Create a visual representation of the household budget, such as a chart or a spreadsheet, and explain each category (housing, utilities, groceries, etc.) to your children. For instance, if your monthly grocery budget is MYR 800, discuss how you arrived at this figure and which items are included. Discuss the family’s financial priorities and goals, and let your children suggest ways to save money or cut expenses.

Example 2: Encourage your children to create their own budgets for their allowances or earnings from part-time jobs. Help them set saving and spending goals and track their progress. If your child receives an MYR 50 allowance each month, help him/her allocate MYR 30 towards spending and MYR 20 towards saving.

2. Saving for Emergencies

Emergencies can happen when you least expect them, and being financially prepared is crucial. Malaysian parents should aim to build an emergency fund that covers at least 3-6 months’ worth of living expenses. This will serve as a safety net in case of unexpected financial setbacks, such as job loss or medical emergencies.

Example 1: Open a savings account for your child and discuss the purpose of an emergency fund. Encourage them to save a portion of their allowance or earnings from part-time jobs by setting a monthly savings goal. If your child’s monthly savings goal is MYR 100, explain how this could help cover unexpected expenses or contribute to their future education.

Example 2: Share your own experience of how having an emergency fund of MYR 15,000 helped your family during a difficult time. This will illustrate the importance of being financially prepared for unexpected events and the benefits of saving.

3. Investing for the Future

Investing is a crucial component of financial planning, as it allows individuals to grow their wealth over time.

Malaysian parents should consider various investment options, such as stocks, bonds, or real estate, to secure their financial future and use this experience to teach their children about the value of investing.

Example 1: Discuss your investment goals and strategies with your children. Explain the difference between various investment options, such as stocks, bonds, and real estate, and discuss the importance of diversification. If you invested MYR 10,000 in a diversified portfolio five years ago and it has now grown to MYR 15,000, explain how diversification and long-term investing contributed to this growth.

Example 2: Consider opening a custodial investment account for your child and allow them to participate in selecting investments. Start with a small initial investment, such as MYR 500, and guide them through the process of researching and selecting investments that align with their interests and risk tolerance. This hands-on experience will help them learn the basics of investing and give them a sense of ownership over their financial future.

Conclusion

Financial literacy is crucial for everyone, and parents are well-placed to play a vital role in shaping their children’s financial future. As parents practice and share good financial habits, their children can follow in their footsteps. By involving their children in the financial decision-making process and leading by example, parents can help ensure their children grow up to be financially responsible adults. These skills will not only benefit the children themselves but will also contribute to the overall financial health and stability of Malaysia as a whole.

What are other ways to raise a financially savvy kid?

About the Author

Helwa Sofni has more than a decade of experience as a Chartered Accountant and held many positions in corporate sector before venturing herself as a Licensed Financial Planner with one of the top leading financial advisory in Malaysia, Wealth Vantage Advisory Sdn. Bhd. This mother of three who resides in Negeri Sembilan, is also a certified Islamic Financial Planner. She truly believes that financial literacy is crucial for everyone in order to live life confidently and peacefully while pursuing one's dreams.

Debt Management in Malaysia

By Norsalina Aisyah Salim

Managing debt continues to be the most sought-after topic as many Malaysians struggle with it. Learn some of the ways to have a better debt management.

Debt management is an important aspect of personal finance that everyone should know, especially in Malaysia, where debt is a common problem for many people.

According to the latest statistics from the Malaysian Insolvency Department, the total number of bankruptcy cases administered for the period of 2018 to December 2022 was 49,133.

The main causes of bankruptcies in Malaysia include personal loans and business loans.

Many people in Malaysia find themselves in financial difficulties due to job losses, medical emergencies, or business failures. Left unchecked, debt can spiral out of control and cause financial stress that affects various aspects of life.

So, what is the importance of debt management in Malaysia, and what are the options to manage debt? What are the benefits of hiring a financial planner to assist you manage your debt?

Why is Debt Management Important?

Debt management is important because it helps individuals avoid financial instability, stress, and problems caused by excessive or unmanageable debt.

If you are in debt, you may feel overwhelmed and stressed, which can negatively impact your physical and mental health. In addition, debt can restrict your financial freedom, limit your ability to make important life decisions and prevent you from achieving your long-term financial goals.

One of the main reasons debt managements is important is that it helps you maintain your credit score. If you have high debt or miss payments, it can negatively impact your credit score and make it harder to access credit in the future. A low credit score can make it more difficult to get approved for loans, credit cards or mortgages and prevent you from making major purchases or investments.

Debt management can also help you avoid falling into a debt trap. If you do not have a plan to manage your debt, you may have trouble making your payments, default on loans, or incur additional costs or fees. This can make it difficult to get out of debt and lead to a cycle of borrowing that is difficult to break.

Debt management can help you achieve your long-term financial goals. If you have high debt, it can be difficult to save for retirement, purchase a home, or invest in your education or business. By managing your debt effectively, you can free up more money for your long-term goals, making them easier to achieve.

4 Ways to Manage Debt

• Budgeting: The first step in debt management is to create a budget. A budget is a plan that lists your income and expenses. This lets you see where your money goes and identify where to save more. When you create a budget, you can set aside a specific monthly amount to pay your debt, reducing your debt over time.

• Debt Consolidation: Debt consolidation combines multiple debts into a single loan. Debt consolidation can make managing your debt easier because you only have to make one monthly payment rather than multiple payments with different interest rates. However, it is important to know that debt consolidation is not always the best option for everyone and be sure to consult a professional before making a decision.

• Debt Snowball Method: In this method, you pay off your smallest debt first and then use the money you would have used on that debt to pay off the next smallest debt, and so on. Using this method can effectively pay off your debt. It gives you a sense of accomplishment and momentum as you pay off each debt.

• Negotiate with Creditors: If you are having trouble paying your debts, you should negotiate. You may be able to work out a payment plan or negotiate a lower interest rate, which can help you reduce your debt over time.

Getting Professional Help with Debt Management

If you are having trouble getting a handle on your debt, it may be a good idea to get professional help. A financial planner can give you personalised advice and show you how to effectively manage your debt. They can also help you create a debt management plan tailored to your needs and goals.

Benefits of Hiring Financial Planner for Debt Management

• Expertise: Financial planner have the expertise and knowledge to help you effectively manage your debt. They can advise you on the best debt management strategies and help you create a plan that works for your unique financial situation.

• Objectivity: A financial planner can look at your finances objectively and help you make decisions in your best interest.

• Accountability: Working with a financial planner can help you stay on track with your debt management plan. They can help you monitor your progress and adjust as needed to ensure you are making steady progress toward becoming debt-free.

Considerations When Hiring a Financial Planner

Hiring a professional financial planner can be a wise decision for individuals who cannot manage their debt. However, it is crucial to consider some key factors when choosing a professional financial planner. Here are some considerations:

• Qualifications and experience: Before hiring a financial planner, check their qualifications and experience. You can look for professionals certified by reputable organisations or with a proven track record of helping clients successfully manage their debt.

• Fees: You must know the fees for hiring a financial planner. Some experts charge an hourly or flat fee, while others charge a percentage of the debt, they help you manage. Make sure you fully understand the fees before hiring a professional.

• Services offered: Different professionals offer different types of debt management services. For example, some focus on debt consolidation, while others specialise in negotiating with creditors. Understanding a professional’s specific services is essential to ensure they meet your needs.

• Reputation and references: Before hiring a debt management expert, check their reputation and references. You can search online for reviews and testimonials or ask for references from previous clients. This way, you can get a better idea of the professional’s track record and quality of services.

• Compatibility and communication: Finally, you must choose a financial planner you enjoy working with and can communicate clearly and effectively. You should feel comfortable discussing your financial situation with the professional and confident they will work with you to create a customised debt management plan that meets your needs.

Conclusion

Debt management is an important aspect of personal finance, especially in Malaysia, where debt is a common problem for many people. By creating a budget, exploring debt consolidation options, or using debt snowballing, you can effectively manage your debt and reduce financial stress. If you struggle to handle your debt, you should get professional help from a wealth advisor.

Wealth Vantage Advisory Sdn. Bhd. was established as the company of choice for clients and financial advisors, leading the change in the industry by focusing on the right way to do things.

Find out more at: https://www.wealthvantage.com.my/

Would you get professional help to manage your debt situation?

About the Author: Norsalina Aisyah Salim

Norsalina Aisyah has experience as Dealer Representative in Stock Broking Company for more than 5 years and was involved in many women and community-educating financial activities in Malaysia for years before joining Wealth Vantage Advisory as a Licensed Financial Advisor. She is now pursuing her PhD. at University Utara Malaysia and has a Certified Financial Planner (CFP) qualification. With her education, certification, and personal experience, she is keen to help others make the right financial decisions and has healthy finances to live a well-balanced life

Kos Membesarkan Anak di Malaysia

Oleh Saidah Asilah

Kos membesarkan anak-anak di Malaysia sering dibicarakan tetapi tahukah anda berapakah yang perlu diperuntukkan untuk ibu bapa setiap bulan bagi memastikan keperluan anak-anak mereka mencukupi?

Tahukah anda kos membesarkan seorang anak ketika lahir untuk ibu bapa bekerja di Lembah Klang secara puratanya mencecah hampir RM800 sebulan?

Waima, kenaikan gaji tahunan secara purata bagi individu berjawatan eksekutif di Lembah Klang adalah sebanyak RM300 setahun. Hal ini daripada pengalaman penulis dengan klien sebagai seorang Perancang Kewangan Bertauliah. Tujuan artikel ini ditulis untuk memberikan panduan kepada ibu bapa muda bekerja dalam membuat perancangan kewangan bulanan mereka. Sejurus mendapat khabar gembira bahawa mereka akan menimang cahaya mata, mereka juga disarankan telah bersedia daripada segi kewangan untuk menampung kos di luar jangka sebaik bayi mereka lahir.

Penulis telah membuat satu tinjauan ringkas di laman sosial Twitter untuk memperoleh data untuk artikel ini.

Kos Bulanan untuk Ibu Bapa Muda

Tinjauan berdasarkan 16 responden yang terdiri daripada ibu bapa di Malaysia

Kos Bulanan Menghantar Bayi ke Pusat Jagaan

Berdasarkan data di atas, sekiranya ditambah purata kos pengasuh berjumlah RM500, kos susu formula dan lampin pakai buang, kos ini boleh mencecah sehingga RM746 sebulan. Angka ini bukan sedikit. Justeru itu, tidak menghairankan jika ada ibu bapa muda yang sanggup mengambil langkah berhenti kerja atau sedaya upaya memberikan susu ibu untuk menjimatkan kos.

Kos Pendidikan anak di Prasekolah

Selepas anak mula menjejakkan kaki ke alam pra-persekolahan antara umur 4 hingga 6 tahun, kos bulanan dijangka masih kekal sama.

Kos untuk 3 prasekolah di Malaysia

Bergantung kepada aliran pra-sekolah yang menjadi pilihan, penulis telah membuat kompilasi tiga pra-sekolah yang dikenali dengan cawangannya di seluruh negara.

Ibu bapa yang memilih prasekolah untuk anak mereka mempunyai pelbagai kriteria, samada kos, jenama, atau kaedah pembelajaran yang diterapkan. Tambahan lagi, ibu bapa bekerja lebih memilih untuk menghantar anak mereka dari pagi sehingga petang.

Kos Pendidikan Anak di Sekolah

Kebanyakan ibu bapa berasa lega apabila anak mula bersekolah di sekolah rendah. Mereka mendapati yuran bulanan tidak begitu membebankan.

Kos Persekolahan di Sekolah Rendah Kebangsaan

Merujuk kepada gambar di atas, sekiranya ibu bapa memilih untuk menghantar dan mengambil anak daripada sekolah, kos sebenar bulanan boleh dijimatkan lagi. Ia kerana, kos pendidikan sekolah kebangsaan hampir kesemuanya percuma, secara bulanan. Justeru, kos yang dipamerkan di jadual di atas setelah melibatkan wang saku atau tambang bas ke sekolah.

Walaubagaimanapun, ada juga ibu bapa yang memilih sekolah swasta kerana faktor kaedah pembelajaran yang berfokus, tidak memeningkan kepala dengan isu transit, dan jarak yang dekat. Secara perbandingan, ibu bapa boleh melihat kemampuan kewangan antara sekolah kebangsaan dan sekolah swasta.

Kos sekolah rendah swasta pada tahun pertama

Jelas perbezaan yang agak ketara dalam membuat keputusan samada untuk anak meneruskan pembelajaran di sekolah jenis kebangsaan atau swasta. Persekolahan swasta seakan menyambung dan menambah lagi kos selanjutnya sejak dari alam pra-persekolahan lagi.

Pelbagai pilihan untuk untuk ibu bapa bekerjaya, ditambah lagi dengan kos sara hidup dan inflasi gaya hidup yang sentiasa meningkat, ibu bapa disarankan untuk membuat keputusan setelah mengambil kira tahap kemampuan kewangan sepanjang tahun.

Antara kesan literasi kewangan seperti dipetik daripada Strategi Literasi Kewangan Kebangsaan Malaysia 2019-2023:

• Menjalani kehidupan yang bermakna, selesa dan stabil

• Kesedaran ilmu, kemahiran dan tabiat yang diperlukan

• Meningkatkan keyakinan dan kemahiran membuat pilihan yang bijak

Kesimpulan

Karakter dan matlamat setiap individu adalah berlainan. Walaubagaimanapun, keselesaan hari ini mungkin tidak berpanjangan sekiranya membuat keputusan kewangan yang salah. Buatlah keputusan yang berasaskan pandangan yang holistik, supaya mempunyai keseimbangan antara keperluan simpanan kecemasan, dana pendidikan tinggi anak-anak serta perlindungan pendapatan yang mencukupi.

Berjumpalah dengan Perancang Kewangan Bertauliah atau Licensed Financial Planner yang boleh memberikan satu pelan tindakan menyeluruh daripada analisa kewangan bersama supaya setiap keputusan yang diambil tidak berat sebelah dengan faktor emosi, favourite atau penyelidikan seorang diri yang boleh menjadi bias dalam membuat sebarang keputusan kewangan.

Apakah antara kos yang anda rasakan sangat penting untuk membesarkan anak-anak di Malaysia?

About the Author: Saidah Asilah Saidah started her career as a graduate trainee with the Securities Commission Malaysia. Then, with a deep interest in investments, she furthered her studies in MSc in International Business and Emerging Markets, graduating in 2013 from The University of Edinburgh, UK. Saidah is a Certified Financial Planner and describes herself as a multi-talented adventurer who gives a positive impact on each person she met.