According to the EPF chief strategy officer recently, only 3% of contributors can afford their retirement. Over the past two years, Covid-19-related withdrawals, namely i-Sinar, i-Lestari and i-Citra, have had a massive impact on the savings of Employees Provident Fund (EPF) contributors, resulting in many members below the age of 55 having critically low EPF savings.
Unless
the government raises the retirement age like what Singapore has
recently announced, EPF contributors may not have enough to enjoy their
sunset years. The retirement and re-employment ages for Singapore
workers will be progressively raised to 65 and 70 years old
respectively, starting from next year.
Your dreams of traveling
the world in your retirement years require extra retirement savings.
This seems far-fetched now as your savings plan might have been derailed
by the pandemic.
The world of personal finance has changed over
the past 20 months since the pandemic held its ruthless grip on the
nation. If you are in your 50s and 60s and are lucky to have kept your
job, saving money isn’t so difficult during the pandemic. Your kids are
probably grown up and you’re free from tertiary education commitment.
You’re probably also free from housing loan instalments. For others, in
particular those who lost their jobs, got furloughed, had a pay cut or
whose businesses took a big hit, money remains a serious struggle. As
the pandemic loosens its grip, it’s time to rethink how to spend and
save in the Covid era.
Fortunately, there are always ways to
improve your retirement finances if you start to implement some cost
cutting strategies now. Here are some simple ways to save money.
1. Cancel unnecessary subscriptions
Cancel
any subscription you aren’t using regularly, such as subscription-based
television services, under-utilized gym, magazines and streaming
services.
2. Cut down on non-essential monthly payments
Desperate
times call for desperate measures. If your earnings have been impacted
by the pandemic, re-examine all your monthly expenses, including your
children’s tuition and extracurricular fees. Cancel costly tuitions and
encourage your children to self-study. Music, dance, swim, martial arts
lessons, etc. can be halted temporarily until a time when your finances
improve.
3. Slash your biggest expenses
Housing costs are usually the biggest part of most people’s expenses.
If
you own your home, consider whether it is feasible to refinance your
housing loan for a lower rate. You may also consider renting out a room
or parking lot.
If you are renting, consider looking for a cheaper place or smaller home or even live with house mates.
4. Plan money-saving meals
There
are plenty of recipes for budget meals on the internet. In general,
cook less meat and replace protein from meat with eggs, beans, peas,
tempeh, peanut butter, broccoli and peanuts. No one says you can’t have
peanut butter on sprouted wheat toast for dinner. It’s filling,
nutritious, delicious and wallet-friendly.
5. Sell items that don’t spark joy anymore
If
you don’t use it, why not make a little money from it? Selling off your
old furniture, clothing, shoes, bags, tech items, used baby stuff and
kitchenware that you don’t need anymore is a great way to clear out your
storage areas while you make some money at the same time.
6. Treat your savings as a bill you must pay
It
pays to shift your thinking and treat your savings like a bill that
must be paid monthly. Every month, pay your savings “bill” by allocating
funds to your savings account, like you would towards other bills. You
can either manually transfer money to your savings account or set up
automatic transfers from one account to another. Using this method, you
will save money by obligation as opposed to waiting until month end to
save whatever amount is left over, if any is even remaining!
7. Trim your grocery budget
Most
people spend the bulk of their income at grocery stores each month.
It’s so tempting to walk through those aisle, grab a bag of chips here, a
pack of cheese there and then top it off with a few bars of chocolate
and gum at the checkout counter. These little impulse purchases add up
quite a bit and end up blowing your budget every single month. I’m
guilty of this too and the pandemic has taught me to practise
self-control on impulse purchases.
Plan out your meals each week
and check what you already have in your kitchen before you head to the
supermarket. Set a budget for each grocery shopping and stick to it.
8. Have a budget and stick to it
Have
a budget to keep track of your monthly cash flow on an Excel
spreadsheet or a template from Google sheet. For years, I’ve been
tracking my budget and all my daily expenses on an Excel spreadsheet and
I find it very effective in helping me trim down expenses to save
money.
First list out all your net income (employee, freelance,
investment, interest earned on any savings account, etc.), then list all
expenses (housing loan, hire purchase, rent, grocery bills, utility
bills, children’s education expenses, etc). Total up each set of figures
and subtract the total expenses from the total income to see if you
have a surplus or a shortage.
If your total income is larger than
your total expenses, well done – you have found money for saving or
investing. If it’s vice versa, don’t fret. You’ll have to look at all
your household expenses to see where you can prune if you want to
balance your budget and have a surplus for saving.
9. Have a Side Hustle or freelance job on top of full-time job
With
the economy still reeling from the prolonged pandemic, you can never
have too much income diversity. Many people have been hit with layoffs,
pay-cuts and furloughs since Covid-19 struck.
There are many
options for side hustle and freelance jobs – start a small baking
business from home, writing jobs, teaching jobs, pet sitting, start an
e-commerce or drop-ship business, driver for app-based ride services and
the list goes on.
Capitalize your skills and talents, including
those you use in your life outside of work and this can point you in the
right direction. If you have a passion and talent in baking and
cooking, wouldn’t it motivate you to run a side business to do what you
love during your free time?
With the boost in income, you can pay
down debt faster, boost your retirement account and have a better
quality of life for you and your family.
10. Review your insurance policies
Re-examine
the coverage for all your plans, including the policies for your
children. You may have too much and be wasting money or too little and
not be sufficiently covered.
Bottom Line
If you wait for
the right time to grow your nest egg, it’s never going to happen. The
best time to start saving is right now, even if it’s just RM50 a month.
Your RM50 savings per month will snowball into RM600 a year and multiply
to over RM6000 in 10 years, thanks to the power of compound interest.
With
some discipline and a simple change of attitude and lifestyle, you’ll
be surprised by how much expenses you can cut and the money you’ll save.
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