Becoming financially responsible seems like a decision for your future self.

If you are a hardworking Malaysian then I have bad news for you, as your time of financial responsibility has come…

And no, being able to make your credit card payment at the end of every month is not what being financially responsible is all about.

giphy (118)

Here are 8 smart ways to become more financially responsible:

1. Create a budget plan

giphy-(1131)

You need a budget whether you make thousands or hundreds of thousands of ringgits a year.
If you are having trouble creating a budget, the Visa Payroll Card Financial Literacy website provides a better understanding on budgeting, financial literacy, and financial responsibility.
A budget plan is one of the greatest decisions you can make, planning can help you save monthly, while learning to be financially responsible.

Creating a good budget plan will help you to….

2. Spend less than you earn

giphy (111)

Say goodbye to your Mid Valley’s weekend shopping sprees, coffee times at Publika’s Bens and the back to back movies at KLCC’s TGV.

With an average salary in Malaysia, let’s face it, saving anything is hard. You have the time for that Caramel Macchiato, but you have no money for it. You have time for that sale on those red stilettos but then again, you have no money to buy them.

No matter how much you’re paid, you’ll never get ahead if you spend more than you earn.

Trying to spend less is often times much easier than trying to make more, so a little cost-cutting can go a long way.

You don’t even need to make big sacrifices, just cut spending off a little bit where you can. You’d be amazed at what it all can amount to.

3. Pay off loans

giphy (114)

In Malaysia, one of the biggest problems are student loans. Most of us who weren’t lucky enough to secure student scholarships have a s*** load of debt to pay back, and a mamak tab to take care of.

Despite our good resolves to pay off the balance quickly. The reality of things is, though it is better and easier to track our spending through cash, too many of us depend on “plastic” and thats when things can get sticky.

So know your rights when it comes to your card. Visa Payroll Card Financial Literacy website provides lessons on dealing with your debt, your rights, and how to handle debt collectors.

4. Invest!

giphy (116)

Investing is a huge financial responsibility, but if it is done right, it can be a huge reward.

Whether it’s that house on Jalan Bangsar that you’ve been dreaming of, or the latest Volkswagen that you have been eyeing, invest in something that will account to you and your future.

Investing is a commitment, that takes more than some cash and a bunch of stocks, it takes financial literacy and responsibility to see it till the end.

You can go to VISA (I know VISA again, but they provide the best platform…), they provide advice on investments, and how to invest for home ownership.

If you think that you are too young, or just not ready to own a home, you might be right!

Home ownership isn’t for everyone. It’s a long-term commitment. The prices of homes increase over the years, but usually at a slower rate. And then you face problems like financing, closing costs and other expenses associated with owning a home.
You also have to think about the upkeep of a home. Everything from cutting the grass to putting on a new roof is your responsibility. The costs can really add up.

Then add taxes, water and sewer bills and other expenses and you can get into some sizable payments. But when you take full responsibility for the maintenance and finance for a home, it’s yours to do what you please. Paint the walls purple. Add a planetarium. Put in a fireman’s pole. You’re in charge!

Another advantage to keep in mind is that once you have an investment, the part of your monthly payment and your interest is tax deductible. Compare that with paying rent, which is neither an investment nor a tax write-off. I know this all seems like sunshine and rainbows, which is great, but before you make your decision make sure you think carefully and understand the financial responsibility that is investing.

With the advantages and disadvantages, know where you stand, either way a decision like investing is on the tracks of becoming financially responsible.

5. Keep good records

giphy (117)

Sounds like a drag, I know.

But think of it this way: if you don’t keep good records, you’re probably not claiming all your allowable income tax deductions and credits. With a budget (see number 1) you can set up a system and use it all year. It’s much easier than scrambling to find everything at tax time, only to miss items that might have saved you money.

Keeping good records also applies to keeping good credit scores, and paying of loans (see number 3).

How to keep good credit scores? The professionals at VISA say:

  • Complete credit applications carefully and accurately
  • Use your credit cards responsibly and don’t let them reach their limit or spend beyond your means.
  • Attempt to pay your credit card balance in full each month, but at least make the minimum payment by the due date.
  • Always pay bills on time.
  • If you have problems paying your bills, contact your creditors. In many cases, they will work with you to figure out a payment plan.
  • If you move, let your creditors know your new address as soon as possible to avoid losing bills or receiving them late.
  • If your credit card is lost or stolen, report it immediately.
  • Review your credit reports periodically for accuracy and report any errors immediately.
  • Establish a consistent work history

6. Get insured

giphy (119)

As an adult, you are responsible for protecting yourself and all your belongings. Insurance is a smart investment that is an advantage for your future financial goals.

While protecting your goals, you protect yourself from any future mishaps and unfortunate incidents by getting insured.
VISA shares that a safe way to handle the unexpected includes creating an emergency fund that could be set aside for the future.

7. Save up!

giphy (115)

Whether it is saving for retirement, loans or just the future in general, the smartest plan is to save up!

Resolve to set aside a minimum of 5% to 10% of your salary for savings before you start paying your bills. Better yet, have money automatically deducted from your paycheck and deposited into a separate account.

That sure sounds simple but we all know that saving is rather hard, especially when the iPhone 6s will soon be in the market. Rest assured, there are some advantages to saving, which VISA lists as:

  • Compound Interest

This is money that grows over time because it is interest earned on interest. As long as you leave the money in there, it will keep earning more. If you left that same RM100 in a 6% interest account for 40 years, you’d have RM1,028, and your annual interest earnings would be more than RM50 per year.

  • The Rule of 72

All you have to do is divide 72 by the interest rate. So if your rate is 6%, divide 72 by 6. At that rate, it will take 12 years to double your money.

  • Big Money

Still not impressed? Sure, 12 years is a long time to double your money. But that’s only if you put your money in once and leave it. If you keep contributing, your money will really grow.

8. Quit the bank of Mom and Dad.

You are an adult now, time to be responsible! Cut the cord and start planning your financial life from now with these 8 smart ways to becoming financially responsible.