Financial Lessons for Millennials

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Wouldn’t it be great if we were fully equipped with financial literacy and financial lessons by the time we leave the sacred (and safer) realm of student-hood? As we enter the very real world and embark on our first job, many times we don’t really know what we’re doing with the money and we wing it, hoping that we’ll figure it along the way.

Here are the top financial lessons they don’t teach you in college and that many of us end up learning the hard way.

1. IT IS NEVER TOO EARLY TO START SAVING FOR YOUR FUTURE Considering that Malaysians have very poor saving habits, this is a key lesson that you should never forget. Many Malaysians do not have enough to survive once they retire as their Employees Provident Fund (EPF) funds are not sufficient. Malaysians also do not have enough savings for a rainy day (emergency fund).

Create saving goals but split them into two categories: long-term and short-term saving goals. For your long-term goals, set aside money for your retirement or to buy your first property. For your short-term goals, build an emergency fund. This should have enough to help you survive should any unforeseen circumstances crop up – like a car accident, a dental emergency, or if you lose your main source of income.

2. STOP LIVING BEYOND YOUR MEANS

We all deal with peer pressure and these days, many of us want instant gratification or suffer from what is known as FOMO (the Fear of Missing Out). If you can afford the excessive lifestyle of a Starbucks coffee every single day and fancy dinners at trendy restaurants with speakeasy cocktails, then, by all means, go ahead. However, we’re pretty sure this means you aren’t saving money.

Stop living beyond your means in an attempt to keep up with the crowd. Learn how to separate your budget between necessities and wants.

3. DO NOT GO CRAZY WITH YOUR FIRST CREDIT CARD

We all get excited with our first credit card, and instead of seeing it as money we don’t actually have, it becomes an extended bank account. Knowing that your credit card gives you money that isn’t there, it is extremely tempting to go on a swiping spree. However, be careful, credit card debt can build in a matter of hours but will be an amount that you may need years to pay off.

4. YOUR CREDIT SCORE IS MORE IMPORTANT THAN YOU REALISE

Your credit score is an indication of your financial health for banks to decide if they want to approve or reject your application. This could be for a credit card or a personal loan. If you have a low credit score, this tells banks that you’re a risky customer to approve and they may either slap you with a higher interest rate or reject your application. Take time to review your credit score with agencies like Credit Tip-Off Service (CTOS) Malaysia. The good news is you can improve your credit score and most of these agencies will be able to identify the steps you can take to improve it.

5. LEARN FROM YOUR BAD INVESTMENTS AND PICK YOURSELF BACK UP

So, you may have invested in a get-rich-quick scheme hoping for 20-40% returns on your investment, and only to be left thousands of Ringgit poorer. Don’t beat yourself up about it for too long. It happens, but this is exactly the reason why you need to educate yourself on financial products and financial tools that are good investments. Learn from it and become wiser.

6. DON’T IGNORE YOUR DEBT AND CONFRONT IT HEADS ON

Ignorance is NOT bliss in this case. Confront it head on before compounding interest turns your debt into an unmanageable mound.

7. BUDGET, BUDGET BUDGET

List down your essential expenses, financial goals, and lifestyle expenses. Split this up into three(3) categories and write down every single thing you spend on or save towards.  

8. FILE YOUR TAXES AND TAKE ADVANTAGE OF TAX RELIEFS

Tax evasion is an offence and you can end up paying much more if ever caught. The good news is there is a chance that your monthly tax contributions are higher than necessary. If this is the case, you can get a tax refund or rebate. Understand the various tax reliefs you are entitled to, and keep receipts of all purchases for at least seven(7) years.

9. UNDERSTAND HOW MONEY WORKS

Become financially literate. Understand how money works, how you can save, how you can invest, the best ways to budget, identify the red flags of a multi-level marketing scam, know how to protect yourself against fraud. The list is endless. Luckily for you, CompareHero.my has a blog that writes about financial matters to help you boost your literacy levels and to be a wiser spender. 

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