You've just gotten your first pay check! Yay! But before you go and spend it all, I'm going to be an annoying aunty and say: Wait just a micro minute. Don't take out the plastic until you've read this post.
You're a grad, fresh out of uni with a new job. This is the time where your financial decisions could affect the rest of your life. You need to cultivate good money habits NOW, not later, because you could get into a financial hole so deep that it could take years to crawl out of.
So here are some of my money tips for those who have just started working. Follow them, and you'll have a brighter financial future:
1. Forget buying that fancy imported car. Go local. Go second hand if you can. Or take public transport. Seriously.
The uncle at the Perodua shop couldn't understand why I wanted to buy an Axia.
"For people like you earning this much, it's better for you to get a better car like the Myvi," he insisted.
"I don't believe in spending more than RM30,000 for a car," I said, shrugging.
Heck, I was already feeling guilty for booking the RM35,000 green Axia. I could've bought a manual Axia which came at RM20,000 or so, but I was tired of driving manual cars. (I have driven manual cars for 20+ years!)
In general, I would advise people to buy a good, second hand car. Now, thanks to Axia's lower prices, you can actually get a 3-year-old second hand Axia for RM18,000-RM25,000.
Back in 2015, buying a second hand car didn't make sense for me because the relatively new-ish ones were going for RM25k or more, and here was a brand new car for just a few thousand more.
Since I needed a reliable car as I worked until midnight, I decided to bite the bullet and bought the brand new Axia. I never regretted it. The car was insanely good in the fuel economy department. Although I drove about 32km a day, five days a week, I only spent RM100 for petrol a month!
Which is why I don't understand why some Malaysians would dish out RM80-RM100k for an imported car. I mean, hell, if you top up a few RM10k or so you could get yourself a flat!
I remember a friend of mine complaining about her new imported car, saying that it guzzled RM100-RM200 worth of fuel per week.
The sad thing is, many Malaysians believe that the fancier the car, the better you'd look to others. Who cares about how "atas" you are if your bank balance is in the red? Why pour money in a depreciating asset?
Simply put, if you're a fresh graduate, you have no business buying an expensive imported car! Get a cheap, reliable secondhand car for RM10-RM15k. If you're good with cars, you could even do what my friend did: He bought my mum's ancient Kancil for RM7,000. He spruced it up. It's still serving him well today.
And how about public transport? Some people shudder at the thought. But I travelled during the days of mini busses, where I clung for dear life as the pink busses zipped through the streets of KL. So, I have no sympathy.
Now we have air-conditioned LRT coaches. Take the LRT and bus for a few years while you save up for a car. You can do it.
Extra tip: You can even rent a room near your office and walk to work. If you do it the right way, you can actually save time and money.
2. Pay off your credit card bills in full every month
Now that you have a salary, expect credit card hawkers to swarm around you.
Now, I'm not one of those who believe that you should cut up your credit cards and never get them. There are benefits to having one. I, for one, actually like my Aeon Big Credit Card because it gives me cashback which I could use to buy groceries at Aeon Big supermarkets. (No, they didn't pay me to say this, but I wouldn't mind if they did!)
The No.1 rule of owning a credit card: Pay your bill in full every single month. Don't carry over the debt. You'd be amazed how quickly it balloons. Be very conscious about what you buy with a credit card. Frankly, I only pay my insurance premiums and the occasional online purchase with it. Most of the time I'm happy to use my debit card.
If you're one who just swipes that plastic uncontrollably, perhaps it's best NOT to have one. A debit card will give you the "cashless" feel well enough.
3. Live within your means
The new iPhone is out. You gotta have it. That dress on Zalora. You need it. Then there's that new, bestseller that's going for RM80 at Kinokuniya. Well, of course you have to buy it! Everyone's reading it! And dinner at that fancy fine dining place? It's a date!
When I was starting out at the bottom of the career ladder, I would complain to my parents that I never had enough money for, well, anything. My baby boomer parents sternly said that I had to cut down on my luxuries.
"What luxuries?" I complained. "I'm just not paid enough!"
True. I was only earning a measly RM2,000 per month back then. But I was also splurging hundreds on books, expensive food and entertainment.
If I knew what I know now, I would tell my younger self to shove it, grow up and stop buying books and fripperies by the carton.
5. Hyper pay off your PTPN/student loan debt/any debt
If you have a PTPN loan, PAY IT OFF. It's not just the responsible and patriotic thing to do, but a prudent, financially sensible thing to do. If your monthly repayment is RM300, pay double that. Yes, don't glare at me. Double that. Triple, if you can. Take odd jobs, do over time - any thing to pay it off early. Having debt hanging over your head will severely limit your choices. You won't be as free, nimble or as experimental as you like if you have a ball of chain aka debt around your feet.
This principle applies to any debt you take on. Pay it down quickly. Trust me, it's worth it.
4. Save an emergency fund
Once you pay off your debts, you'd be amazed at how much you can save. After I paid off most of my debts, all the money that would have gone to my debts went to my bank account instead. It began to grow really quickly after that!
In principle, it's a good idea to save at least three months worth of living expenses. This emergency fund would come in handy if (touch wood) you're laid off or have an emergency. Set out to do this immediately. Don't wait.
5. Get health insurance, stat!
Especially medical insurance. Don't play-play. It's easier to get health insurance when you're younger as you're considered healthy. Health insurance gets costlier as you grow older.
Some argue that "my company give good health insurance what". Yes, but will you be there forever?
Investigate the medical cards, health insurance options out there as soon as you can.
Agree? Disagree? Got more tips? Share your thoughts below!