As someone in my 30s, I’ve been thinking of financial independence and how to achieve it. Here’s a compilation of what I call “gold nuggets” that I’ve collected that basically are financial advice I’ve stumbled upon (from articles, forums, comments, etc.) which I think are important to remember. I’ll keep adding to the list as I continue on this journey of hopefully achieving financial independence. Also included a list of references.

Important note: I’m NOT a financial advisor. I’m not saying these are guaranteed ways to be financially independent. I’m just compiling what I personally consider as important advice as I learn to be financially independent.

Financial References

Financial Books
• The “Bible” for financial independence: Your Money or Your Life
(Mr Money Mustache has a summary of the 9 step program here )
The Millionaire Next Door
• All Your Worth: The Ultimate Lifetime Money Plan
The Total Money Makeover: Classic Edition

Financial Blogs/ Websites
Investopedia (International)
Mr. Money Mustache (International)
Dave Ramsey (International – for those struggling with managing debt)
Dividend Magic (Malaysian)
Mr Stingy (Malaysian)
The Very Long Run (Malaysian)
RinggitPlus (Malaysian – compare FD rates, loan rates, Credit Cards etc)

Reddit
r/personalfinance
r/financialindependence
r/frugal

1. Keep track of your spending

This is the most basic and very first thing you must do, but not many actually do or are able to keep at it. I’m one of them LOL. I started off trying some mobile apps that you can use to track your expenses but I really hated it and would always forget to key in my spending. It’s just my problem really, my husband has no problems tracking his expenditure on a mobile app. So what I did last year was use Google Sheets and created my own spreadsheets based on a few different reference samples.

I created a personalized spreadsheet that made the most sense to me and was easiest for me to do. One of the things that scared me after doing this was noticing that I was having a deficit every month (Income – expenses) which was why I couldn’t seem to save money or pay off my credit card debts. It’s very important to be able to see where your money goes, instead of just “thinking” about it. Being able to clearly see what you are spending on helps when you need to cut back and reduce unnecessary spending.

Again, I think what helps most is finding a method that works best for you so it doesn’t feel like a chore to do.

2. Always pay yourself first

Another similar advice is to save first then spend.. instead of spending first and saving what is left. I see this often on Reddit and think the concept of “always pay yourself first” is nice to follow. This helps you to squirrel away money for your retirement nest and helps you control frivolous spending. Different method works for different people. Some like to set a specific amount every month and slowly build it up (eg. Starting with RM50, then gradually increasing it by RM5 every month.). This helps those who are not earning as much and the amount doesn’t seem so daunting.

Of course the ultimate goal is to increase the monthly savings as much as possible but at the beginning every little bit helps. Some people find it easier to set a percentage % of their salary as savings. Often the guideline is to save a minimum of 10%, or you can follow the 50/20/30 rule (from: “All Your Worth: The Ultimate Lifetime Money Plan”) where you divide your take home pay to 50% (needs), 30% (wants), 20% (savings).

3. Discount ≠ Saving money, so UNSUBSCRIBE from all those retail newsletters and don’t “window shop” at online marketplaces.

I struggle with this a lot. I learned that just because you bought something at a discount does not always mean you are saving money, unless it’s an essential item (eg. grocery product that you would buy anyway) or something you actually need to buy. Paying RM10 for an item I don’t really need is wasting RM10 even if it’s original price was RM20.

One method I use is to unsubscribe from all the newsletters I received from retail websites and stay away from online marketplaces unless I’m specifically looking for something I need. I find that when I’m casually browsing (“window shopping”) at online marketplaces, I tend to get tempted by things I never even knew I wanted. So I just stay away and only go there for specific purchases which I can get at a cheaper price (eg. my dog’s food is RM20 cheaper to buy online than at the pet store).

Ps. Physical shops like Mr. DIY and Daiso are also my kryptonite… so many interesting things at cheap prices. LOL. The struggle is real.

4. “Add to cart” and leave it there

To add on to the previous nugget, I’ve learned that it’s a good idea to add something you want to the shopping cart and leave it there for a while. A few financially beneficial things happen: 1. After a while you realize you don’t actually want or need the item (helps with impulsive purchasing behavior) 2. Sometimes shops offer you a discount to try and get you to check out your items (if you were gonna get it anyway, the discount helps) 3. Some shops will update you when the price of the item in your cart drops.

5. Don’t touch your EPF savings if you can

Often when I read online articles or forums about saving and investing it’s very US-centric. I think most commonly you’ll see people talking about maxing out their 401k contributions. If I’m not mistaken, their 401k is similar to our EPF (Employees Provident Fund/ KWSP) where it’s a form of forced savings and employers contribute towards the fund. EPF gives a pretty consistent average dividend of 6.02%, lowest was 4.5% during the global financial crisis of 2008. (For further detail on the dividend rate history see here).

You can take out your EPF money to invest in other types of funds or use it to pay downpayment for a house etc. But overall I think the best advice someone gave me was to avoid touching it if I can because it gives a consistently high return of investment (compared to fixed deposit of 2.50-3.50% p.a.). It’s a good hassle-free nest egg for retirement. 🙂

6. Minimize expenditure, increase revenue

This took me awhile to learn even though it’s common sense. When I was younger, I was only taught to save save save. So to me, spending less money to save more money was the only way to go. My husband knocked some sense into me when he told me about the importance of working towards increasing revenue, how much can I truly save if I’m only earning RM2.5k a month? There’s only so much I can “cut back on” to save. So it goes hand-in-hand, I reduce my expenditure to necessities while trying to save money and look for ways to increase my earning power. For many Malaysians, they end up taking up a second job on the weekends or start a side hustle. Others invest in upskilling themselves to increase their value in their current job.

So basically I learnt that I shouldn’t be complacent with my current pay because heck my yearly increment is way below the yearly inflation rate. My ultimate goal is to move myself up my job ladder (unfortunately in my field it’s a slow process and the pay still won’t be great), save to invest in dividend yielding funds for passive income, and find a side hustle I enjoy doing.

7. Living with a frugal mindset + minimalism

I think it’s nice that the trend lately is moving towards minimalism and reduced consumerism. I subscribe to the Frugal subreddit and enjoy reading people’s tips and tricks on living with a frugal mindset. Everyone has their own definition of being frugal. For me it’s reducing my spending on non-necessities and spending on things that make me happy.

For example, I save money during weekdays by cooking my own dinner and bringing the leftovers to work for lunch. But on weekends, I don’t mind bringing my parents out for dinner or going out for dinner with my husband. I won’t compromise relationships (with my family and closest friends) and my own health for the sake of frugality. Also penny-wise, pound-foolish… look at the bigger picture and set a budget.

I’ve found that frugality and the minimalist lifestyle pairs well (Thanks Marie Kondo!). I’ve stopped buying decorations and stuff for the house because I want to reduce clutter. Seeing my house neat and clean makes me happy. I reduced buying beauty and skincare products to only the ones I use regularly that work for me. I also try to get into the buy it for life (BIFL) mindset when purchasing stuff. Basically I save up and pay a bit more for a higher quality item that can last longer (Boots Theory of Socioeconomic Unfairness).

8. Cost per wear and how many hours does it take to buy

This is something I learned from the luxury blogger community. I like luxury products but can’t afford them at the moment so I live vicariously through these bloggers LOL. They often like to talk about “cost per wear” to justify the amount they spend on luxury items. The idea is that the more you use it, the lower the cost per wear, therefore the better your investment. It makes me really think about how much I’m spending on an item and how often I will be using it. It also ties back to the BIFL idea. You can read more about the idea of cost per wear here. So now I make sure whatever I buy is: 1) Better quality so it lasts longer, and 2) Something I will use often so it’s worth buying.

Another idea I often come across in articles on controlling spending habits is to calculate how many hours of work does it take to buy the item. It helps to put things into perspective so you make better financial decisions. Then again, if you’re a high income earner this probably won’t help much haha.

9. Be careful of easy payment plans (installments) – personal experience

This one is from my own personal experience. It’s easy to look at the amount per month on an easy payment plan (a lot of stores and credit cards offer this) and think oh it’s only RM100 a month for 2 years, I can afford that. Even if it’s a 0% interest free EPP, it adds up if you keep on opting for this whenever you buy big items. Then you end up with a fixed expense every month for X months/years. When there’s an emergency and you need money… that’s when you’re stuck.

I learned that it’s ok to opt for 0% interest free EPPs but I have to be very careful and not allow it to add up to more than 10% of my take home pay. Otherwise all I do every month is use up all my salary to pay debts and fixed expenses, with almost no savings (accept for EPF).

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