Money management is a crucial aspect of achieving financial stability and independence. However, growing your money can seem like a daunting task, especially if you're not sure where to start. Everybody wants their own money saved up for emergencies, an upgraded lifestyle or anything they want.
In this article, we'll provide some tips and strategies to help you increase your savings and investments, so you can reach your financial goals faster. Whether you're just starting out or looking to boost your existing portfolio, these tips can help you make the most of your money.
Setting financial goals is an essential step in growing your money. Without clear and specific goals, it can be easy to spend money without any real purpose or direction. When setting financial goals, it's important to be realistic and specific. Start by asking yourself what you want to achieve financially. Do you want to pay off debt, save for a down payment on a house, or build up your emergency fund? Once you have a clear idea of what you want to achieve, you can start creating a plan to make it happen.
If your financial goal is to earn more money to make a large purchase (e.g. a house) then you can plan towards that. If your goal is to make more money so you can lead a comfortable lifestyle, then you can plan and set goals that would push you in that direction. Budgeting and tracking all your finances is a good way to see how close you are to your goals, how much you are spending and to control where your money goes. You can use a banking app in Malaysia that will help you keep track of your debit and credit cards and your flow of money.
For every payday or bonus, we advise contributing some of the money to your savings aside from necessities. Build the habit of saving up and also establishing an emergency fund. Essentially, you do this by making sure your savings do not dwindle beyond a set limit each month. For instance, you may want to retain at least RM500 in your account. This is your safety net, and it should never be touched other than for emergencies. One of the benefits of online banking in Malaysia is that you are able to see all your accounts at a glance and make sure your savings and emergency funds are where they need to be.
Investing is the process of allocating resources, usually money, with the expectation of generating an income or profit. It involves buying assets such as stocks, bonds, real estate, or other financial instruments, with the goal of growing your wealth over time. It can be done through various means such as self-directed individual accounts, mutual funds, exchange-traded funds, or robo-advisors. It's important to understand that investing always involves some level of risk and it's essential to do your research and diversify your investments to mitigate that risk.
Stocks are shares of ownership in a corporation or entity. Buying a stock equates to owning a piece of it and benefit from any rise in its share prices and dividends that it pays out. As a basic example, if you invest into stocks worth RM1,000 and the value increases over time, you will be able to sell your shares at a higher price than your initial funds.
Bonds are another investment where a company or government raises money by borrowing from investors and promises to pay them back with interest after a certain period. Meanwhile, mutual funds are pools of companies that have put in either their stock, bonds or a combination of both. When buying mutual funds, you essentially own part of the entire pool of companies.
We would like to preface that before you jump into investing, you need to do your research to learn about the fundamentals of investing. That way, you can confidently invest based on your own judgement, keep up with the market, and know the perfect time to make your exit. You can also speak to a professional investor to get first-hand advice on investing properly with minimal risk.
Besides your job or bonuses, why not diversify your sources of income? For starters, you can look into freelancing to utilise your skills and talents outside your career and profit from them. Freelancing also helps you further develop your skills, meet new people, and help you upskill in the long run.
Outside the basic forms of investment, you can also invest in other assets such as real estate and gold. No matter the difference, they follow the same general rule of earning profit from your initial investment when the value increases over time. You can also consider diversifying through cryptocurrency. They are no different from stocks, but have a tendency to be volatile.
It is always good to expand your knowledge and never stop learning about growing and managing your finances in the long run. The HLB blog has plenty of other articles that can help you learn. You can find topics including credit scores, financing holidays, saving for retirement or a topic about online banking for working adults in Malaysia.
All the best in growing your money!