I am a personal finance writer/researcher. I like to think I know a thing or two about saving money. Without further ado, here is my
Masterpost: How to save money in Malaysia
Saving money is actually simple. You have to (a) spend less than you earn, or (b) earn more than you spend, or (c) both.
That’s it. (c) is the best solution.
The devil, of course, is in the details. Let’s tackle it one by one.
How to Spend Less Than You Earn
Spending less money than you earn is easy in theory, but it depends on who you are and your financial situation. But broadly speaking, there are three types of people.
One – People who can spend less, if only they try
These are people who have enough money to cover essential life stuff – like accommodation and food – and simply need to cut back on non-essential life stuff.
A lot of ‘how to save money’ articles out there tend to focus on this category of people. The advice looks like this:
- ‘ Stop drinking Starbucks!’
- ‘Invite your friends over for dinner instead of eating out!’
- ‘Use coupons when you shop!’
There’s nothing wrong with all these advice. They’re valid reminders. Overused, but valid. All with the message: Stop buying shit you don’t need.
Two – People who really can’t trim their budget any more
The second category is people who are actually, legit struggling financially to cover even the most essential basic needs. All their income goes to debt, food, accommodation, petrol, medical – important stuff.
These type of people tend to not have healthy bank accounts, may be in debt, and probably don’t have emergency savings either. The last one is a bummer – if anything unexpected happens (say punctured car tire), they will be screwed.
There are plenty of advice for these people, but here’s the thing: many are preventative in nature. That means you have articles like:
- Why having emergency savings is good for you
- How to avoid credit card debt
- Cheaper education alternatives
It’s helpful, definitely, but a little too late for this category. How can those articles help them to save money when they ran out of it?
What *I* think they really need is articles like:
- RM5 meals for family of 4
- Practical ways to downsize your home
- What to do when the Ah Long is looking for you
- Tips on getting donations and financial help
Do you agree? As far as I know these don’t really exist – there’s lack of in-depth articles to help people when they’re already financially struggling. Many financial institutions suggest to ‘get a loan’. That’s not a solution. That’s a postponement at best, and a financial disaster at worst.
Being in this category is tricky, because being poor is expensive. I’d imagine you have to give up one of the essentials, temporarily, even though it’s not the best option for you. Like eating nothing but instant noodles. Or only walk to places you need to be instead of using public transportation.
Three – People who have a spending problem
In the nicest way possible, this category is the trickiest. They may have a healthy amount of disposable income, or not at all. It doesn’t matter how much they earn. Even if they earn RM2.6 billion, they will want to spend RM2.7 billion.
(some dark humour there, lol)
There’s no way to sugarcoat it. This category of people live their lives relying on temporary spending ‘highs’. Nothing is enough. This could be an out-of-control shopping addiction, or gambling addiction, whatever.
This is actually a brain thing – people get addicted to endorphin and dopamine (‘feel good chemicals’), and keep spending in order to maintain that high. I don’t think anyone can help them but themselves and maybe expert help.
If you belong to category one or two – you can be helped. If you belong to category three, please seek help.
How to Earn More Than You Spend
Who doesn’t like to earn more? Financial stability is pretty awesome.
Roughly, we can divide this into two categories: active and passive income.
Anything that requires active participation from you. This means a job (or second job, or third, and so on), freelancing with your skillset (photography, writing, etc), having an online/offline store, stuff like that.
I can’t really ‘advice’ you on this because I’m still figuring out how to do this efficiently as well. But you might find my The Exact Steps I Use to Earn Online in Malaysia article helpful.
Anything that can generate income without ongoing active participation. This can be investments (stocks, mutual funds, REIT, etc), or income generated from one-time effort (selling ebook/other intellectual property, renting out property, affiliate marketing through websites, etc)
I absolutely love the idea of passive income because I
‘m lazy have better things to do in my life than manage things 24/7. Of course nothing is ever easy though – you still have to check your passive income on a regular basis.
So how do I actually save money?
The answer is already in the first few paragraphs:
You have to (a) spend less than you earn, or (b) earn more than you spend, or (c) both.
This is the answer.
Again and again, this is the answer.
Ideally, I know most people (and myself, if I’m honest) are constantly looking for that ONE simple fix to end all of our money woes.
I’ve since learned that no, saving money is an accumulation of actions. Earning money is an accumulation of actions. Some become habits. You have to try a few, see if you can live with it, and keep at it. If you can’t keep at it, try harder, or do something else.
Some money-saving efforts I took in the past failed completely, like:
- Saving money on shampoo and conditioner by using baking soda and apple cider vinegar (my hair fell off)
- Trying to plant vegetables and herbs (they all died)
- Buying a lower-spec laptop instead of a higher-spec one that I needed for work
- Buying cheap, low quality stuff that breaks down
- Buying cheap kitty food that made my cat poop all over the house
But some efforts have been successes as well, like:
- Significantly saving on rent
- Tracking my expenses
- Being good at cooking and baking
- Not having too many clothes
- Not having a car
Related: 50 ways I save money
How I save and earn money works for me because I can incorporate it into my life. I especially like to track my expenses so I know what I actually spend on, so I can think of ways to cut down the cost.
But for others, other budgeting methods might work better. So who am I to say you’re wrong, if your method works?
Getting advice on saving and earning money, for real
Start with the respective FAQs. It will be overwhelming, so give yourself a few hours to sift through the truckload of information. Don’t worry too much about covering all of them, but let your browsing naturally decide what kind of advice you lean towards to. Once you decided what investment/money saving approach you want to do, read a bit more about it (make sure its not a scam or anything- read my guide on how to spot investment scams), then do it. For example, if you lean towards saving money on work lunches, check out the strategies people use to meal prep (my guide) and/or how to politely turn down lunch invitations from colleagues. This alone saves a few hundred ringgits a month. If this is a necessary expense for you, no worries, can you cut back on something else instead?
Also, get advice from some women in your life. Women, in general, have the tendency to make less risky choices. Less risk is good. You’ll be slower, but you’ll get there. And you want to get there.
In personal finance, no one gets it right on the first try. Even Warren Buffet, the greatest investor ever have made decisions that lost him money. It’s all part of the journey.
Good luck! If you need help, ask questions or comment below.