For some reason, the government thinks letting people access their own retirement savings is a solution to be proud of and proof of their competency, so okay let’s roll with that and collectively pretend that it is so we don’t hurt their feelings. They are desperate for rakyat’s approval.
First: This is not an article whether you should or should not take out duit KWSP. This is an article about the best uses for it, *if* you take it out. If you haven’t and plan to, submit your application at https://pengeluarankhas.kwsp.gov.my/ before 30 April 2022.
Here are the 8 best uses for your duit KWSP, ranked from best to meh. Go through them one by one – some will apply to you, some won’t. If it doesn’t apply to you, do the next best thing.
#1 – Get out of dangerous or abusive situations
If your partner, parents or guardians have been giving you physical, mental or financial abuse, then use your duit KWSP to save yourself.
This also applies to abusive employers. This is your opportunity to find other jobs and get the hell out of there.
#2 – Pay off credit card/ personal loan
If you have credit card debt, especially balance carried over from previous months, it’s a great idea to use duit KWSP to pay off the debt.
Don’t skip your credit card payments any longer. Not only you’re paying a lot in credit card fees, you’re also going to eff up your credit score. Later when you want to buy house or whatever, you might get worse rates, if at all.
Getting bad rates for house loan aka mortgage is a bigger deal than you think. Because the amount you need to borrow is huge (at least six figures), a difference of even 0.1% can effectively mean you’ll be paying thousands extra, for nothing!
Paying of high-interest debt is also Step 2 in the journey to be financially free.
#3 – Top up emergency fund
For people who have had their emergency funds depleted, then I’m sure the duit KWSP announcement was super welcomed.
#4 – Get your health concerns sorted out
Awesome, you are not in any immediate danger and have no high-interest debt left. You also have less financial anxiety, now that you have some emergency fund. Next let’s focus on your health:
- Get your recurring headache or weird lumps and bumps checked out
- Buy your supply of prescription pills in advance
- Get a comprehensive health checkup (keep the receipt, can deduct tax relief)
- Speak to someone about your mental health
Health is wealth is cliché, but true. Speaking of health..
#5 – Fix those things that are already causing you pain/may cause you pain in the *short* term
You suffer from back pain? Get a better mattress and/or a comfortable work chair.
Your car tyres are getting worn out and you drive around a lot for work/travel? Get new car tyres.
Walking hurts? Get a new pair of quality shoes.
The general rule is, if it keeps you from off the ground, it’s worth the money.
#6 – Decide how much you want to allocate as ‘fun’ money
Okay, so by this point, you’re feeling good about yourself. You went through #1-5 and done all the ‘responsible’ things. It’s time to reward yourself with the amount left over!
But you also know the importance of saving up for rainy day and don’t want to spend all your duit KWSP money. Who knows when you’ll get a ‘windfall’ again right?
Now is a good time to have that internal discussion with yourself on the maximum amount you’ll give yourself for ‘fun’ spending. You know, for clothes, gadgets, food, socialising, whatever.
If its RM100 per month, it’s RM100 per month. If it’s RM500, it’s RM500. Up to you, you know yourself best. Why not stretch out the money and have fun for months to come rather than finish off all the money right after you get it.
(Side note: It’s better to give yourself a small allocation rather than NO allocation. You’re human, it’s natural to desire stuff and experiences. Plus it’s better to allow yourself to be happy while appreciating small pleasures rather than blaming yourself for failing to keep to a strict budget)
#7 – While hunting for deals, put that money in other savings-earmarked accounts first
While you do your deal-hunting research to get the items/experiences you want, it’s a good idea to put your duit KWSP money elsewhere and not in your *main* bank accounts.
One – you’re less tempted to make impulse purchases ‘just because the money is there’.
Two – maybe the money can even grow a little bit while you decide what to spend on.
Personally I am a big fan of ASB. Comparable returns and easy to withdraw when needed. When not needed, the money compounds (aka grows into more money = awesome).
#8 – Find opportunities to make money
Some of you may have skipped #1-7 altogether. You’re like, no Suraya! The money is not for anything frivolous! All I care about is GROWING it!
Alright okay okay I gotcha. I don’t understand why you need to use duit KWSP for this but fine.
Generally speaking, there are 3 main ways to make money: (1) earning more through your day job, (2) earn through side hustles, and (3) investing.
If you’re leaning towards (1), then read this: 3 Ways to Get A High Salary in Malaysia
If you’re leaning towards (2), then read articles under the Earning Money category. You can rent out your car, monetise your hobby, organise a workshop and more.
If you’re leaning towards (3), then read articles under the Investing category.
Generally speaking, using the gains/profits from your work (1+2) to funnel into investing (for the long term) is the best strategy.
That should be it. I won’t insult your intelligence by telling you not to get this or that, you big already. I wish you all the best in growing your income so you can replenish your retirement savings as soon as you can.
If you’re a Muslim, find out if you need to pay zakat on duit KWSP (tl;dr, (tl;dr, pay 2.5% in zakat, but this can be exempted if the money will be used for necessary and living costs).
Are you planning to withdraw your duit KWSP?
If yes, what do you plan to use it for? If no, what convinced you? Let me know in the comments!