5 steps to live a more financially stable life


July 13th 2022

be smart with your money blog

Ever wondered how a life would be like to have your needs covered with some excess money to spare? Well, there is no need to look any further than yourself. Financial stability is a proven way to bring you and your family to a future that is worth working hard for.  

Studies show that over 90% of Malaysians earn under RM 5,000 a month, with raising cost of living due to global inflationary pressures and supply chain disruptions, the average Malaysian will find fewer spare cash in their pocket to buy things they could have bought before.  

So, what could you do to improve your financial stability? 

1. Establish a budget

The first step to achieving your goals is to set a budget of how your coming years will be like. A 50/30/20 model is a strong way to understand your budget. 

  • 50% on needs such as housing, food, utilities  
  • 30% on wants such as new clothes 
  • 20% on savings for emergency funds, investments 

Rather than working to borrow more at cheaper rates, why not consider controlling your spending each month to slowly rack up your financial security.  

2. Get invested and stay invested

It is never too late to get invested, but as the old saying goes: “invest only as much as you can lose”. The market is a place with volatility, and it is up to you to figure out your risk tolerance level to choose the right product for you. Try this market volatility calculator to find your risk tolerance.  

In fact, the current market is in a ripe state as there are a range of investment tools available for the average Malaysians. A common example could be investing in bonds, which  authorized issuer borrow your money and pay you a certain yield at a fixed period.   

Other than bonds, you may wish to invest in an Exchange-Traded Fund (ETF), which tracks a certain basket of stocks from an index. It is not uncommon to buy up an index fund every month to maximise the concept of “dollar cost average”. Short-term fluctuations simply don’t matter if you keep a consistent investment strategy. Long term investors like Warren Buffet argue that you can never beat the market, and you would be better off investing into the total market, rather than trying to time the market by nibbling with individual stocks.  

Certainly, there are many other types of investors, some may prefer growth stocks, value stocks, or dividend stocks, but the essence of investing is in trading with an open mind and understanding the volatility of the market. There is no need to go “all in” on an investment and there is definitely no incentive to listen blindly to someone else’s advice – do your own research! 

3. Get insured

Whilst it may seem distant, having an insurance can act as a safety net for any unexpected circumstances. Life insurance, hospitalisation coverage, personal accident insurance are common insurance policies that can be beneficial. Be careful with the terms of some of these policies though, as some may require details on cashing out early, and monthly payments. These terms become crucial when you are in dire need of the cash you previously put into insurance.   

4. Prepare for the worst

As the 50/30/20 model earlier suggests, having 20% dedicated to emergency funds is a good way to plan for any unexpected changes in your income. Although some may say that emergency funds could be in the form of insurance, it is still important to have some cash stored in the bank for the rainier days.  

5. Pay off debt

If you have outstanding debt at absurd interest rates, start budgeting and saving up, and pay off the debt the moment you can. Interest rates start to compound and the “snowball” effect of bad debt could last many years if not dealt with properly.  


In short, look out for yourself and the people around you. It’s never too late to start planning but it will always be too late if you don’t start. You can still make the most out of every penny you make as long as you try – go for it!