Cover Photo: iStock

Our financial needs are constantly changing as we navigate through different life stages and it’s important to make strategic decisions for our long-term financial health

Had it not sunk in before then, last year many of us realised that we can never know for sure what will happen in life and that such events as job loss, illness, marriage breakdown or the loss of a home can very well happen in the course of one’s life. As unprepared as we were to deal with working from home, wearing a mask every time we stepped out of our house or working out indoors, we were also not ready for the financial implications brought on by the pandemic from job loss and business slowdown to pay cuts.

A survey done by the Department of Statistics during the first Movement Control Order revealed that Malaysians had savings to tide them over for only one to four months. With many Malaysians tied up with home loans, auto loans and the uncertainty of the duration of the pandemic and subsequent recovery, it was clear that financial relief was inevitable, which was provided for through cash handouts, six-month loan moratorium as well as permission to withdraw from EPF accounts. 

As unprecedented as the pandemic is, in reality, the impact it has had—job loss, illness, economic downturn or income deficit—are all potential real-life situations that financial advisors warn us to prepare for. It’s all part of managing our money, which includes anticipating and preparing for our financial needs, mitigating potential risks, budgeting and keeping track of expenses, plus investing in financial products or services.

See also: The Road To Oxbridge And Ivy League

Are You All Set Up, Financially?

An important step in managing our finances is to anticipate our financial needs throughout our lifetime. Our personal goals also play a big part in mapping out and zeroing in on our potential financial needs. Do we intend to get married or remain single? To have or not have children? Do we want to become a business owner or travel extensively?

The only issue with goals is that they can change as we progress in life. So, how do you plan then? The advice is to set goals anyway because it will help you start the planning process. Also, know that financial planning is an ongoing process; it’s not set in stone. Adjustments may be inevitable depending on the economy, personal constraints, and other extenuating circumstances.

For most of us, the most common life course is to pursue higher education, build a career, get married and have children. Mapping out our financial needs throughout the different stages of our lives can help us plan better—and it’s wise to start from young.

See also: Get Financially Savvy With HSBC Premier

Below Age 20

Besides traditionally saving pocket money, there are beneficial savings accounts today that help children boost their savings. A good example is HSBC’s Premier Junior Savers Account* that enables parents to convert HSBC Premier Credit Card Rewards Points into Cash Back and channel it into their children’s savings account.

The comprehensive savings account also enables parents to help their children to develop good spending habits particularly with the HSBC Premier Junior Savers VISA Debit Card for children aged 12–17 years old. With access to their own money, it can help children learn important lessons first-hand like how to spend wisely as well as have responsibility or accountability for their financial decisions or actions. Parents can easily monitor their account activities to track their spending and guide their financial habits, which will gradually empower them to be financially savvy.

20s to 30s

At this stage, you would have landed your first job and are now in charge of managing your money. But given the overall lack of knowledge and experience in dealing with finances, a lot of young adults are usually unsure of what to do at this juncture. It is not surprising then that many squander these precious years instead of building a good financial foundation. To get you on the right track, it is never too early to seek the assistance of a financial advisor. HSBC’s Relationship Managers are there to help you better understand your financial situation. So learn from the best and apply how you can make the most of your money now so that it will bear fruit in the long term. 

Besides learning the basic but important practice of how to budget and track your expenses, the strategies to focus on at this stage are to:

Protect Your Income Invest in insurance now as the low premium you get at this age is very affordable. Today, insurance can also double as a savings or investment plan. HSBC’s EliteCare, for example, is a comprehensive insurance and investment-linked plan that offers life protection and grows your wealth at the same time.

Build Your Savings Start an emergency fund to make sure you have cash reserves for unforeseen circumstances. Save at least 10 per cent to 20 per cent of your income every month or whatever you can afford to keep aside and gradually accumulate enough money to cover expenses. Keep it simple and automatic by setting up a recurring instruction to move money to your savings account each month by using HSBC’s Online Banking facility to help you reach your goal. 

Grow Your Wealth Consider investing your money each month and benefit from the power of compound interest, where your savings can accrue at an interest rate until your retirement. If you are a fresh graduate and an HSBC Premier customer, you can get help from their wealth specialist; first-time investors will receive an HSBC Wealth Kit. A good place to start your investing journey is in unit trust. HSBC EZInvest is a particularly good option for first-time investors as it allows you to invest as low as RM500 and provides you the flexibility to top up as and when you can afford to. To help you manage your risk, there are different investment options with different risk levels—all at a lower fee compared to similar services provided by other banks. To top it all off, EZInvest is accessible 24/7 through the HSBC Mobile App that helps you to easily buy, sell and monitor your investments securely anytime and anywhere.

Start Planning for Retirement While it may seem like a million years away to start thinking about retirement, it’s good to project how much you’re going to need when the time comes so you can gradually work towards it instead of needing to sacrifice a much-needed holiday at that stage. Consider various options from private retirement schemes, such as investment or fixed deposit. Choose to diversify your investments on different financial assets for protection and multiple sources of income. Also get professional advice from your financial advisor to assess how much you need for retirement and to identify the income gap (i.e. inflation, rising healthcare cost, etc) plus have an honest discussion with your children about your retirement plans so as to manage expectations. If you plan to retire overseas, it’s good to start accumulating the foreign currency you need in regular batches to manage currency fluctuations.

40s to 50s

As you progress in your career, your income has grown and you may be taking some important steps in life like buying a home, getting married and starting a family. Expenses are increasing and you now have long-term financial commitments to set aside money for. At this juncture, you should:

Protect, Protect, Protect Now that you have a family and home, it’s important to know what type of protection you need. For one, life insurance is vital for the breadwinners so their family is protected financially in case of their sudden demise or disability. HSBC’s ProtectCare is an affordable and flexible life and personal accident insurance that provides a lump sum payment of up to RM400,000. Make sure to also protect your home and family from unforeseen circumstances like a fire, flooding or health crisis that could abruptly eat up a big chunk of your hard-earned savings that you had other plans for. With Smart Home Cover, you can choose the level of protection you need. Another important protection to consider is for critical illnesses like cancer as the financial burden can be an additional stress for the family to bear at this difficult time. For some peace of mind, Cancer Protect helps cover the cost of cancer care and treatment with a lump sum payment of up to RM1 million.

Saving for Education Fund Make sure to start saving for your children’s education from the start, ideally from the day they are born because there’s nothing more nerve-wracking than having to gather up funds at the last minute. There are many options to consider such as an education savings plan, which offers a payout when your child goes to university; investment in unit trust or rental property; or an investment-linked plan, which can be tailored to you to help you grow your wealth. You can also encourage family members to contribute to your children’s education in lieu of gifts. A good idea is to take advantage of the convenience of HSBC’s 24/7 Foreign Currency Conversion and start converting small amounts when the exchange rates are favourable for your children’s future education. It will also help you avoid currency exchange inflation if you do this only just before your children leave to study abroad. As HSBC Premier customers, you can also capitalise on preferential exchange rates to get more for your money.

Start a Business This is a good time to consider business opportunities to secure a secondary or multiple income streams. With more economic opportunities available today thanks to the internet, entrepreneurship has never been more convenient though it’s still not easy. If you’re planning to start a small business, you can’t take too many chances without covering all your bases. Today, there are many business solutions that are worth considering to assist you to start up, manage or grow your business from software to financial services. HSBC Fusion is a comprehensive banking solution that lets you earn interests on your monthly average credit balance, provides preferential rates on deposits, lending and FX to help you grow your business and at the same time save and make your money work for you. It even provides your employees perks like special loan rates and convenient services to manage their finances.

60s

At this stage, you’re nearing retirement. Your income should be reaching its peak and on an upward trend. Your children are likely heading off to university or about to and it’s time to consider life after retirement. Here are the priorities to focus on:

Prepare for Children’s Studies Abroad Open a bank account in the country destination where you can conveniently transfer funds and your children can access money for their everyday expenses. Parents who are HSBC Premier customers have the ability to open an international account from Malaysia so it will be set up and ready prior to your child’s arrival, subject to host country approval. Fund transfers are also free and instantaneous via Global Transfer for HSBC Premier and HSBC Advance customers and you get preferential foreign exchange rates as well, with 24/7 access to foreign exchange conversion. Also, make sure they have the necessary insurance protection they need while they are on the way to their destination.

Provide Your Children a Head Start At this stage, you should be in a good position to give your children a little head start on their investing journey, such as investing on a wealth product or home, which they can take over once they’ve settled into the workforce. If you are an HSBC Premier customer, you get preferential rates on deposit, wealth products and even loans. If you choose to invest in a home for your children, you can opt for HSBC’s multi-generational mortgage, which enables you to enjoy a longer stretch of mortgage tenure, thanks to the joint income loan from you and your children.

Note that managing finances require constant tabs to our evolving needs. HSBC’s team of Relationship Managers will be able to assist you with a yearly financial review, to keep you on track of your goals.

*HSBC Malaysia is a member of Perbadanan Insurans Deposit Malaysia (PIDM). Protected by PIDM up to RM250,000 for each depositor.

© 2022 Tatler Asia Limited. All rights reserved.