There is so much information on HSBC’s Financial Wellbeing page on how to manage money and get financially healthy, from how to spend wisely, creative ways to free up funds and how to avoid excessive borrowing. For those who are new to managing finances, here are tips on key steps to improve financial literacy including how to create a budget and track expenses, how to build an emergency fund and savings, manage debts and plan for retirement.

HOW TO CREATE A BUDGET

Drawing a monthly budget and keeping to it is one of the most effective ways to quickly turn your financial situation around by preventing a deficit at the end of each month. Budgeting allows you to get a clear picture of your financial situation, helps you control your spending and put aside some savings, giving you peace of mind. Here’s what you need to do:

• Note down your daily expenditure over the course of a month. You can go through your bank account and credit card statements, receipts and bills to help with the process. Also note irregular payments you make annually or quarterly. 

• Record all your sources of income, after tax. If your income varies from month to month, take an average over a three-month period.

• Add up all your expenses and subtract this total from your monthly income.

• If your calculations indicate that your expenses are higher than your income, consider ways to reduce your spending. Maybe you need to give up certain indulgences in a month.

• Make sure you add savings to your budget. Based on your expenses, determine how much you can comfortably save each month.

• Once you have your budget, you can get an app to help you keep track of your daily expenses and stay within your budget.

How TO BUILD AN EMERGENCY FUND AND SAVINGS

An emergency fund is money that you set aside to cover any unforeseen expenses like fixing your car, or expenditure for at least three to six months if you suddenly lose your job. How to start?

• If you’ve already determined how much you can afford to save, use the recurring instruction through your online banking account to set aside the amount each month so you don’t forget or risk the temptation to spend it elsewhere.

• Consider an all-in-one bank account for your everyday needs like HSBC Everyday Global Account* that allows you to pay bills, deposit and transfer with a single account and zero account fees. It is also a multi-currency account that allows you to buy, save, transfer and spend in 11 currencies including Ringgit Malaysia.

• HSBC’s EZInvest platform is a convenient and affordable way to start investing. It gives you access to a selection of funds with different risk levels to cater for investors of different risk appetites and flexible investment options so you can start small and have control of your funds.

KNOW HOW TO LEVERAGE ON YOUR CREDIT CARDS

Credit cards are a primary and preferred payment method for consumers today whether it is to pay for purchases or services in store or online, fund their eWallets or to make deposits for a hotel stay, for example. In fact, paying with a credit card can actually be more beneficial to a consumer compared to payments with cash or debit card because: 

• It is convenient, safe (allows people to go cashless and avoid loss from fraud), and is universally accepted.

• Provide consumers benefits for credit card use with rewards points, cash back and merchant offers. 

• Offers instalment options for repayment. With HSBC’s credit cards, there’s the Balance Conversion Plan, which helps consumers stretch their payments through affordable monthly instalments; Cash Instalment Plan, through which consumers can get cash from their credit card limit transferred to their bank account quickly and hassle-free, then repay it in instalments over a fixed term of their choice or the IPP (easy payment plan) with a 0% interest free period, giving consumers the flexibility to makes purchases without worry.

• Credit cards can also be relied on for emergency use instead of dipping into your savings or to help you build or improve your credit score if you use it responsibly by making your payments on time.

DEBT MANAGEMENT

If you have several loans (not applicable to mortgage and vehicle loans) and credit card payments, it is good to consider which you should prioritise to pay off first and which you can take your time. Usually there are two strategies—pay off the debt with the highest profit rate first (debt avalanche method) or finish paying the smallest outstanding balance first (debt snowball method). You’ll need to take a good hard look at the state of all your financial statements and decide which strategy will work best for you. Ultimately, if you don’t want to end up with mounting interest payments that can really add up substantially over time, it makes more financial sense to go for the first strategy to clear your debts. 

If you are struggling with several credit card debts, you can choose debt consolidation, which will consolidate all your outstanding balance from your credit cards and offer a fixed monthly payment with flat interest rates, which can help with your cash flow.

One option is to take up the HSBC Amanah Premier Personal Financing-i for debt consolidation. Offering financing of up to RM250,000, Premier customers will get a 4.88% p.a. profit rate, which is a great option if you’ve got credit card debt with higher profit rate ranging from 15% p.a. to 18% p.a or more. Also you have the perk of an extended payment period to help reduce the stress of clearing your debt.

Financial planning is truly complex and can often require some guidance from an experienced financial advisor who will be the best source to help us to untangle ourselves from a financial mess. HSBC Relationship Managers can also assess your risk profile with a financial review, help you strategise a plan to take control of your finances, look at wealth opportunities and more, to improve your financial health.

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

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