ANN/THE STAR – Housewife Norfiza Nor Ariffin, 53, gets by with MYR2,500 for her family. She stays with her husband, a 61-year-old pensioner, in Ipoh, Perak in Malaysia and their adult daughter, who is 24 and employed. Norfiza sells nasi lemak in the morning to add to her household income, but she said even without her small business, they could financially survive.

Making a monthly budget is an unfamiliar concept to her. “We spend what we get until the end of the month and the cycle continues for the next month, and so on,” she said.

She and her family have no savings. She said the money they make is enough to get by.

“Thankfully, our house and car are fully paid up, so what we need is money for food and other essentials. Our daughter helps out too,” she said.

In June, the Malaysian Employee Provident Fund (EPF) launched Belanjawanku, a financial management app to help users track where their money went and to hopefully, manage their finances better.

The app was funded by the EPF and conceptualised by Universiti Malaya’s Social Wellness Research Unit (SWRC). Its director Professor Norma Mansor said the app is a tool to help people understand their financial situation and to figure out the next step in making financial decisions. “It serves as a guide for individuals and families as it provides estimates on monthly expenses for different family sizes. The indicator also provides estimates for different cities, for those who plan to relocate to other cities in Malaysia, whether for job seeking or for retirement,”

WHERE DID THE MONEY GO?

Financial education portal Ringgit Oh Ringgit (RoR) founder Suraya Zainudin said having a budget is great if you have always questioned or wondered where your money went.

“With a budget, you can make better choices with future expenses. For example, if you are down to your last MYR150 and payday is still a week away, would you pick a night out or a weeks’ worth of groceries? A budget helps you decide, instead of funding both; possibly with debt,” she said.

But the author of Bergaji Tapi Pokai (Salaried but Broke) cautions that the financial playing field is not levelled so it’s really important to understand that budgeting only works if you earn enough and you can cut down expenses. And for someone like Norfiza, and others who live from paycheque to paycheque, a monthly budget makes little sense because there’s hardly enough to cover their expenses.

“Without earning enough money and the ability to trim expenses, a budget is pretty much useless. As the popular saying goes, “You can’t budget yourself out of poverty,” she said.

She added that there is a misconception that people are poor because they don’t manage their finances well when research has found that both rich and the poor make equal financial mistakes. “It’s just that when you are rich, it’s easier for you to get out of the mess,” she said.

WRITE IT DOWN

But for those who are employed and who receive a monthly salary, Suraya recommended that they budget their money by writing down all of their monthly expenses, annual expenses, and one-off expenses that they have to pay in the coming year.

“From there, you can more or less gauge if your income is enough to sustain your lifestyle, or if you need to make adjustments to your lifestyle so you can save up towards a financial goal,” she said.

“You may even decide to work towards higher income, if there are not many expenses you can cut. For a start, a guesstimation of expenses is good enough. I often see people feel discouraged when they could not track every single ringgit.”

Norma said where personal finance is concerned, managing money and sticking to a budget may not be easy, and the Belanjawanku app comes with an easy-to-use interface that allows users to track their budgeting, spending and earning.

“It can be beneficial to those who have limited knowledge about personal finance education.

Belanjawanku also gives an estimate of the minimum cost for each of the common items that people spend on in their daily lives. The app also alerts its user on two situations: when spending exceeds the recommended budget and exceeds the income. This helps users to be more mindful of their expenses and to organise their finances more efficiently,” she said.

THE IMPORTANCE OF SAVINGS

Norma said savings allow people to enjoy greater security in life and it’s important to have some money put aside for emergencies or unexpected events.

“The COVID-19 pandemic has taught us the importance of savings. While the whole world is still reeling from the effects of the pandemic, it is also being hit by supply chain disruptions resulting from the Ukraine conflict. Inflation is a global problem that affects more than just Malaysia.

“There are situations that are not within our control, and individually, you can’t control the rising prices of goods and services. But for things that are within our control, we can try our best to improve.”

She said it does not take a complete lifestyle change to start saving money. “I understand that to some, this may be easier said than done. What’s more, with the salary you earn, you could barely pay the bills. There’s never enough money, so how is it possible to save?”

But she said everyone has to start somewhere. “The Belanjawanku app helps Malaysians identify their needs and wants. Perhaps some items can be discarded and replaced with cheaper alternatives. Personally, it boils down to identifying your lifestyle expenses and your actual needs and priorities,” she said.

“If a lifestyle is supported by debt and credit cards that are not paid in time, one may find it more and more difficult to manage until the problem becomes too difficult to handle. If you are at your wit’s end, consult a debt counsellor and try to find a workable solution. It is important to note that debt and financial problems can have a dire effect on a person’s life, including family relationships as well as mental and physical health,” she said.

On the contrary, Norma said when a person is organised financially, it gives clearer direction on where his or her money is heading.

“Personal finance apps can be a great way to make your financial life less stressful. Besides, it can help you improve your financial health in the long run. Having awareness of your current financial situation and indications of what expenses are like at different stages of life helps in setting financial goals or plans for the future,” she said.

START FROM ZERO

Suraya said when it comes to money, the basic principles apply: earn more than you spend and spend less than you earn. “Members of the family could find ways to increase income (through salary and/or side hustles), and reduce costs (generally, the top three biggest expenses are accommodation, transportation and food),” she said.

She also offered three additional actions for those without savings to start building their emergency fund.

“If you are eligible, check with the zakat or charity bodies near you and if available, sell items of value that you own and put it towards emergency funds.

“The ideas are simple, but execution can be hard, especially for those earning less than living wage. One also mustn’t underestimate the paralysing effect of financial anxiety – it is easy and common to distract oneself rather than do all the tasks needed to solve the problems.”

While there is no doubt, Suraya said, that Malaysians are underpaid – recent data shows that 35 per cent of Malaysians earn MYR2,000 and below – solving this issue isn’t straightforward.

“There are issues skills mismatch, dependence on foreign labour, lack of workers union and more. Recommendations have already been given by think tanks. It’s just a matter of political will for implementation.

“Employers should also know that minimum wage is not living wage and should take that into consideration when offering positions. This is beneficial for them as well – more applications means increased chance for quality applicants and employees who can afford to live a reasonable standard of living are also happier and more productive,” she said. – Syida Lizta Amirul Ihsan