PIDM helps build an emergency fund for hard times

KUALA LUMPUR: Saving money consistently isn’t easy, especially with a salary that doesn’t match the cost of monthly expenses.

High monthly commitments such as paying various monthly bills, family expenses, insurance and repaying bank loans have left many people with no money to save.

Indeed, regardless of income level, planning expenses is crucial to ensure financial stability, especially in the face of unforeseen events.

Executive Vice President of the Malaysia Deposit Insurance Corporation (PIDM), Wan Ahmad Ikram Wan Ahmad Lotfi, said that every worker is advised to have an emergency fund to prepare for unforeseen situations, such as medical expenses or loss of income.

“When there is an emergency fund, survival is not affected so suddenly that you have to borrow money from friends,” he said in a statement recently.

He said common mistakes made in financial spending include impulse buying and following the FOMO (fear of missing out) trend on social media, as well as unplanned buying habits, especially while using the service. “buy first, pay later” on a credit card, which leads to so high a debt load that some end up being blacklisted and declared bankrupt.

“The allocation of income and expenses should be based on the 10-10-10-70 formula suggested by PIDM management icon Chief BerUang, i.e. 10% for savings, 10% for emergencies, 10% for insurance and 70% cents for expenses,” he said.

Wan Ahmad Ikram said every individual should also be aware of their current personal financial situation to avoid out-of-control spending, build resilience and reduce potential financial impact should the unexpected happen.

“To help individuals initiate prudent financial management, PIDM provides an SPK calculator that will provide a summary of monthly income and liabilities, as well as excess cash to start saving within the given time frame,” he said.

The SPK Calculator is an interactive platform that balances individual income and expenses and calculates the amount needed for emergency savings.

Interestingly, the SPK Calculator will provide appropriate savings for emergency purposes as well as guidance to facilitate changing monthly expenses and commitments.

“This calculator helps individuals adjust their monthly commitments to achieve emergency savings levels over a self-determined period and this calculation is automatic,” he said.

There is also a personal pledge that can be downloaded as a wallpaper to motivate individuals to keep saving and control their spending so they can reach their savings goal.

He said people who want to build an emergency fund can assess their finances when needed using the SPK calculator for free and without registration on www.pidm.gov.my/SPK.

“We want to help Malaysians build their financial resilience and improve their financial situation without having to wait for events to impact their lives,” he said.– Bernama

Comments are closed.