Personal Money Management – 10 Wealth-Building tips

Wealth

Money may or may not buy you happiness, but managing your personal finance is a vital part of your long-term goals. Here are the top 10 tips:

1. Financial goals: How much money do you want to accumulate in the next five years? Set a realistic target. At the end of each year, you can compute your net worth to check how close you are to your objectives.

2. Savings: The amount you want to save every month is related to your financial goals. You set aside a specific amount before spending your money.

3. Investment: The money that you have saved in the bank to earn interest is not even sufficient to offset the inflation rate. You need to invest wisely to reap a reasonable higher return to beat inflation and sustain growth.

4. Spending: An important rule is to live within your means. Buy what you need and not what you want because your wants have no limit but there is a limit to what you can afford.

5. Debt management: The best thing in life is to buy with cash except for the purchase of a house and a car. Don't ever try to accumulate credit card debts. It will ruin your creditworthiness.

6. Insurance for wealth protection: Having adequate insurance coverage to protect your wealth is part and parcel of financial planning. It is also prudent to have enough medical insurance to cover illnesses, accidents, and disability.

7. Will: Draw up a will is a hassle-free way to transfer your wealth to your loved ones when you’re no longer around.

8. Charity: It is a gesture of kindness to help the needy. The amount is not important. What matters is the sincerity from the bottom of your heart to give.

9. Educational fund and retirement fund: Life is going to be miserable with insufficient funds for old age. Set aside an amount for the golden years. Financial independence is an important goal in life. Allocating a sum for children’s education is another major consideration of your financial goal. A good education for children is one of the best forms of investment.

10. Take advantage of tax relief: In Malaysia, you can reduce your tax liability in several ways, some of them are listed here:

• Save for your children's education with Skim Pendidikan Nasional (up to RM3,000 in tax relief)
• Purchase life insurance( tax relief of up to RM6000 inclusive of your contribution to Employee Provident Fund)
• Purchase of sports equipment( tax relief of up to RM300)
• Purchase of reading material excluding newspapers( tax relief of up to RM1000)
• Take up medical or education policies (tax relief of up to RM3000)

Here are some wise words from George Horace Lorimer, 

“It’s good to have money and the things money can buy, but it’s good to check once in a while and make sure you haven’t lost the things that money can’t buy.”