With the start of the new year, there are some actions that you can take to kickstart your finance on the right path. I have prepared 24 ideas that you can take for the year 2020.
1. Declutter your house (or room)
We may have not noticed but over the years, we may have bought many things that we might have forgotten now. So, take a weekend and start cleaning and decluttering your house.
Items that you no longer need can be categorized into the following:
1. Trash to throw.
2. Stuff to donate.
3. Stuff to sell.
The idea is really simple because, once you clean and declutter your house, you will have more living space and for that stuff that you can sell, you will get some cash back.
More importantly, you will get to see the stuff that you have purchased and not using (making it a waste of your money) and would give you a reminder to think properly before your next purchase.
2. Automate your savings.
As I have written previously, many of us have a mindset where we will save whatever money that we have left at the end of the month. However, the reality sucks and even before the end of the month, most of our money would have been used up, making it not possible for us to save. The reason why this is happening is because of our habit. We can still see the money in our bank accounts, so we subconsciously think that it is still okay to spend.
So, to make savings works, we should set aside our savings at the beginning of the month and that is where automate your savings comes in. Set a certain amount of money to be transfer to another saving accounts (or investment like Wahed Invest) at the beginning of the month and live your life with whatever you have left. Truth be told, you will not miss that amount of money that you have saved, seriously.
3. Try budgeting for a month
If you have not tried budgeting yet, you should try it. The simple way is to track where your money went for the previous month and budget accordingly for the coming months. Again, it makes you more conscious about your spending and lowers the possibility of overspending.
4. Review your Budget
The only thing that is constant in this world is God and changes. So, our lives today may not be the same as last year. You might have changed to a new job or have a new baby in the family. So, your budget should change according to your current life.5. Eat at home
If you have been tracking/checking your spending/budget, you would soon realize that a big portion of our spending is on eating out. A meal for a family of 3 would cost about RM100 and that is a lot of money. But if we are eating at home (not delivery from restaurants), the cost would be much lower. My family's meals at home usually cost not more than RM 25 per meal. That is a lot of savings and imagine doing that for 20 days, you will be saving about RM 1,500.
6. Cancel memberships/subscriptions
There are many things that we love in our lives and looking at that small cost, we would not think twice to sign up for membership or subscription. Gym membership and Netflix subscription are things that are good to have but do not necessarily need. Instead of the gym, go and run at the local park and instead of Netflix, watch videos on Youtube. It is just as good.
7. Limit guilty pleasures
Every one of us has a soft spot for certain things that we have much pleasure with, even if we know that it may not be good for us. Items such as cigarettes, beers, chocolates, sweets, etc are such items. We know that it is not good for us but we still fell for the temptations. But instead of stopping it altogether, we can put a limit on it so that the temptation would not be too much to bear. Imagine the money you can save just by limiting your guilty pleasures. My chocolate addiction cost me RM 50 per week but by limiting my chocolate intakes, my cost for chocolates is down to RM 20 per month.
8. Save Your Spare Change
Whenever we use cash, there is a high chance of us getting some spare changes back. Many would take it that these spare changes are not much but over a certain period of time, we can actually save a significant amount of money. It has been my habit to save my spare changes and over a period of a year, I would have accumulated about RM150 just from spare changes. It is an easy thing to do. Every day when you get home, whatever spare changes that you have in your pocket, put it into a piggy bank (or whatever container you like) and leave it. At the end of the year, you will see a significant amount of money that you can use.
9. Use Cash Back Apps
Whenever you purchase something online, it is best to use a cashback app to get some cash back. We have Shopback in Malaysia and over the years, I have managed to get RM300 cashback with another RM 327 still pending. Use my link to sign up and get RM5 cashback bonus.
10. Make Your Home Energy Efficient
New technology means a new way to make our home more efficient. When we moved into our new home last year, we choose to use LED lightings, air conditioners, water heater and even oven that has a 5-stars rating which is more cost-efficient. And when we are more mindful of the usage, we managed to bring down our electricity bills from almost RM 90 per month to slightly more than RM 50 per month.
11. Wait 24 Hours Before Buying
A lot of times, we would have an impulse to buy certain items. That is a reason we would have many items in our home that we hardly use and have to be throw away, donate or sell when we clean and declutter our home. But by waiting for 24 hours before buying, we may have a second thought about buying and high chances, we would choose not to proceed with the purchase. But if we still think we need to buy that item, chances are, we really need it.
12. Consolidate Your Debt
If you have debts all over the places, such as a few credit cards and personal loans, it is hard to keep track of all of it. A good thing to do is to consolidate the debts into one. There are two advantages to doing this. First, you only need to track one instead of many. Second, it is possible for you to get a lower interest rate and save money on your interests.
13. Use Savings To Pay Off A Loan
If you have a loan that is about to clean and you have enough savings to clear it, do it. You will be able to save on interest and for the coming months, you will have additional cash for other things. I would suggest you save or invest the additional cash.
14. Invest
The best time to start investing is yesterday. The next best time to start investing is today. The earlier you start investing, the better it is for your future. That is the magic of compounding interest.
If you were to ask me where to invest, I would gladly inform you that I would much prefer to invest in the US market. There are many ways to do that and the easiest way that I could find right now is to use Wahed Invest (look for the app in Google Play Store and use my referral code (limwei1) and you will get RM40 after you keep your investment (RM 100 minimum) for at least a month). Wahed Invest is a robo-advisor that provides halal investment and you can read more in my review here and here.)
15. Turn Your Hobby Into Cash
Everyone has a hobby and if it is possible for you to turn your hobby into cash, then you would be earning money while enjoying your hobby.
16. Refinance
Refinancing your mortgage is a great way to save thousands in interest and also potentially lower the monthly payment at the same time. For example, if you have a RM 200,000 fixed-rate mortgage at 4.5%, you will be paying RM 1,013 a month. Over a period of 30 years, you will be paying RM 164,813 in interest, and that is assuming you don’t make any extra payments along the way. But if you refinance the same loan into a new 20-year mortgage at 3.5%, you will only need to pay RM 719 a month and save almost $300 a month. Do note that this doesn’t take into account the interest savings you will get as well.
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