Securing your financial future is crucial to have a comfortable retirement, while avoiding high levels of debt in the future. Learning how to be financially stable is not easy, but once mastered, it can ease your life’s burdens tremendously.

In 2019, being financially savvy can be difficult, but not impossible. If you’re looking for financial tips to help you change your life, there are a few things that you need to do. First, you would need to take these 3 Important Steps to help you change your mindset.

Live within a budget 
Whether you make thousands or hundreds of thousands of ringgit a year, you still need to budget. This is the starting point of achieving your financial goals. For many people, it’s a lot easier said than done. Credit cards, loans, savings, and even emergency funds allow you to buy more things than your income would allow. 

To make it simple, you need to set a daily budget as well as a monthly budget. Once you break it down, it will be easier to see where you’ve spent above your budget and cut down on it.

Hold off the splurge
If you find yourself tempted to splurge on items you don’t really need or even want, one reason might be that unplanned purchases make you feel better, albeit temporarily. Perhaps that instant gratification is filling an emotional hole or providing “retail therapy” without you even realizing it.

The easiest way to hold off on your splurge is to ask yourself “why”. “Why do I want this? Do I need it?”. Give yourself at least 24 hours and when you look back, you’ll most often find yourself not needing it and therefore you won’t spend on it. 

Plan finances ahead
A financial plan is absolutely essential in helping you reach your financial goals. The plan should have multiple steps or milestones. 

Once you change your mindset, here are the 9 ways you can plan your finances and put it to practice and make to make them work.

1. Establish financial goals
   You need to start setting short-term, mid-term, and long-term financial goals.
   
   Short-term goals should include getting the best possible handle on your budget, adjusting your spending habits, eliminating credit card debt, saving a set percentage of your income, and/or establishing your emergency/rainy-day fund.
   
   A key mid-term goal would be developing multiple income streams. This doesn’t mean working every weekend but instead, it might mean figuring out how to monetize a hobby, or starting a side business with an underutilized skill.
   
   The ultimate long-term financial goal, of course, is funding a comfortable retirement. It’s never too early to start preparing for it.
   
   Once you’ve changed your mindset, there are a few steps you can take to ensure you meet your financial goals. 
   
   
2. Track your net worth
   Assets are things you own that have monetary value. They can include houses, cars, furniture, checking and savings accounts, certificates of deposit, retirement funds, stocks, bonds, and more.
   
   Liabilities are monetary obligations to other people or companies. Mortgages, car loans, credit card debt, personal loans, and student loans are common liabilities.
   
   Your assets minus your liabilities is your net worth. If your net worth is positive, that means you own more than you owe. If your net worth is negative, that means you owe more than you own. 
   
   
3. Pay attention to interest rate
   Understanding how interest compounds and accrues on a loan or credit card is one of the most important pieces of financial smarts anyone can have, since it can prevent you from paying more than you originally borrowed.
   
   A financially literate person will get to know each of their loans (from student loans to auto loans and mortgages), calculate their interest rates, and take steps to prevent them from taking hold of their finances, like paying off your interest first. For credit cards, the solution is simple: pay off your balance and the interest can’t touch you. It can save hundreds, if not thousands, of dollars in the long run.
   
   
4. Set bite size financial goals
   Break your resolution up into bite-sized goals that are specific and will ultimately help you achieve a long-term vision.
   
   For instance, this year you could set aside 20% of your income towards a savings account that will be used as a down payment for your home and you aim to collect RM5,000 by the end of the year. 
   
   
5. Keep bad debt at bay
   The easiest way to get into debt is by using a credit card. Using credit cards is not living within your means. When you plan your budget, completely rule out credit cards as a way to make ends meet.
   
   People often use credit cards for purchases they can’t afford to pay straight away, for example a new television. Instead of paying for purchases like this with your credit card, you should instead put aside some money each month until you’ve saved up enough to buy it. If you can’t afford to save up for the purchase, then you can’t afford to buy it.
   
   
6. Spend money wisely
   Far too many purchases are impulse decisions. This is fine if it’s a RM2 chocolate bar at a supermarket, but it becomes a problem for larger purchases. Before you buy something, think about how it will affect you in the future.
   
   How long is it going to last? Is it going to put you in debt? Is the value you will get out of it over its lifetime worth the cost?
   
   These are questions you can use to determine if something is really worth buying/spending on.
   
   
7. Set up their emergency fund
   Having savings that’s dedicated to emergencies will keep you from resorting to credit cards whenever you have a financial emergency. An emergency fund of three to six months of living expenses is ideal, but starting out with RM100 to RM200 will help with some of the minor emergencies from time to time.
   
   
8. Start preparing for retirement
   When it comes to saving for retirement, you should begin to plan and save for future expenses like your child’s education or a down payment for a home if you have not yet purchased one. You may be thinking about a dream vacation home in the future or retiring earlier than normal.
   
   All of these take a different saving and investing strategy than typical retirement savings. However, it is an important part of your overall financial plan.
   
   
9. Benefit from your money by investing in investments that suits your profile
   Before you can start investing, it’s important to figure out what type of investor you are and understand what is your risk appetite. You need to know how much investment risk you can handle. Your risk appetite can rise and fall along your investment timeline, which measures both your age and how much time you have to reach your financial goals.
   
   For example, as you near retirement, your risk tolerance will likely decrease because you have less time to recover any money lost as a result of market fluctuations. But when you’re planning for retirement 30 or 40 years out, you may be able to tolerate a higher level of investment risk.

How to get started in investing
First, you need to open a Central Depository System (CDS) account. You need to provide a copy of your IC and a fee of RM10. A trading account with a stockbroker or banks will usually be opened simultaneously when you open the CDS account. You can know who are the licensed stockbrokers on Bursa Marketplace website. 

Then, you need to determine what type of industry and subsector you are comfortable to invest in. There are about 900 listed companies in Malaysia and it can be overwhelming to make your first choice in stock investments. You can find all the important information you need on the Bursa Marketplace website. 

Remember, don’t work hard for money, let your money work hard for you.

Once you put these tips into practice, you will start seeing a change in your life and you don’t have to worry about your retirement anymore. You too can succeed and achieve your financial goals if you start working towards it today.