Savings

In my last post, I mentioned that one should have a total of 6 to 12 months of living expenses in the bank. Recently I came across this news in The Star on 19^th Feb 2009.

According to the latest findings from Citi’s Financial Quotient (FIN-Q) 2008 survey, only two in five (39%) Malaysians actually save. Less than 28% make and stick to a monthly budget. From the finding, Malaysians are reported having 11 weeks of savings in reserve. This means that Malaysian can live up to 11 weeks using their saving without any income. There are 21% of people whose saving would last for only for weeks.

From the survey, it is reported that a majority of Malaysians saved up to 20% of their monthly income which exclude the 11% in the Employees’ Provident Fund (EPF). There are 12% of Malaysians who do not save anything at all.

This is actually quite risky as if one were terminated from his/her job, he/she has to find the source of income within one month. One can argue that given the time constraint, then the person will go full force to look for the income. However, reality is cruel. No matter how well u plan, the activities do not happen as u wish. So why dun we prepare early??

If save too much money in the bank, the interest rate is actually quite low and u might b suffering a loss. If save too little money in the bank and the rest of money is put in investment, the investors might be suffering a loss in the investment. According to financial expert, one should have at least 6 months of living expenses as the savings to prepare and protect urself from any unforeseen activities. So have u prepare enough savings to sustain urself for at least 6 months???