Ever since the COVID-19 pandemic, a staggering 41% Malaysians have reported that their mental health has been affected by financial stress. And with the rising cost of living, along with the fluctuation of the Ringgit currency, it’s no surprise that a lot of us are feeling the pinch from the increasing price of Nasi Lemak. If you’re also worried about money, you’re not alone. Today we’ll talk about how you can manage financial stress and share some tips on how to improve your financial well-being.
What is Financial Stress?
Financial stress is the anxiety and worry that come from facing financial difficulties. This can include not having enough money to cover expenses, dealing with debt, or worrying about future financial stability. Financial stress can affect various aspects of your life, from your mental and physical health to your relationships and overall quality of life. Recognising and addressing financial stress is crucial for maintaining both your well-being and your relationship with money.
Signs of Financial Stress include:
Constant Worry
If you find yourself frequently worrying about money, it’s a sign that you’re experiencing financial stress.
Avoiding Finances
Ignoring bills, avoiding financial conversations, or not checking your bank account can indicate financial stress.
Physical Symptoms
Stress can manifest physically, causing headaches, sleep disturbances, and other health issues.
Impact on Relationships
Financial stress can lead to arguments and strain in relationships with family and friends.
Tips to Manage Financial Stress
1. Improve Your Financial Literacy
In other words, educate yourself. Building a solid financial literacy foundation will make a significant difference in your personal finances, as it will empower you to make better financial decisions. Read books like “Rich Dad, Poor Dad” by Robert Kiyosaki or “The Total Money Makeover” by Dave Ramsey.
(Check out our Best Money Tips playlist on our YouTube channel!)
2. Create a Budget
A budget helps you understand where your money is going and where you can cut back on. List all your income and expenses, categorise them, and set spending limits for each category. Create a budget that forces you to spend within your means. You can use budgeting apps like You Need A Budget (YNAB) or Wally to track what goes in or out of your account. If food takes the biggest chunk out of your salary, check out our article on how to cut down your food budget.
3. Build an Emergency Fund
An emergency fund acts as a financial cushion for unexpected expenses. Start small by saving a portion on your income each month until you have at least three to six months' worth of expenses saves. You can set up automatic transfers into a no-touch account to stay consistent with your savings.
4. Prioritise Debt Repayment
Paying down your debt can relieve a lot of financial stress. In Malaysia, the outstanding balance for BNPL transactions is RM0.9 billion, while credit card debt stands at RM40.3 billion in 2023. Use strategies like the debt snowball method (paying off smallest debts first) or the debt avalanche method (paying off highest-interest debts first). Consolidate high-interest debts into a lower-interest loan to simplify repayment.
(Learn the top 3 Methods to Pay Off Your Debt in Malaysia.)
5. Set Financial Goals for Yourself
Having clear financial goals gives you a sense of direction and purpose in your financial journey. Set short-term and long-term goals, and create a plan to give yourself a blueprint to follow in order to achieve them. For example, a short-term goal could be saving RM5,000 in six months, while a long-term goal might be buying a house in five years.
(Learn How to save RM10,000 in 3 months!)
6. Practice Healthy Financial Habits
Consistent financial habits lead to long-term financial stability. Pay your bills on time, avoid impulsive spending, and review your finances regularly. If you have trouble staying on track, set up reminders for bill payments and review your budget monthly.
7. Seek Professional Advice
If you find yourself getting overwhelmed and are unsure of where to start, seek professional help from financial advisors to provide personalised advice and strategies to manage your finances. Look for certified financial planners or use free financial counselling services. Organisations like Agensi Kaunseling dan Pengurusan Kredit (AKPK) offer free financial advice and debt management services.
Key Takeaways
Financial stress is common, but it’s important to address it to maintain your overall well-being.
Creating a budget, building an emergency fund, and prioritising debt repayment are crucial steps to managing financial stress.
Improving your financial literacy and setting clear financial goals can enhance your relationship with money.
Remember, it’s a journey. Take small steps, stay consistent, and seek help when needed.
By implementing these strategies, you can take control of your financial situation, reduce stress, and build a healthier relationship with money. If you're struggling, consider reaching out to a financial advisor or counsellor for personalised guidance.
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