five ways to protect yourself financially.

Hello peeps.

No matter who you are, it is important to have certain measures to protect yourself and your beloved family financially. Why? Because life has a way of throwing curveballs at us when we least expect them and certainly when they’re not wanted. To make sure you’re able to make lemonade out of the lemons that can sometimes show up unannounced, follow these five tips below and get some much-needed peace of mind:

1. Establish an Emergency Fund

Emergency funds (also called tabung kecemasan) are those funds tucked away in case of an emergency. As a general rule of thumb, it is wise to have at least a year of your income saved in an emergency fund. But to scrutinize further based on each person financial lifestyle, this could be varied. This way, should you find yourself out of work or otherwise down on your luck, you will still be able to meet your financial obligations and stay afloat in the meantime.

Saving money for an Emergency fund is certainly less fun than online shopping or nights out with friends, but I can assure you that the stress of not having money when you most need it is even less fun. If you don’t currently have any emergency savings, don’t scared…start now!

Your best option is to place your emergency funds into a money-market account (think savings account but with a better interest rate). The Malaysian banks’ average interest rate you can earn on a savings account is 0.10%, whereas the average interest rate on a money-market account is double: 0.25%.

If you still prefer to open a savings account, you can do so in many ways. You can always open one with your local bank and begin depositing money each week. If you’re more inclined to save if money is automatically deducted from your bank account and transferred to your savings, consider opening an account with auto-debit / standing instruction features.

2. Get a life insurance

The concept of insurance may seem like something you could not possibly need when you are young, but unfortunately, that’s not the case. Health insurance, life insurance, car insurance …all of these things come with fees attached but are absolutely worth your while. Protecting yourself is so important – in the case of an emergency, you don’t want to be unable to seek medical attention (or hit with a huge medical bill!).

Life insurance is one of the more important insurance types, particularly if you have children or a dependent. Without life insurance, you could leave your family with more than a giant, gaping void in their lives should the unimaginable happen to you. Most families know to purchase life insurance for the working spouse, but not all families purchase insurance for the SAHM (stay-at-home-mother). If you’re a stay-at-home-mom, here’s the thing: you are important! You are the heartbeat of the family and keep your little ones engaged daily. If something were to happen to you, how would your family be able to continue? When you purchase life insurance, consider all of the costs you would need to include to maintain the same quality of life that you have now: the daily duties, child care expenses, household maintenance, etc. Life insurance is the key to ensuring your family is protected, and you, in turn, can achieve greater peace of mind. So remember not only that the breadwinner needs life insurance, but as well stay-at-home-mother.

3. Set up a will

If you have children or a dependent, you may find yourself in need of a will. Why? If something happens to you, a will is designed to serve as your legal way to ensure your wishes are honoured. If you have had this item on your “to-do” list for quite some time, make a goal to cross this item off of the list this next week.

For a Muslim family, it is important to have (takaful - hibah), especially for a husband. Under Faraid law, a wife only gets 1/8 out of her husband’s asset. Hence, hibah comes in to provide his beloved wife with a legacy to continue living life with the left commitments. At the same time, the will act as a legal document distributed the asset under Faraid law.

4. Stick to your budget

One of the best ways to ensure you sleep better at night is by establishing a budget and actually sticking to it. Sure, there may be other ways you’d like to spend your time. Still, if you stick to your budget, you’ll find that you will be able to course-correct potentially sabotaging behaviours before they spiral into unfortunate situations. You’ll also be able to give your money a purpose and a plan instead of it telling YOU what to do. These things will give you greater peace of mind, help you live a more purposeful life, and be an essential part of staying prepared.

My suggestion is to go through every month this budget. This will help you realise the important expenditures every month, and eventually, you are aware of the past expenses that could lead you into financial trouble.

5. Create a financial plan

Believe it or not, ignorance is not bliss when it comes to your finances. Without a concrete plan, it can be easy to feel “stuck” or confused.  Have a financial plan to account for your spending, budget, investments, retirement goals, etc., is critical if you want to make sure you are prepared. Financial plans are designed to help you feel more established and give you the tools and roadmap you need to feel confident, prepared, and fulfilled.

Talk to you soon.

Hope you enjoy my writing.
Spread love and positivity,
EMIR xx