Attention To All Rat Racers: Escape the Paycheck-to-paycheck Lifestyle Before It’s Too Late!

Today, living paycheck-to-paycheck is no longer just a saying; it’s an actual lifestyle that is practiced by the many working professionals in Malaysia. For most, the logic behind this is: “We’ve worked hard for the money that we earn, so we are entitled to treat ourselves every month. I can always start saving later.”

Well, that’s the wrong mindset to have, especially in this day and age with the rising cost of living and price hikes across Malaysia. And can you really have any peace of mind with the knowledge that you actually have zero savings to fall back to in the event of an emergency?

It’s 2016 and high time for all of us to wake up and change our spending habits for the betterment of our financial life.

You’ll panic when your car or motorbike breaks down

Many Malaysians rely on their own personal means of transportation to get to work and can you imagine if you were stranded without any way to go to work? Sure, it hasn’t happened yet and we’re not trying to jinx you, but who’s to say it won’t ever happen? Do you have the extra money or savings to conveniently withdraw for the tow and repairs fee? Or do you still have to depend on the famous bank of ‘Mom and Dad’?

You’ll be in trouble during medical emergencies

Okay, so some of you have your medical insurance provided by your company or you have your own personal insurance. But is your company’s medical insurance unlimited? Does your personal insurance cover hospital admission fees as well? Does it cover your spouse and children as well? And speaking about illnesses or accidents, do you have money to help your parents out if anything happens to them? Think about it.

You can’t prepare yourself for natural disasters

True, you can’t tell if and when a natural disaster could strike. But IF it happens, wouldn’t it be nice to have a savings that you can rely on to – for example – recover from flash flood damages. Remember the unexpected flash flood that wreaked havoc at the Shah Alam Stadium’s parking lot last November?

Many of the cars and businesses in the surrounding area suffered flood damages. Should the same or any other natural disaster happen to you (knock on wood), are you able to cover the losses yourself? Not all of us have the insurance protection against such cases, so you should always be ready for any worst case scenarios.

You can’t sustain yourself for sudden job loss

Although no one wants to admit it openly, the job market in Malaysia is not doing too well. Just last year, according to Channel News Asia, Malaysia Airlines terminated over 20,000 of their staff during the restructuring of the company. Not that we’re wishing it to happen to you (again, knock on wood), but the worst part is that only 6% of Malaysians can survive beyond six months with no income.

The truth is, you should have financial reserves with enough to sustain you for at least 6 months, especially in times like these. Job-hunting isn’t that easy, but you probably know that already.

You will not have financial security for life

Be it a retirement plan or simply life-long investments, many of us underestimate what it means to have a financial security in life. Spending what you earn without any thoughts of savings – be it for the immediate future (like for the rest of the month) or the long term – will only spell trouble for your financial life.

It’s pure logic, you can only work until x amount of years, and if you’re lucky health-wise you can continue working past the standard age of retirement. But what happens when you can no longer work? How long do you have to wait until you can withdraw from your EPF account? Unless you’re perfectly at ease with living off other people’s charity, we suggest you stop living paycheck-to-paycheck pronto.

You could end up living in debt with your spouse

Imagine this, you’re getting married in 6 months but you have absolutely nothing left in your savings account. You might even feel that you have no other choice but to apply for a personal loan to cover the wedding expenses, which is strictly a no-no. Look at it this way, you’re about to start a lifelong commitment with your partner, do the both of you want to start your marriage with a massive financial debt?

And this isn’t just only for weddings; there will be other scenarios that might force you to depend on loans, credit cards and worse, other people to get you through life.

Your debts will increase in time

Obviously when you’ve spent all of your cash at hand, you’ll have to rely on your credit card for the rest of the month. As time goes on, the more you stick to the paycheck-to-paycheck lifestyle, your credit card and other debts will snowball into huge figures that will damage your financial stability and credit score even further.

So if you had saved a portion of your salary since the start of the year, not only would you have a pool of savings to fall back to in case of emergencies, you would also be able to use a portion from your savings to treat yourself to a vacation or buy something that you really want – like a new computer or a smartphone.

You’ll always be that ‘broke relative’ during festivities

Since you’ve been spending each and every one of your paychecks, it will seem like you never have any extra money for Christmas, Hari Raya, Deepavali, Chinese New Year or even birthdays! This may sound harsh, but how are you going to feel you’re known amongst your nieces and nephews as that ‘uncle/auntie who is always broke’?

Jokes aside, it’s going to be depressing to know that you can’t really contribute or get your loved ones gifts or spend money on them during special occasions. Now if only you didn’t spend all of your salary for the past few months…

It’s not all doom and gloom though, as there are a variety of ways to take charge of your personal finances. Whether it’s changing your spending habits or increasing your income with a side job, analyze your financial status carefully and find ways to break free from the paycheck-to-paycheck lifestyle.

If you’re unsure on where and how to start, you can always visit CompareHero for more money-saving tips and financial advice.