It is well-known that the most effective way to accumulate wealth and see your net worth growing day after day is paying yourself first! My Wealth Builder explain in details the three simple steps to pull off this only saving strategy you’ll ever need. I summarized the three steps here:
1. Pay yourself first from every paycheck
2. Don’t touch funds from step 1.
3. Invest and grow the funds
These steps look simple and obvious, but human being is emotional. It takes high discipline to procrastinate your spending. Impulse buy happens every single day. So for fellow Malaysian, here is a few simple strategies that might help you to pay yourself first and pay all the other bills later.
Pay Yourself First Implementation Suggestions
1. Save your money in a saving account without ATM card. It makes withdrawal difficult. You would have to queue at the teller counter to withdraw your cash. Which means you need to park your car, get into the bank, press the number machine, wait for your turn, fill up form and sign some documents. Moreover, you had to do this during weekday only during office hour. Save the hassle of withdrawing money, just leave it there.
2. Don’t activate the internet banking service for that account, so that you can only transfer money in, but not out.
3. If possible, open the saving account jointly with your spouse, or mother or anyone who is more disciplined then you. Both party must be present to withdraw fund.
4. Buy an endowment policy. You will lose money if you stop halfway. This is the feature of force saving which will keep you paying the insurance premium until the policy mature. You will be surprise that you actually save a lump sum for your retirement when the policy mature.
5. Invest in investment-linked fund using the top up facility such as the Great Saver Rider on Great Eastern investment-linked policy or PruSaver on PruLink Prudential policy. The advantage of investing in your insurance policy account is that it can be paid by your credit card auto charge.
6. Pay all your insurance policy with credit card. This will make sure you pay the premium-expenses which is actually your saving. Especially those policy which had reach the critical years. It is better to keep paying those policy because 100% of your money will be debited into your insurance account.
7. Invest in unit trust fund using dollar cost averaging. Ask your agent to remind you to invest monthly when you get your paycheck at the end of the month. Isn’t it nice to have someone reminding you to save money?
8. Contribute more into your EPF account. Instead of contributing 11%, you can opt to contribute more if your employer is willing to assist you on the process. You will get more tax relief and less money on hand to spend.
What do you think? Please share the other strategies effective to you.