How often do you give yourself a self-test in finance, if ever? Well, here are a few questions for you to mull over and figure out the answers.
Your monthly net income is RM2100. Your home loan is RM900 per month and car loan is RM500 per month. You are also making a monthly payment of RM300 towards settling a huge outstanding credit card debt. What is your debt payment-to-income ratio?
The house loan payment is not included as it is a long-term liability. The general rule-of-thumb is “do not spend more than 20 percent of your net income on consumer credit payments.” A lower percentage (e.g. 15 percent) is better and safer. If your take-home pay is RM3000, your consumer credit payments should be around RM450 per month only (15 percent).
You bought an electrical item with a RM60 down payment. You have to make subsequent payments of RM70 for 36 months. What is your total cost for buying the electrical item?
Answer: RM60 + (RM70 x 36) = RM2, 580
You purchase a packaged food (185 g) for RM4.85. Then you purchase a similar product (300 g) of a different brand for RM6.00. Which product is cheaper?
1st product: RM4.85 ÷ 185 = 2.62 cents per gram
2nd product: RM6.00 ÷ 300 = 2 cents per gram
The second product is slightly cheaper.
You are single and your take-home pay is RM3250 per month. You calculated your monthly expenses to be RM2150. How much should you save for an emergency fund?
Monthly expenses x 3 months = RM2150 x 3 = RM6450
This is the minimum amount to save which you can increase as you see fit.
How much interest would you earn if you deposited RM5000 at 6 percent for 30 months?
Interest = RM5000 x 0.06 x 2.5 years (30 months)
Jacquelyn is the co-author of the books “Teaching Your Kids About Money” and “Top 93 Personal Finance FAQs in Malaysia” with KC Lau. Jacquelyn is the pseudonym used by Amy Sipagal.