IN the midst of Malaysia’s high number of COVID-19 cases, there are still ways that people can better manage their finances that involves a few financial strategies like debt removal, stable investment and cashflow.
According to HSBC Malaysia head of wealth & personal banking Renee Bullock-Cann, in these tough times, some of the challenges that one has to go through can vary, which also includes financial stress.
In light of this, HSBC highlighted several strategies that could help the public to better manage their finances.
- Prioritise and take stock of what you owe. Always pay off your debt with the highest interest first. For most people, that would be credit cards, car and personal loans.
Where possible, align all the due dates and set a reminder to ensure payments are made promptly to avoid incurring any late payment fees or overdue interest charges.
Mortgages or home financing tend to be more acceptable debt to hold because of their lower interest or financing rates.
- Look for lower interest rates and consolidate. Borrowers with high-interest debt may be able to consolidate their balances into one lower-interest alternative. Not only can that save money in interest fees every month, but it’s typically easier to pay one bill with a single due date, than managing several due dates a month.
- Make your money work harder for you with the right credit cards. When used prudently, credit cards can actually help you stretch your money. The caveat though is that you must be able to make full repayment each month and not let the spend roll over.
If this happens, potentially any cashback or savings you would have earned would be eliminated by the interest charges or late fee charges.
- Create cash flow. If you have unencumbered properties or low loan-to-value ratios, consider applying for a home equity loan. It will allow you to draw cash from existing properties to ease the temporary strain on your cash flow.
But keep in mind that doing so carries the same risks and requires the same financial discipline. If you lose sight of your financial goals, you may end up right back where you started, or even worse off financially
- Speak to your bank. Various banks have a number of programmes to help their customers free up short-term liquidity. Some of them, like HSBC Malaysia, has financial assistance programmes for existing customers in line with the PEMULIH stimulus package recently announced on top of existing R&R programmes.
“Paying off debt in a challenging economic climate is tough, but it is a smart habit to cultivate. Applying a few of these key strategies can help people manage their debts with more confidence, and boost their own financial resilience as their finances will be in better shape when the economy recovers,” Bullock-Cann concluded. – Aug 9, 2021
