By : Mohamad Ashaari bin Awab K.B.;P.A.

A Financial Behavior survey conducted by the Credit Counseling and Management Agency (AKPK) in 2018 showed that the level of financial well-being among working adults in this country is still at a low level.

According to the Head of the Financial Education Department of the Credit Counseling and Management Agency (AKPK), Nor Akmar Yaakub,

"High indebtedness is an issue employers have to face where three out of 10 working people have to borrow to buy basic necessities.

"They earn below RM2,000, saving is the biggest financial challenge.

"Those who are serious about preparing expenses are between the ages of 50 and 59 while those with high incomes are seen to plan less," he said.

Referring to the statement above, the author believes that poor financial management is the main cause of individual failure to save money.

Here are some reasons why poor financial management can make it difficult for us to have savings.

No financial planning.

Goal setting is very important to increase our motivation to consistently save money. However, if individuals have little or no personal financial planning, it is certainly difficult to set savings goals and implement effective strategies to achieve them.

Don't know cash flow.

Not examining the outflow of money when spending is also an effect of poor financial management. Without organized spending, one may easily spend money without realizing how much they have spent and end up with no balance to save.

Spending beyond means.

Uncontrolled use of credit cards or spending on unnecessary luxury purchases can result in high debt and having too much debt. The effect of this can hinder an individual's ability to save money.

Little or no financial knowledge

Lack of knowledge about personal financial management and the need to save money can cause a person not to give priority to saving activities. Many financial users think that the basic thing to save money is, 'save first then spend'. For example, the salary we receive every 25th of the month, the main thing to do is to save at least ten percent of the income and then spend the rest of the salary for other uses.

To overcome this problem, it is important to start by improving the knowledge of financial management, then the action of making a budget, setting realistic savings goals, and ensuring that every expenditure follows the financial budget that has been set. In addition, controlling expenses and reducing debt will also help improve the ability to save money effectively.

Date of Input: 30/06/2024 | Updated: 30/06/2024 | ayna