Tips to help newly-employed graduates to build a secure nest egg

1) Open a financial freedom account and deposit 10% of your monthly salary there every month.

2) Keep proper records of spending to monitor.

3) Set a monthly expenditure budget and compare that with the actual amount spent. There are free software in the market that can be used.

4) Buy a medical card to protect against hospitalisation and surgical cost if the cover from the employer is inadequate.

5) Create an emergency fund for rainy days; put this money in fixed deposit or money market fund. The amount should be around 3 to 6 months of monthly mandatory expenses.

6) If you really need to use the credit card, pay them in full by end-month. A credit card should be treated like a form of payment, not extra money.

Source: http://biz.thestar.com.my/news/story.asp?file=/2009/3/28/business/3558733&sec=business

Credit Card: A necessity in today's world

In today's world of globalization and internet business, credit card has become a necessity to most people, for credit card bring about convenience to all of us! With only one card in hand, our purchasing need can be fulfilled all around the world!

But in recent time, credit card has been misused, thus creating negative implications to the users. Everyone, whether existing users or those planning to get one, must bear in mind that credit card is meant to bring you convenience, not excessive spending without limit. If everyone practiced responsible spending, credit card will be one of the best tools in this era.

There are many types of credit card offered by almost all the banks, some in collaboration with airline or hypermarket. So how do we determine which card to apply for? In this age of internet, besides obtaining more information from the “physical” bank itself, we can also obtain the latest and most attractive offers from online credit card search. We can even apply credit card online!

And if you are in the U.S, Yourcreditnetwork.com is one site you must refer to. It offer such comprehensive information on credit card, from Low Interest Credit Cards, Student Credit Cards to Bad Credit Cards. Yes, you did not get me wrong, this site even list out Credit Cards that are considered bad, and all the cards were given rating and review.

Besides, this site also specializes on informing consumers about credit card offers, how to use credit wisely, and occasionally posts humorous insights into the wacky world of credit. What’s world without a little bit of humor? So if you are looking for information on credit cards without the usual dullness, this site is especially for you!

Fixed Deposits have Risks too!

Most people thought that putting money in Fixed Deposits is the safest way to keep money growing and it is risks-free. Though I would agree that FDs is one of the safer way to keep your capital, I disagree that FD actually help your money grow, and surely it is not risks free.

And the risks involve is Inflation Risks. With the current FD rate of 3%, putting your money in your FD is actually making it depreciating, though it give the false impression that it actually appreciating with the interest given. Figure wise, yes, it is appreciating, as the bank give out interest to FDs, and the balance figure keep increasing with the interest added. Value wise, No! It is not appreciating, instead it is depreciating as inflation reach 5%. The money you put into the FDs is actually depreciating at a rate of 2%.

So if you think there is putting your money in FDs alone is enough as it is the safest way, better think again!

Inflation

With the recent hike of petrol prices in the country, one of the inevitable result from it is: Inflation.

With a hike of 41% in petrol prices, no doubt the inflation rate in the country will also rise. Economist are predicting inflation rate of the country will rise to 5%. Not too bad considering there are also significant increase in rice prices. But what most of us didn't noticed is that, everyone's inflation rate is different. This 5% is not applied to every Malaysian in the country. This 5% is the average of the whole country.

That means, if you are living in the capital or big city, your inflation will definitely be more than 5%. Why? Actually you can actually measure your own inflation by jotting down your expenses for this year, and compare the amount with your expenses next year. A month by month comparison will be unnecessary as there will not be much of a difference between this month and next month. I now give an example on how to calculate.

Let's say you drink a cup of coffee everyday. The price now is RM1.00. For 365 days, you will spend RM365 / year. After this petrol hike, assuming the price increases RM0.20, so now the price for one cup is RM1.20. For 365 days, the cost is RM438, an increase of RM73. This increase is 20%, therefore your inflation is 20%, way above the national value of 5%.

This is just a single item example. If you add up your every expenses, more often that the percentage will be even higher, as normally prices of products keep going up!

“Failing to Plan = Planning to Fail”?

What is Financial Planning?

Financial Planning is really simple, and no different from planning for a day out. You will only need to think of the 3 points below:

1) Knowing where you are now,
2) Where do you want to go and
3) How to get there.

1st of all, we need to know what are our current resources, our financial goals and how to achieve them in the most effective and efficient manner. Financial Planning is important to everyone, not only to the rich, and especially the not-so-rich. Ya, you get me right! Especially the not-so-rich! If you are rich, you still can afford to be complacent and get away with it. A not-so-rich, if don’t carefully plan and implement with discipline, you will suffer at the end of the road.

Money may not be the most important thing in life, but nevertheless, you can’t live without it! Every single thing revolves around money, even when I sit in the room and switch on my laptop (you will still need electricity to run your laptop, and you’ll have to pay for your electricity).

Financial Planning is a systematic way of organizing our financial affairs in the most effective and efficient manner in order to achieve our Life Goals.

Financial Planning actually help us to understand our Wants and Needs. Our Wants are infinite, but unfortunately, our resources are finite! There is always Trade-Offs or Sacrifices to be made.

Besides, it helps us to cope with difficult times. The only constant in life is Change and learning to cope with changes early will be a plus point! If one day, unfortunately you lose your job, can the money you save let you live your life on until you get your next job? If not, how can you save enough for that? You don’t save any money? OMG!

Also, with a financial plan in place, creating wealth will not be big fuss. Wealth creation is not a sprint but a marathon, as it takes time, discipline and a lot of financial stamina. With the help of a qualified investment advisor, you can have the most appropriate investments that suit our risk appetite to achieve our desired goals. In the current market, there are many investments available for you to choose. By adopting various investment strategies and proper Asset Allocation, slowly but surely, you will get your 1st pot of gold!