SHAH ALAM, June 17 — Being able to differentiate between wants and needs would help in the management of personal finances during the Covid-19 pandemic, says financial consultant Firdaus Pay.
He said those who have been financially impacted by the outbreak should also avoid unnecessary debt and should create an emergency fund to help in better money management.
“During this period, good financial planning includes preparing a budget and making a list of what are our needs are that should be prioritised over our wants.
“It is best to reduce our debt and avoid unnecessary debt by putting the ‘good debt’ first and avoid ‘bad debt’,” said Firdaus during an online talk show on Media Selangor’s Facebook yesterday.
He said good debt would increase a person’s net worth or income, such as mortgages that can be rented out, while bad debt involves borrowing money that does little to improve financial outcome and becomes a burden in the long run.
The specialist in forensics accounting had also urged individuals to set up emergency funds that could be used in case of a job loss or reduced income.
“What is important is we should have takaful overage for ourselves and our family as it would help us with unexpected expenses such as hospital fees,” he said.
Firdaus had also recommended investing in Amanah Saham Bumiputera (ASB) or unit trust funds by allocating at least 10 per cent of individual monthly income.
“These savings can be used in the long term period or in times of emergencies,” he added.
