Have well financial management to avoid unexpected difficulties – BNM

KUALA LUMPUR (March 31): A well financial management is a responsibility that one must have in order to avoid considerable difficulties and challenges in life, especially during the unexpected event such as the recent pandemic, said Bank Negara Malaysia (BNM).

In its Annual Report 2020, the central bank said taking control of finances can improve one’s live by having more freedom and peace of mind.

“Being prepared for life changes in life circumstances is important. Just as the recent pandemic has shown, unexpected challenges can alter our lives in many unexpected ways,” it said.

BNM said consumers should be aware of steps that they can take when unexpected challenges happened.

It said consumers, who are struggling to repay debt, should seek help early and discuss their situation with their financial institutions.

Alternatively, the financially affected consumers could reach out to the Credit Counselling and Debt Management Agency (AKPK)  for help, including financial counselling and practical advice on money management.

Understanding basic financial concepts would help consumers to better appreciate the importance of managing their finances prudently, especially applied to saving and building emergency funds.

BNM said a good guide of sufficient buffer is to have savings of between three and six months of monthly expenses.

“Part of managing our finances may include borrowing prudently to fund large purchases such as our home, cars and motorcycles or to expand our businesses.

“In doing so, one should not only be aware of how borrowings work, the terms and conditions, but also the rights that consumers have,” the central bank said.

It said the total monthly debt repayments should not be more than 60 per cent of a borrower’s net income, after taking into account statutory for taxation, contribution to the Employees Provident Fund and the Social Security Organisation. – Bernama