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Home » 4 Important Steps To Take Before You Start Saving

Unless you’re extremely wealthy already, you know you need to save. Whether it’s for a vacation, emergency or capital for investments, saving is crucial to achieving the things you want.

When you save, you’re not just simply putting money into your bank account – saving is smart, mindful and strategic planning to optimize your disposable income so you can afford your goals much earlier with no financial burden.

This can seem complicated and difficult.

Good news. We planned out 4 specific steps for you to follow so you can develop a personalized strategic plan to better prepare you for savings.

1. Have a clear goal


Before you start saving, you need to know what you are saving for. Having a clear savings goal will help you figure out how much and how long it’s going to take to afford your goal.

  • Don’t be too vague or specific about it. If it’s a new camera you’re saving for, be clear how much it roughly costs, even if you haven’t decided yet what specific model.
  • Write this down. Whatever it is you’re saving for: a sports car, city condo, or that dream holiday.

2. Track your spending

It’s not so much about how much money you make – everyone has different goals and commitments. Someone else who earns more than you may not be able to save as much due to his commitments. So it’s really about how much you don’t spend that makes a difference to savings.

The second thing to do is to start tracking your everyday spending at the beginning of the month.

There are two practical reasons for this:

1.Tracking your spending gives you a clear picture of where your money is going and where you could spend less.

2. It helps you set a baseline on how much you need for monthly necessities (rent, food, utilities).

How to track your spending

1. Start by downloading a spending tracker app on your phone

For your first month, you don’t need apps with too many added features. You only need to record all your expenses to draw a baseline. Most apps allow you to customize spending into categories. We recommend My Money Manager as it’s simple and easy to use or Fortune City App if you love playing games, but you should find one that’s best for you.

2. Categorize your necessary expenses into 4 main categories:

    • Food/Groceries: this includes eating out
    • Rent/Utilities: Your rent/mortgage, electricity and water bills
    • Transportation: this includes petrol, car servicing, tolls and parking fees.
    • Bills: Phone bills, road taxes, insurances, credit cards, debt, ‘samans’ etc.

3. Add more categories such as:

    • Entertainment/Lifestyle: Movies, live shows, spas, etc.
    • Misc bills: Non-essential bills such as Netflix, Spotify, memberships, etc.
    • Emergency: medical bills, medicine, medical equipment etc.
    • Pets: food, toys, medicine, etc.

3. Record every time you spend

Every time money leaves your wallet or bank account, record it in your spending tracker app under their respective categories. For example, after you pay for your lunch, immediately record how much it costs under ‘Food/groceries’.



5. Set a baseline

At the end of the month, your expenses should look something like this:Now that you have a clear picture of how much you need for monthly necessities (your baseline), write it down.




E.g. RM600 for rent, + RM70 for electricity + RM100 for phone bills + RM30 for water bills = RM800 is your baseline.



Now consider areas you can cut down on or stop altogether in order to…

3. Pay off debt & outstanding bills

Debts are like holes in the bottom of your financial bucket. You can start saving now, but the longer you put off paying debt such as credit cards, the more money ends up ‘leaking out’ of your financial bucket due to interest rates.

  • Pay off all your outstanding bills first
  • Now that you have a baseline of your monthly expenses (step 2), allocate a large portion of your disposable income to paying off your debt.
  • Once you are actively paying off your loans and debt, move on to step 4

4. Build an emergency fund

We can’t stress how important this is. Many Malaysians start saving for their goals when they don’t even have an emergency fund. A lot of things can happen in 3 months – your car might need an emergency repair, you might need to fix a broken sink or a family member might need serious financial help.

  • As a general rule of thumb – have enough money to last you at least 3 months without an active income
  • If RM800 is your baseline, you should have an emergency reserve of RM800 x 3 = RM3200.

Having an emergency fund gives you both confidence and peace of mind knowing that you have the most fundamental aspects of your financial life sorted.

Ready to start saving?

Once you have a firm grasp of your basic finances, you should be confident about starting your savings journey – just remember to constantly keep track of all your spending so you’re consistently on track to reach your goals!

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