In the third part of our Special Report on Money and Divorce, Hann Liew, the CEO of RinggitPlus, shares his thoughts on managing money wisely when you're newly single, perhaps with children to support.
Q: What percentage of income should go into emergency funds, as well as investments?
A: On emergency funds, you can start by saving 10% of your monthly income. A general rule of thumb is to save three to six months of expenses as emergency funds, as that’s usually enough for a short- to medium-term disruption in lifestyle.
One thing to remember is that just because you have an emergency fund, it doesn’t mean you should stop saving. If you’ve been comfortably putting cash away for an emergency fund, you should continue saving with the same amount.
Additionally, if you’re a parent with young children, you should participate in the Skim Simpanan Pendidikan Nasional (SSPN-i) to save up for your children’s tertiary education. Besides, you can also get up to RM8,000 in tax relief when you file your income taxes.
If you already have a substantial amount of savings, then you may consider investing in mutual funds, stocks, and bonds, but always in a diversified portfolio. Nonetheless, it’s important to find out more information about the investment portfolios, assess the risks, and to diversify your investments.
Be aware of investment scams. An easy way to identify a scam is that it always promises quick and high returns that seem too good to be true.