Alert: Are Malaysians saving enough for rainy days?

Categories: ABCs of Personal Finance

Alert: Are Malaysians saving enough for rainy days?

How much savings is enough for our future? RM300,000? RM1 million? Or perhaps RM3 million?

More importantly, if we do not save enough, who will save us?

#1 Malaysians are saving. But are we saving enough?

In 2021, when I first wrote about this topic, the concern was that many Malaysians were not saving enough. Has the situation improved?

The RinggitPlus Malaysian Financial Literacy Survey 2025 suggests we still have work to do.

Among respondents earning RM5,000 to RM10,000 monthly, 39% saved RM500 or less per month, up from 31% in 2024. Meanwhile, the proportion who said they could survive for more than six months on their savings fell from 32% to 27%. Almost half, or 47%, reported living from paycheck to paycheck.

These are survey findings, not a complete picture of every Malaysian. Nevertheless, they raise an important question: if people earning RM5,000 to RM10,000 are struggling to build sufficient savings, what happens when they face an unexpected expense?

The PIDM savings research also found that 55% of its respondents had less than RM10,000 in available emergency savings.

That is worrying. A sudden job loss, major car repair or medical expense can quickly eat into RM10,000.

#2 Is the cost of living the only reason we cannot save?

Of course, the cost of living is real. Housing, food, transport, childcare and other essentials take up a significant portion of household income. Some families genuinely have very little left after paying for necessities.

We should not pretend everyone can save the same percentage of their income.

However, there is another question worth asking. When we say we cannot save, have we examined where our money goes?

We may feel pressured to upgrade our smartphones because colleagues have newer models. We may order food more often because it is convenient. We may spend RM15 on a latte occasionally, then repeat the purchase several times a week. We may be visiting Shopee daily!

There is nothing wrong with enjoying these things. The problem starts when our lifestyle consumes all our income, leaving nothing for our future. Truth is, we need maybe 3 pairs of jeans and 3 pairs of shoes instead of the more than 10 pairs of each and yet we are still looking for more.

If we wait until the end of the month to save whatever is left, there may be nothing left to save!

My suggestion? Save first, then spend what remains. Start with an amount we can realistically afford, even if it is RM50 or RM100 a month. Increase it when our income improves.

For households already struggling to pay for necessities, the priority may be to review expenses, seek better-paying work where possible, or obtain appropriate financial counselling. Saving is important, but we must recognise that income and affordability matter too.

#3 What are the actual benefits of savings?

Savings are not simply numbers sitting in a bank account. They give us choices.

First, savings protect us from emergencies. Without an emergency fund, a broken car or temporary loss of income may force us to borrow money. We then pay interest and make our future finances even tighter.

Second, savings reduce our dependence on debt. We do not need to use a credit card or personal loan for every unexpected expense. This is especially important because debt repayments reduce the amount available for future saving.

Third, savings help us take advantage of opportunities. Perhaps we want to pursue further education, start a business or make a carefully considered investment. Having money set aside gives us flexibility.

Fourth, savings help prepare us for retirement. When we are no longer earning a regular salary, we still need money for food, utilities, healthcare and daily expenses.

These benefits are practical and immediate. We do not need to become millionaires before we can benefit from saving.

#4 But is saving alone enough?

Here is where we need to think beyond the bank balance.

Money saved in a deposit account may earn interest or profit, depending on the product. However, inflation gradually reduces what our money can buy.

Malaysia’s inflation rate was 1.4% in 2025, according to DOSM’s annual Consumer Price Index report. Even when inflation is relatively low, prices can rise over many years.

Imagine having RM100,000 today. If our expenses rise over time, that same RM100,000 will not necessarily support the same lifestyle 15 or 20 years later.

This is why we need to understand the difference between saving, investing and preserving wealth.

Savings provide liquidity and security. Investments, such as diversified funds, shares or suitable property, may help grow our wealth or generate income over the long term. Each comes with different risks, costs and levels of access to our money.

We should not invest our emergency savings in risky assets simply because we want higher returns. Nor should we assume every investment will make money.

The sensible approach is to build emergency savings first, then develop an investment plan suited to our goals, timeframe and ability to handle losses.

#5 Start today. Our future self will thank us.

We may retire at 60, but we could live into our 80s or beyond. That could mean two decades or more of living expenses after full-time employment ends.

So, how much savings is enough? There is no single number that suits everyone. It depends on our lifestyle, retirement age, health, housing arrangements, other income sources and how long we live.

What we can control today is whether we start building financial resilience.

We do not need to save RM3 million before taking the first step. We need to start with what we can afford, make saving a habit, and gradually build towards a bigger goal.

And remember, savings are the starting point, not the entire plan.

If we do not save enough today, who will keep paying for our future?

Happy saving, and start today, yeah!

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