Do you know what your financial health is? Knowing your financial health will help you:

• Plan your personal finances
• See which part of your personal finances you need to improve
• Understand if you can afford to make important financial decisions, like buy a home or a car, or even start a family

Just like taking care of your physical health, taking care of your financial health could change your life. So, here are six numbers to help you check your financial health!

 

• Net worth

What is net worth?

Your net worth is the value of your assets minus your liabilities.

Assets = What you own House Money in bank accounts Investments EPF	Liabilities = What you owe Credit card debts Housing loan Car/motorcycle loan
Net worth = Assets – Liabilities

Why should you know your net worth?

Your net worth shows you how healthy your finances are. It will also help you figure out what you need to improve, like how much debt you have. 

How do you increase your net worth?

• You can spend less money and grow your savings and investments. 
• You can also reduce your debt. 

 

• Take-home pay

What is take-home pay?

Your take-home pay is the income you have left after mandatory things like taxes, EPF and SOCSO have been taken out from your salary. 

Salary = What you earn	Mandatory deductions = What you need to pay Taxes EPF SOCSO
Take home pay = Salary – Mandatory deductions

Why is it important to know your take-home pay?

Your take-home pay will be lower than your salary because taxes, EPF and SOCSO have been taken out. So, when you’re planning your budget, you need to look at your take-home pay to see what you can set aside for expenses like savings and insurance. 

Your take-home pay will also help you see what you can afford if you want to invest or take a loan. For example, you should make sure your total debt isn’t more than 40% of your take-home pay.

 

• Credit score

What is a credit score?

A credit score is a three-digit number that shows how likely you are to repay your debts. The number can range from 300 (very bad) to 850 (very good). A higher credit score means you’re more likely to repay your debts.

Why is it important to have a good credit score?

A higher credit score means:

• Your bank or lender is more likely to approve your loan application
• You’re more likely to get a lower interest rate on your loan
• Your loan application will be approved faster

How do you get a good credit score?

Read our guide on credit scores to help you improve your credit score!

 

• Housing loan interest rates

What are housing loan interest rates?

If you take a loan or already have a loan to buy a house, this is the interest rate you’ll be charged. Most housing loan interest rates are variable. 

All housing loan interest rates are calculated using the reducing balance method. This means the more you pay towards your loan, the lower the interest you’ll have to pay.

Why do you need to know housing loan interest rates?

Knowing housing loan interest rates will help you choose the most affordable housing loan for you. 

If you already have a housing loan, you may want to refinance your housing loan if you can get a lower interest rate – but you’d only know if it’s a good time to refinance if you know what your existing interest rate is compared with the interest rates in the market! But remember, if you’re thinking of refinancing your housing loan, check if you can afford to pay your new interest rate. 

How do you get the best housing loan interest rate? 

Check out our 8 practical tips when buying a home to help you get the best housing loan!

You can also use our housing loan calculator to find out how much you need to repay each month for your housing loan.

 

• Savings

What are savings? 

Your savings are the money you have saved in your bank account or retirement funds such as EPF. 

How much savings should you have? 

To start with, you should have at least six months’ worth of your salary saved for emergencies. 

You can also save for different financial goals, like the downpayment for a house or car. Figure out how much you need to save to achieve that goal. Then, plan how much you need to save each month to reach your goal – Use our savings goal calculator to help you!

How do you start saving money? 

Read our guide on savings goals to help you get started with saving!

 

• Credit card interest rates

What are credit card interest rates?

If you don’t fully pay off your credit card bills every month, you’ll be charged interest on the balance you owe.

Why do you need to know credit card interest rates? 

Credit card debt is one of the largest causes of bankruptcies in Malaysia.

One thing you need to remember is that interest rates on credit card debts are much higher compared to many other loans. Even though banks may advertise credit card interest rates of 1.5% per month, remember that this actually works out to 18% per year! 

How can you minimise the  interest costs of your credit card?

• Always pay the full amount of your credit card bills on time. 
• If you don’t pay the full amount of your credit card bills on time, you can get charged a lot of interest and get into more debt.

You can also read our guide on credit cards to help you understand more. And remember, if you need help managing your debts, you can get in touch with https://www.akpk.org.my/.

 

Related links:

Want to improve your credit score? Read this guide to find out how.

Interested in applying for a credit card? Before you continue, read this guide to know what you need to do.

Use our credit card repayment calculator to find out how much you need to repay each month.

Before you apply for a loan, check the effective interest rate you’ll need to pay. You can read more about effective interest rates here. 

If you want to take a personal or hire purchase loan, you can calculate your effective interest rate here. 

You can also calculate how much you need to repay each month for your personal loan, vehicle loan or housing loan here.