You might not think that personal finance has anything to do with sustainability and veganism.
I didn’t think so too.
But then I realised — it has EVERYTHING to do with this lifestyle.
We vote with our dollars (or whatever currency) in favour of plant foods.
It’s a silent protest against animal products and, by extension, animal exploitation.
It’s a way to say, “I prefer to buy secondhand clothing rather than supporting fast fashion” without making a big fuss and getting ourselves in jail (even for doing the right thing).
I’m at the point in my life where I have to take my finances to the next level and not just be living paycheck to paycheck. I’ve done the least I could do that is to go vegan, live plastic-free as best I can and not buy new fast fashion items.
But I intend to contribute more to this eco vegan movement.
So here is a general personal finance guideline which is really nothing new, but with added tips for greener and more minimalistic habits.
1/ SET UP A BUDGET
You can’t control what you can’t see. So create a spreadsheet or download an app to track your expenses.
Don’t think too much for this first step.
All you need is somewhere to write down your expenses and that you would be able to calculate and review at the end of the month.
Some people do it manually in a notebook but I use a software as its easier to automate the calculations. I used to do it on Google Sheets as I could input a simple formula to sum up my expenses. Now, I use an app called Notion, which is not a financial planner app but rather a productivity app. I’ve managed to organise everything there, not just my finances, but it has a simple database system that can do the math too.
Find what works for you and stick with it.
2/ PREPARE EMERGENCY FUND
There are different types of savings and one of them is for an emergency.
If you had saved up 6 months’ worth of expenses, you probably wouldn’t have to worry during this coronavirus crisis even if you lose your job or some of your income.
If you’re like me who don’t really have 6 months’ worth of expenses, you’ll feel a bit more anxious.
So how should I rectify this?
- figure out how much i actually need each month for expenses
- decide how much i should save from my monthly income
- create a savings account in a bank dedicated solely for emergency (DO NOT WITHDRAW UNLESS IN EMERGENCY)
- set up automated transfer to the savings account each month until the goal is reached
I currently have about 3 months’ worth of expenses which are in my business account. That account does not have ATM withdrawal service (i.e. no debit card issuance) so the money can only be transferred online. If I do need to spend, I’d put the money into my personal account.
This is not a very ideal way of doing things as there’s a chance for me to just transfer and spend more than I should.
As in point #3, an emergency fund should not be withdrawn if it’s not an emergency.
3/ SAVE & INVEST
You could continue saving money in your savings account but it won’t grow as much. This is because the interest rate or dividend is low.
If you put to an investment fund, your money will make even more money.
In Malaysia, there’s this basic investment scheme called Amanah Saham Nasional Berhad. The interest rate is around 9% (if I’m not mistaken). It’s good enough to start with.
I’ll have to explore more on investment schemes as I gain more knowledge and income, but for now, this should be sufficient.
4/ LIVE BELOW MEANS
This is something that we should all practice no matter how rich we may be.
If you follow Elizabeth Warren’s 50/30/20 budgeting rule, it’s unlikely that you would overspend. Based on your after-tax income you should use:
- 50% for needs — rent, mortgage, car loan, utility bills
- 30% for wants — eating out, gym membership, leisure activities
- 20% for savings — emergency, retirement or even for debt settlement
You could adjust these percentages but the point is to know your priorities and be strict with your spending.
If you know you can’t afford eating out every day, limit that to once a week. Learn to cook and meal prep.
If you’ve been eyeing on a designer handbag, stop and ask yourself, “Do I really need this?”
Mull it over in your head for a few days or thirty. If after a month you’ve forgotten about it and think that your current handbag is still usable, then you know that you don’t actually need a new one.
I’d say that having a minimalist mindset helps a lot in terms of purchasing decisions.
5/ AVOID SCAMS
This is an advice that you’d have probably got given before, perhaps more than once.
But don’t think for a second that just because you know not to fall for scams that you would never fall for it.
I speak based on my experience.
I recently got scammed and lost about RM 5,000 (US$ 1,200).
To some, it’s not a lot. But to me, it’s my hard-earned money.
I guess I was at a really vulnerable point in my life that the scammers could take advantage of me. In retrospect, I was stupid and I didn’t think straight.
But it taught me some valuable lessons:
- ignore automated calls
- if you know you’ve not done something unlawful, just ignore
- if you did do something unlawful, the police would come straight to your house
- if you think you’re mentally ill, seek help immediately
- build an emergency fund (point #2) and start investing as soon as possible (point #3)
Coming out of this trauma, my perspective in life has changed slightly.
I’m now more determined to increase my wealth and achieve financial security by means of creating a business through my copywriting work and/or create passive income through selling books or investments.
I’m more focused now. This was the massive kick in the butt I needed.
6/ DO AN INVENTORY
My finances are not a separate entity to my lifestyle or habits. They are intertwined.
When I got into the sustainability train, I worked my way towards switching my belongings to reusable/compostable ones and gradually step away from depending on disposable items.
I’m still working my way but so far I’ve managed to switch several bathroom and kitchen essentials.
Besides tangible items, one could also consider switching their utility provider or energy source.
There are utility providers that are investing in green energy and as a consumer, we should support it.
In Malaysia, TNB has a myGreen+ scheme that enables a consumer to subscribe to green energy. There’s little information on the web but I was told that more info is on the myTNB app that you can download.
7/ EXPLORE NEOBANKS
Neobanks are fintech based financial providers with all its services being done digitally.
This means that all transactions occur via a mobile app and that there are no physical branches that one can go to.
But yes, they are legit, registered banks. Based on Wikipedia, there seems to be only 16 in the world, most of them are based in developed countries.
I got fascinated by it when my friend told me about Monzo. You can have both your current and savings account in one app but on different ‘pots’. You can have a joint account with someone else. And you could use it internationally without the hassle of figuring out the exchange rate.
Basically, you can go completely cashless anywhere.
They do provide a debit card for transactions and withdrawals. And although you may sign up to Monzo if you’re not a UK tax resident, you still need a UK address.
I’m guessing this condition is similar to other neobanks but you’d have to check them out individually.
I have a mind of opening a Monzo account but I need to do a bit more research into it, as should anyone. But I have to make a decision at some point and not get stuck in the research phase.
I think neobanks are the future.
I personally do not like using e-Wallets because of the hassle of transferring money from a bank. Plus, you can’t transfer any money back to your bank if you decide not to use the e-Wallet app anymore.
With a neobank app like Monzo, I could do all my transactions there and I could track my spending/savings all in one seamless app!
8/ START A BUSINESS OR EARN SIDE INCOME
This is something that I’m only beginning to venture into. I’ve already started my freelance copywriting business. Being a full-time freelancer is very much like being an entrepreneur. So far, I’m enjoying it despite the struggle of obtaining and maintaining clients, especially in this trying time.
Even if you’re comfortable with your high-paying 9-6 job, it doesn’t hurt to learn other ways to make money and diversify your income.
One way to start is to find something that you’re passionate in, or a cause you believe in with a problem that needs solving.
Work at it one step at a time and before you know it — you’re an entrepreneur!
Otherwise, you may earn a side income like being a Grab/Uber driver or work at cafes part-time. You can also earn some income online through affiliate marketing or selling stuff on ebay/amazon.
Bottom line: find ways to increase and diversify your income.
As we’ve learnt from this current pandemic, nothing is permanent, not even your “stable” job.
My Current Financial Situation
Just to let you in a bit on my situation, I’m still at my early stages of ‘adulting’ — I’ve been working for about 3 years.
I’m still learning to be more financially literate and I’m keen to paint a better picture of a cost-effective sustainable lifestyle.
Although it seems like living greener is more expensive and may be considered a privilege, I believe that it can be done no matter where you’re at financially.
It’s all a matter of perspective.