Whats your main passive or semi-passive income source? List three actions that can increase your passive income ratio 1. 2. 3.
Savings Ratio
Savings ratio is the proportion of income which is saved. Referring to your MFT, all the amount you put in Surplus section can be regarded as savings. Many experts suggest that you at least have a 10% savings ratio. Looking at the situation in Malaysia, most employees contribute to EPF. Since they are contributing 11% and the employers match the contribution with another 12%, that is a total of 23% saved in EPF. However, most EPF retired members found that there is not enough fund left. If 10% savings ratio is adequate, that means an average worker doesnt need to worry about her retirement because it is mandatory to contribute to EPF. Does this mean that you as an employee dont have to save already? Of course not. Thats why the target here is elevated to 30%. As mentioned in my book Top Money Tips for Malaysians, a savings ratio of 30% will enable you to be financially free very soon.
Savings Ratio Total savings Formula Target Example Your Savings Ratio Whats your main savings and why? List three actions that can increase your savings ratio 1. 2. 3. Annual Gross Income 30% or higher RM25,866 / RM156,800= 16.50%
Wants Spending Ratio Total Spending on wants Formula Target Your Wants Spending Ratio List down top three spending on wants 1. 2. 3. Annual Gross Income 10-20%
1. 2. 3.
Lets move on to another related financial ratio that you should keep your eyes on.
1. If your ratio is more than 2. 36%, list down three actions in 3. order to reduce the ratio to healthy level