One of the major highlights of celebrating Chinese New Year is the custom of giving and receiving ang pows (or e-ang pows, for some of you). In fact, depending on the generosity of your married friends and relatives, you can actually rake in quite a substantial amount of cash during this festive period.

The question now, though, is what will you do with your money? Instead of spending it all or just depositing it into your bank account, here are some things that you can consider doing with your ang pow money this Chinese New Year!

Clear off your credit card debt (or other debts)

Back in 2019, the Credit Counselling and Debt Management Agency (AKPK) – a credit counselling set up by Bank Negara Malaysia (BNM) – revealed that credit card loans made up 55% of its total debt portfolio. Recent data from BNM also noted that banks have been issuing more credit cards to Malaysians, up from 9.57 million in September 2021 to 9.92 million in July 2022, with the total consumer credit limit breaking a new record of RM154.34 billion in July 2022.

And to further complicate matters, new and innovative forms of credit lines – such as buy-now-pay-later (BNPL) schemes – have also been made available to Malaysian shoppers in recent times, with BNM noting in 2023 that there was a growing trend of users missing their repayments.

Although it isn’t the most thrilling way to spend your ang pow money, debt repayment should be prioritised whenever you have any extra money coming your way. So do the responsible thing – use that ang pow money to break free of paying interest rates and clear off your credit card (or BNPL) debt as fast as possible. In the case of credit cards, consider consolidating your debt by using a balance transfer if you have outstanding payments on multiple cards.

Save, save, save!

This is, of course, a common advice given as to how you should use your ang pow money responsibly – and you cannot deny that it’s a good one! But let’s talk about where you can park the amount so that it can be more rewarding.

To begin, it’s all too easy to spend all your ang pow money if it sits in your main bank account that you withdraw from regularly. Make a commitment by opening a new sub-saving account (or a separate account altogether) purely for your savings and deposit your ang pow money here. This can be the push you need to start making regular deposits into this dedicated bank account and avoid withdrawals unless an emergency crops up.

Of course, regular savings accounts don’t earn you much interest if you’re aiming to make your money work for you, so you may want to consider using high interest savings accounts instead. Depending on the account you choose, you can earn rates as high as 6% p.a.! However, note that there will be requirements that you must fulfil in order to unlock these high rates, such as paying a number of bills or depositing a minimum amount into the account each month.

If you’re not keen on opening a separate savings account, there’s another way you can keep your ang pow money safe from your spend-thrift hands. You can start a fixed deposit (FD) with as low as RM500, and the interest rates from a fixed deposit are also higher than that of a savings account. Moreover, you usually can’t withdraw from FDs for a fixed period of time without losing your earned interest, which is a good way to keep yourself from dipping into your ang pow savings at a whim.

There is also something called cash management solutions that you can look into to save your ang pow money, but we’ll discuss this in the next section!

Top up your emergency fund

An emergency fund is essential for every individual, giving you the financial cushion that you need in the event of unexpected setbacks. Think sudden medical emergencies, car repairs, or job loss – these can all lead to unexpected debt if you’re unprepared.

A good rule of the thumb is that you should have enough emergency savings to keep you covered for at least three to six months, including your living expenses and debt obligations – but if you’re able to, consider increasing this amount (just in case). If you’re not in immediate need of money, why not use your ang pow money to top up this fund as well? 

We mentioned cash management solutions earlier, so let’s dive into this real quick, and we’ll share why we think they can be good avenues for your emergency fund. Essentially, these solutions let you earn returns that are almost as high as FDs by investing in a low-risk investment instrument called money market funds. They also have low entry requirements; some solutions let you start with just RM1!

Most importantly, though, cash management solutions are highly liquid, which means you can withdraw them at any time without incurring penalties (unlike FDs). Upon submitting your request, most will disburse your money to you within one to two business days. So why not use these solutions to earn some interest on your emergency funds while it sits in your account?

Notable cash management solutions that you can check out include Touch ‘n Go (TNG) GO+, StashAway Simple, Kenanga Digital Investing (KDI) Save, and Versa Cash.

Start a private retirement scheme

Sure, the Employees Provident Fund (EPF) is there for retirement purposes, but a majority of Malaysians agree that EPF savings alone are not enough for retirees to stay out of poverty after retirement (this is before we even take into account the impact of the special pre-retirement withdrawals that were allowed during the Covid-19 pandemic). It makes good financial sense to start additional savings for your retirement early on, but a majority of young Malaysians have not practised this habit.

Putting your ang pow money into a private retirement scheme is a good way to start the practice of saving for retirement. PRS operates on a voluntary basis, so you decide when and how much you contribute to the scheme. Using your ang pow money to invest in PRS can help you kickstart the habit of regularly setting aside some money for retirement as you go along. You can even enjoy up to RM3,000 in tax relief through your PRS contributions!

Invest your ang pow money

Another thing you can consider is putting your ang pow money into investments. You can choose to invest in unit trusts, shares, or property – just to name a few. Malaysians have also been exposed to robo-advisors, which are intended to simplify the investment process for the public and empower them to kickstart the journey (especially beginners!)

Of course, the thing about investing is that it has the element of risk – returns on your investments are not fixed and you might end up with less money than you put it. Investing requires a prerequisite amount of knowledge and understanding on your part, so make sure that you do your research before putting any amount of money into investments!

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There are many other ways also to responsibly utilise your ang pow money – such as using it to insure yourself if you’ve not started – but don’t forget to also spend some to treat yourself (prudently)!

Our key message, however, is this: exercise some financial discipline with your ang pow earnings this year instead of losing track of them completely. After all, at some time in the future, you may be on the giving end of those red packets instead of receiving, so make the financially smart choice now and thank yourself later!

• TAGS:
• AKPK
• Ang Pow
• Angpow Notes
• Balance Transfers
• Bank Negara Malaysia
• BNM
• BNPL
• Buy-Now-Pay-Later Payment Solution
• Buy-Now-Pay-Later Schemes
• Cash Management Solutions
• Chinese New Year
• Credit Counselling and Debt Management Agency
• Employees Provident Fund
• Employees Provident Fund (EPF)
• EPF
• Fixed Deposits
• High-Interest Savings Accounts
• Investment
• Longform
• Private Retirement Schemes
• PRS
• Retirement
• Robo-Advisors