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Bad financial choices are the bane to the average Malaysian, its annoyance is comparable to mosquitoes constantly hovering near your ears!


But on a more serious note, there are many reasons why we make bad financial decisions, some of our own volition and some that are perhaps a little out of our control. Here are a few reasons why people make regrettable money choices, and how you can mindfully avoid them:


Financial Fatigue


Managing multiple bills, accounts and investments can lead to burnouts, something we all want to limit as much as possible. Financial fatigue acts as a blinder that limits our vision. This “limited vision” acts as a sort of temporary mental blindness that prevents us from seeing the full picture, hence causing us to make bad financial decisions.


Fortunately, there is a game plan to counteract this common predicament:


  • Get Organised


Get a clear picture of your monthly expenditure, and get to know where your money goes each month. Preferably you could make a list of essentials vs non-essentials. For example, an essential expenditure would be food, bills and loans, whilst a non-essential expenditure would be something more along the lines of buying A-grade football boots when you’re not Ronaldo or Messi.


  • 1,2,3…Action! 


Once you’ve got a clearer picture of the issue at hand, put a plan in motion to ensure you keep within the margins of your budget. You can do this by setting up an autopay system for your bills and loans and knowing your credit utilisation.


  • Hold Yourself Accountable


Consider both long and short-term expenditures, keeping them both in view ensures that they don’t sneak up on you. Set clear, workable goals and stick to them.


In the event that you do fail to meet these goals, don’t panic! Sift through the debris of the financial wreck to determine the cause of said incident. This allows you to hit the brakes the moment you’re able to sniff out a potentially bad financial choice. 


The Marshmallow Test


The test was a psychological experiment conducted in the 1960s. Children were offered the choice of receiving one marshmallow now, or waiting and receiving two marshmallows later.


The findings concluded that children who couldn’t hold off on instant gratification were also associated with poorer academic performance. This difference in attitudes towards gratification also seeps its way into financial decisions,frequently we fail to make good choices because we can’t delay gratification in pursuit of a greater goal.


Learn to prioritise long-term goals in place of instant gratification that serves no long-term benefit other than reducing the digits in your bank balance. Remember, you might be the kid that failed the marshmallow test, but that doesn’t mean you can’t turn things around with the right tools and proper financial planning.


Poor Financial Literacy


Financial literacy speaks of an individual's ability to understand financial information and concepts as well as possessing the skills and decision-making abilities to make good financial choices. However, not everyone is well-versed when it comes to personal finance. 


Both economics and consumer behaviour literature agree that financial literacy affects people’s financial behaviour and economic decision-making. A lack of financial knowledge and capability leads to poor financial choices and investment mistakes, which could result in undesired economic consequences.


For the financially challenged, accumulating savings is always a good place to start. Having extra money can help ease consumption, provide the ability to make investments in oneself and the future as well as guard against unexpected expenditures.


it’s important to have a savings account with a financial institution, such as CIMB. This is because interest rates allow for a small increase in total savings as you continue to save up more and more from your monthly wages. 


Once you’ve got a clearer picture of the issue at hand, put a plan in motion to ensure you keep within the margins of your budget. You can do this by setting up an autopay system for your bills and loans and knowing your credit utilisation.


Seek Good Financial Advice and Planning


In complex situations, when we don’t always have the answers, we tend to do what everyone else is doing. This can be beneficial in some instances, however it is a double-edged sword. Avoid taking comfort in the financial decisions of your peers, they may not be the ones you should be taking advice from.


Instead, seek good financial advice and planning from trusted and qualified advisors. Here at CIMB, we offer the finest financial advice in all the land, so give us a ring today for better financial security tomorrow.


Visit our Life Goals page for more financial tips and guides. Let us help you pin down the blueprint to create and nurture a healthy cash flow that allows for growth and a reduction of expenditure, all while avoiding those dreaded burnouts we so frequently experience in the wake of financial turmoil. 



This article is brought to you by CIMB as part of our ongoing efforts to raise the level of financial literacy among Malaysians. Financial knowledge and understanding are key to making well-informed and meaningful financial decisions that will improve all our well-being. This, in turn, achieves CIMB’s purpose of advancing customers and society.