There are as many financial tips out there as there are stars in the sky. How do you make sense of it all? Where do you start? This article is by no means a budgeting or debt remedy, as the internet is overflowing with those already.

Here is my article for those of you who already have a plan and are wondering about its ‘health’. Even if you don’t have a plan, I will also make a brief point as to how to go about making one, so rest assured. This is to generally bring your finance on the right track and to keep it from ‘derailing’.

1) Motivation.

It is easy to take a pen and a paper to write down your goals, but to actually do it in real life is a whole different ball game. Moreover, you need actual endurance to see them through to the end. One way to do this is to give yourself small treats every now and then as rewards for good behavior.

I recommend everyone to have a saving rate of 30%. And you can also save 10% for your medium to long term “wants”. The former 30% saving is for your long term financial independence. That’s your freedom fund! The latter 10% savings is for you to spend on things that matters to you.

The savings for “wants” is what I call “Reward Fund”. Treat it as a tangible proof that you’re doing well. If you can’t meet the 30% saving for “Freedom Fund” in that particular month, you should subtract the shortfall from your “Reward Fund” to make up the difference. So your long term goal is intact, and at the same time you feel the pinch of foregoing the short term wants and desires.

2) Solid Plan.

A budget plan should be a work of art. Simply jotting down your income minus your debt equals happiness, is not the way to go. Nowadays, you can find numerous budgeting apps and tools that make these calculations easier and your goals clearer.

First of all, a budgeting plan should be very thorough and should include all of your expenditures: past, present and future. If you ignore your past and only focus on your future, then you will miss out on the vital ways by which you could have saved money.

To illustrate this with an example, last year I cancelled my Astro subscription and save hundreds monthly! I did this since I barely watch TV anymore, as I usually find everything I need online. This year I just bought a streaming TV box that costs less than RM500 – no subscription, no on-going expense, no advertisement, just pure content streaming!

Thus, you need to look at past expenditures as well as future ones to figure out which ones are redundant. In this way you can prevent leakage from your income.

Your plan should have well defined boundaries and should be semi-flexible. What I mean is, that there should be well defined categories for each and every type of expenditure. By doing this, I noticed that there are a lot of categories that were repetitions and were eating a significant amount of wealth. For instance, if you have household necessities categories, then you do not need a separate one for groceries, since they are the same and can be bought at the same place.

By semi-flexible, I mean two separate main categories under which all these separate sub-categories can fall. One will be flexible, under which, funds can be allocated to others. The second one is the Non-Flexible or Rigid one, under which, falls utility bills and debt, down payments (if you have any), etc. Funds from the second category cannot be moved once they are allocated, so it creates a barrier and instantly saves you a lot of trouble at the end of the month.

A clean and well-structured plan can help you see your goals clearly, and is also essential to your financial fitness.

3) Grow your money and stay out of bad debts.

If you came this far successfully, then Congratulations to you! Have a treat! However, those of you who want to go a little further, listen up! Although, saving is good for your finances, it does little for its overall growth.

You are saving to spend, right? Thus, saving saves you, but also puts you in a paradox. This might come as a shock, but you need to invest in order to increase your wealth. People might think that this is too much of a risk, but once you’ve got your budget and motivation under control, why not invest?

If you have done extensive research and have taken smart steps to minimize risk, then your investment should bring you revenue. Contrary to popular belief, it is not gambling. It is different in the sense that you are not completely blind and are doing it within your competency.

By being in the stock market, you are part of the business world and can enjoy their success. Make sure to do your homework, buy in bulk for long term, and just make sure the business continues to do well. That should be all that you need.

You can also invest in good properties or just in unit trust if you are too afraid and too lazy to invest directly. You cannot invest and expect returns quickly, so be patient. Just be sure to keep your balance in check and to stay out of debt.

If you fall into bad debt while investing, then it’s best to send your financial plan to the gym again, but get back into the game once you are fit. Make sure you keep a close eye on your credit cards and never ever have carried forward outstanding balance.

If you are careful and motivated, then the future is bright for you. Although money seems to be everything, it really does not buy happiness. At the end of the day you need people to celebrate with, when you succeed.

So keep your family and friends close and don’t forget to invest some time with them as well, whether it is a simple hello on Facebook or a personalized birthday gift. Don’t forget to take care of your health as well, because nothing is more costly than bad health. I wish you all the best in your endeavors!


Personal finance author and trainer

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