If you find yourself living paycheque to paycheque, and have come to the realisation that it’s not how you want your financial situation to be, then congratulations! You have reached that all-important first step.
Taking control of your finances is important and setting up a budget can help you see your situation more clearly, and allows you to plan accordingly.
If setting up a budget sounds intimidating and you’re not sure where to start, here are some tips to help you get on your way.
- Starting Point
Your take-home pay (after tax) is the amount that you have to work with. If you have side incomes, this should be factored in too.
- Current Spending
Write down everything that you spend on including what you deem as miscellaneous (these can add up!). This will give you an idea on where your money goes and areas that can be improved on.
- Plan It Out
Separate your spending into three categories:
- Necessities – Your utility bills, transportation, food and other monthly obligations
- Wants – What you spend for entertainment, shopping, hobbies – basically leisure!
- Savings – An amount that you want to save monthly
- The Rule
A good guideline for budgeting would be the 50/30/20 rule.
50% of your pay should go to your necessities, 30% to your wants and 20% to your savings. Keep in mind that this is a general guide and you should adjust it if not deemed realistic.
- Budget Planning
List down everything you’ll need to spend on monthly in their respective categories along with the amounts, and don’t forget to factor in your credit card spends too. Look out for areas where cuts can be made. Ideally this should be from the ‘wants’ category while your savings remain intact. Remember, your savings need to be there for emergencies too.
- Set goals
What are your financial goals? To have more than RM 10,000 amount in your bank account? Then your budget should be working towards that. Keep your goals realistic as unrealistic goals can be disheartening and throw you off track, causing you to give up. Make your goals attainable and broken down in stages so you can celebrate each win as they happen, encouraging you to keep on with your journey. Use a physical budget planner or the MAE app to help you with your financial goals.
- Don’t Give Up
Remember that this is a journey and you won’t reach your goals overnight. Every step completed is a step in the right direction so give it time. All it requires it some planning and discipline. You got this!
