I know some people that make 5 figure incomes but have debts all over and is consisntently in deficit. I know an accountant (a good friend of mine, an ex-colleague in KPMG) that is very good at managing other peoples’ or company’s money but when it comes to his personal wealth, he ‘sucks’ badly (and he makes more money than many of us). He is constantly in debt and ‘pokai’.
I know I might not be the best person to advice him/her on this issue, but I think I can give some pointers from my own experience. My personal advice and experience:
- First rule : you always plan lesser than what your actual income is (people will accommodate their lifestyle according to their income so don’t give in to peer pressure);
- Second rule: you never plan with what you don't have (don't speculate on how much bonus or increment you will get and don't get trapped by CREDIT CARDS!!!);
- Third rule: make sure you always have an allocation for savings and/or investment (even if it is only RM5 a month);
- Fourth rule: if you want to feel that you are never short on cash, you need to make your income 'berkat' (sorry, don't know the English word for it). Prioritise your income... i will share with you how i prioritise mine, most importantly, the top 3 items (see below)....and for argument purposes, lets assume an income of RM 1500 (my income when i started work at KPMG); and
- Fifth rule: need to work on in creating passive income (want to know more, come and talk to me hahahaha)
Salary RM 1500
Contribution to Parents RM 200
Zakat and Charity RM 100
Allocation for Haj RM 100
Food RM 300
Rental and basic amenities RM 200
Logistics RM 150
Clothing RM 100
Entertainment RM 50
Others (emergency) RM 100
Savings/Investment RM 200
Of course, the allocation changes as new requirements or changes in lifestyle. This was mine during my bachelor years. Now, I have a family to accommodate and thus my life style changed as well.
You might ask where is the allocation for my car? Well, I only bought my first car after 4 years working. Before that, the public transportation was life. I would rather pay more on the down payment than to increase in my monthly allocation on other stuff. Up until now, I am only paying less than RM 500 on my car, and it sure gave me room to breath during ‘bad’ times.
Hey, that’s my 2 cents on the issue, what’s yours???
6 comments:
passive income?
Are you a mutual fund consultant bro? Hehehe.
IMHO,you overspend because of peer pressure. Only peer pressure makes you purchase a Mini Cooper S when actually all you can get is The Perodua Myvi.
Wah..its realy good advice that juz now i'm still manage my income..huhu biaselah dah lame tak pegang duit byk cam ni..alhamdullah..
What Fakha has given was a sound advice and workable too.
Just like him, I started with less when I was in Ernst & Young and at the same time, my husband was not working. Life was hard then!
But, good management of income will always make you survive. I do not want to go at great length of how i manage, but, the principle is almost the same as Fakha's. PUBLIC transportation is the KEY!!!
Well, I am thankful for having a wife that always be my financial controller in my expenses.
If I to manage my income by myself, I will definitely spend them for another set of digital camera (DSLR), a new branded laptop and all sort of gadgets that you can find all over the floors in Low Yatt.
And that was then (kononnya!)
Now, we have our monthly financial plan. I'll share the template later on in my blog. Still new, as our previous template doesnt anticipate expenses like road tax, family trip, etc.
Thanks bro for the tips. And I want to add some more
“ DICIPLINE & CONSISTENCY “
In my case, I planned so many things in order to manage my income and expenses since few years before. But, I have to admit that I might be a good planner but not a good implementer, because I can't manage myself according to the plans that I decided on my own.
So the answers are discipline and consistency.
I agree with you too, we should have our monthly saving even though it is RM5 or less. Because if we wait for big income to start our saving, then we are absolutely late because we don't know when is the time.
good tips. but rite now i'm still struggle to manage back my income. Not because I use the money to jolly every where. But now I’m married and I have to support my wife and my coming soon baby. Built everything from zero will need you to invest more money and saving for the wife and baby thing. But I wish after everything is complete. i can get back to save money (for my own) in the bank just like before I’m marry.
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