Take
Control of Your Personal Finance
This may come as no surprise, but 3
out of 4 Malaysians hate financial planning.
Many of us like to dream about things
such as buying a new home, traveling to an exotic place, sending our kids 
to a great college, or retiring early. Unfortunately, the reality of financing
those dreams often prevents many of us from living them out, which may
explain, in part, why so many people hate financial planning.
But it doesn't have to be that way.
With some patience, planning and discipline, you can achieve some if not
all of your dreams, and at the same time, feel better about yourself and
your money.
The key is to start now. And the
best place to start is with a financial plan, which
can help you get your arms around financial issues like credit card debt,
insurance needs and retirement savings.
The following tips can help you get
started on the road to less worry and greater financial freedom :
Set Realistic Goals.
Want to retire a millionaire? If
you create a financial plan today, reduce your debt and begin saving regularly,
you may be able to live more comfortably, with less worry and maybe even
retire as a millionaire. First step: set some realistic goals about how
you would like to live now and in the future. Next, begin learning about
how to manage your money better, and develop a financial plan that will
help you achieve your goals - even if you're living paycheck to paycheck.
You can create one yourself, but sometimes it's best to work with a financial
planning professional who can lend some perspective on your personal financial
situation and help leverage all of the financial resources available to
you.
Track Your Daily Spending
It's never the big things that surprise
people about their spending. It's the little stuff, like the RM8.50 you
spend on a cup of "designer" coffee each morning, the RM8 for lunch, or
the RM1.50 for a mid-afternoon cola. If you really want to get a handle
on your finances, write down every expense down in a small notebook - even
the 50 sen you just spent on a candy bar. After several months, you'll
see the hard truth about how you spend your money. That's good, it will
help you identify where to cut back. For example, if you brought your lunch
to work each day, rather than buy it, you could probably save about RM130
per month, which could be invested in a unit trust
or investment linked fund.
Create an Emergency Fund
Rainy days happen in everyone's life.
The real problems begin when you're caught off guard. Commit today to save
enough money equal to at least three months of living expenses to cover
unexpected events, such as being laid off from your job, car repairs, weather
damage to your home, etc. If you can't immediately set aside that amount
of money in a savings account, start by putting away a little bit from
each paycheck into an emergency savings fund.
Pay Off Debts, Especially Credit
Cards
The average Malaysian carries a RM7,000
credit card balance. Yikes! If that card carries an annual percentage rate
of 18.0 percent, and a person makes a monthly payment of $100, it will
take more than 60 months to pay off. That equates to more than RM1,736
paid in interest. On the other hand, if a person pays RM200 per month,
that bill will be paid off in two years, which equals RM676 in interest.
That’s a savings of RM1,060. Debt, especially credit card debt, can strangle
your financial plan. Remember, the more quickly you rid yourself of debt,
the more you have to invest to achieve your dreams.
Start Investing in Yourself
It's important to pay the bills each
month, but it's equally important to pay yourself and begin investing to
achieve some of your life's goals. One of the easiest ways to begin is
by starting a systematic investment plan where money is automatically withdrawn
from your savings/current account each month and invested in a mutual
fund or investment linked fund. |
