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Managing Your Personal Finances


Are you stressed out about money all the time? Always worried if you can make it to the end of the month, before your salary comes in? Well, rest assured. We have got some advice for you. Here are some tips to help you get over your financial anxiety.

Are you stressed out about money all the time? Always worried if you can make it to the end of the month, before your salary comes in? Well, rest assured. We have got some advice for you.  Here are some tips to help you get over your financial anxiety.

First thing first, Set Your Goals
I’m sure you already have some goals set about what you want to do in life, and how you plan to spend your money that you’ve been working so hard to earn. Now, list down all those goals and think of any others that you have in your wish-list, then start sorting them out according to priorities and according to timeline.
For example, some of your goals may include:
  • Travelling the World
  • Starting a Family
  • Retiring Early
So, based on these, travelling the world might be the least important, but probably the most soon to happen, while starting a family might be the most important, and retiring early would be the last to come. Most of the time, the higher priorities would be long-term goals, while the lower priorities would be short-term goals.

It’s important that you start by plotting out the long-term goals and focus on those. As for the short-term goals, you head towards achieving them, while working on your long-term goals at the same time. In other words, you can’t ignore your long-term goal of retiring early, while trying to accomplish your short-term goal of travelling the world.

Work Out Your Budget
Next, you need to create a plan to help achieve your goals, and you do this by coming up with your own personal budget for everything. You can use your past expenditures to serve as a guideline when coming up with your budget. Start with the necessities then try to reduce or eliminate everything else that you can live without or don’t really need.

Take into account your income and find out how much you can save each month for your different goals and make the allocations according to what you’ve previously plotted out. You have to work on both your long-term and short-term goals together, by allocating your finances to both goals, and even if more might go to travelling the world (short-term), there still has to be some amount that goes towards your retirement savings (long-term).

Sometimes your budget will not be able to meet all your long-term and short-term goals. You then need to review and revise your goals to realistic expectations; For example, instead of travelling the world for 12 months, decide on a particular region to go to for a few months first.

You can get help with your budget if you need to. An easy way would be using a budgeting software, which are
now easily available on mobile apps. Such software can help you keep track of your expenses while referencing the budget you’ve allocated. Besides that, you can also take up personal financing classes to help you figure out how to create your budget.

Once you’ve got your budget sorted out, make sure you stick to it. It’s easier said than done, but it’s the only way you can work towards financial stability.

Get Out of Debt
The biggest obstacles in reaching your goals would be the debts that you’ve accumulated. These can range from study loans, to car loans and housing loans, among other things. So, an important step towards reaching your goals is to eliminate your debts.

It may not be easy to do this, and perhaps you need a little extra push to start off. An option would be to sell of all the things you don’t use and don’t need, to collect some funds to start paying off your debts. Another way would be to get a second job, at least temporarily, to get you on stable footing. Either way, you would have to look back at your budget and review it.

You’ve got to come up with a plan for managing all your debts as well and include it in your personal budget. You can make allocations, similar to how you set aside money for your savings. Try making snowball payments. Focus on one debt to pay off as much as you can, while paying the minimum for the rest of your debts. Then once you’ve settled that debt you focused on, move on to the next one, and continue till all your debts are paid off.

Take into account that certain debts are long term, for example home loans, and that these cannot be paid of quickly. Thus, you need to plan for these in your monthly budget.

However, even after you have no more debts, you still have to be careful, as it’s very easy to start making new ones. A major factor is your credit card. Try your best not to use your credit cards and set up an emergency fund to avoid using credit cards to cover unexpected expenses.

Look Out for Guidance
Once you’ve got everything sorted out, it would be beneficial to start making investments, to grow your current wealth. In order to do this, you should speak to a financial planner. Good advisors will share the risks involved in each investment and help you find investments according to your comfort level.

There are NGOs which provide assistance for financial management, in the form of counseling and advice. Bank Negara itself has its own Credit Counseling and Debt Management Agency (AKPK), whose services are all free of charge.

Another form of guidance would be to find yourself a mentor. Look for someone you’re close to, who has done well financially. If you’re planning to start a business or something along those lines, then look for people who have been successful in those areas.

Don’t be afraid or shy to ask for help and ask any questions you may have, no matter how trivial you think they may be. It’s better to know for sure then to just assume and get it wrong.

Managing personal finances helps you to set your financial goals. Understand how much you need to earn to sustain your lifestyle goals, where you could go travelling, when you can plan to settle down, retirement and so on. Therefore, start your financial planning journey now and enjoy your steps on attaining financial freedom.

Posted by admin on 09 April 2018