Budgeting
do you ever count with your current income, your current salary, your current saving, your current property, how long it takes for you to be a millionaire? or at least you'll retire without jeopardizing your current lifestyle?
we might have EPF for retirement. in 2006, EPF declares 5.15% dividend rate distribution. minus 4% inflation rate, the nett is only 1.15%. in 2004, it was reported 4.75% and 2005 increased to 5%. with this, EPF may not be enough to maintain your standard of living in 30 years from now. uh, i have only 31 years to retire!
how to overcome this? would you move to any countryside to avoid high living rate?
the words are financial intelligent. financial wisdom will not come naturally. it is a lifelong process. one has to know his goal and plan before setting up a financial plan.
the very first step in financial planning is understanding how to set your budget. budgeting is not listing down your income and expenses then leave it to be filled again tomorrow without any expulsion.
watching out your expenses is not highly necessary. the thing is, watch out your saving. when you keep your saving strictly, your expenses could be controlled.
simple steps to start budgeting are:
1- write down all your source of income. you may want to do it per month. eventually you'll know how much you earn per month.
2- make a list of things you have to spend at per month and how much you spend. it may be you house, car, land, insurance, parents, etc.
3- set how much do you wanna save permanently. half of your salary? quarter? or rm100? decide and stick it in your brain that you won't use the money unless you may die if you don't use it.
4- set how much do you wanna save for emergency. car breakdown? you may need the money one of those days but not everyday.
5- list down your daily expenses. food? clothes? gas? oil? chocolate? magazine?
6- optional fund!. you maybe wanna go somewhere for vacation. you may use all your money residue to be kept in this very personal fund.
to have a comfortable living, extra work or side income is not really necessary. it might give you extra money but without proper financial plan i.e. good saving plan, it is merely nothing. millionaires are not only have vast of income but also being frugal. it means strictly save your money and let your money makes money.
it's where you should put your permanent saving. choose a venue that could increase your money. use Rule of 72 to decide where should you invest your money so that i would doubled in a certain time.
project your money using Rule of 72:
easy, just use your calculator. if you want to know how long it will take to double your money at 7.5 % return, divide 72 by 7.5 and you'll get 9.6. you need 9.6 years to double your money with 7.5% return.
but this is not considered inflation rate. however, you'll get the picture how your money works passively.
easy, choose a medium that offers more return and you money will doubled shortly.
we might have EPF for retirement. in 2006, EPF declares 5.15% dividend rate distribution. minus 4% inflation rate, the nett is only 1.15%. in 2004, it was reported 4.75% and 2005 increased to 5%. with this, EPF may not be enough to maintain your standard of living in 30 years from now. uh, i have only 31 years to retire!
how to overcome this? would you move to any countryside to avoid high living rate?
the words are financial intelligent. financial wisdom will not come naturally. it is a lifelong process. one has to know his goal and plan before setting up a financial plan.
the very first step in financial planning is understanding how to set your budget. budgeting is not listing down your income and expenses then leave it to be filled again tomorrow without any expulsion.
watching out your expenses is not highly necessary. the thing is, watch out your saving. when you keep your saving strictly, your expenses could be controlled.
simple steps to start budgeting are:
1- write down all your source of income. you may want to do it per month. eventually you'll know how much you earn per month.
2- make a list of things you have to spend at per month and how much you spend. it may be you house, car, land, insurance, parents, etc.
3- set how much do you wanna save permanently. half of your salary? quarter? or rm100? decide and stick it in your brain that you won't use the money unless you may die if you don't use it.
4- set how much do you wanna save for emergency. car breakdown? you may need the money one of those days but not everyday.
5- list down your daily expenses. food? clothes? gas? oil? chocolate? magazine?
6- optional fund!. you maybe wanna go somewhere for vacation. you may use all your money residue to be kept in this very personal fund.
to have a comfortable living, extra work or side income is not really necessary. it might give you extra money but without proper financial plan i.e. good saving plan, it is merely nothing. millionaires are not only have vast of income but also being frugal. it means strictly save your money and let your money makes money.
it's where you should put your permanent saving. choose a venue that could increase your money. use Rule of 72 to decide where should you invest your money so that i would doubled in a certain time.
project your money using Rule of 72:
easy, just use your calculator. if you want to know how long it will take to double your money at 7.5 % return, divide 72 by 7.5 and you'll get 9.6. you need 9.6 years to double your money with 7.5% return.
but this is not considered inflation rate. however, you'll get the picture how your money works passively.
easy, choose a medium that offers more return and you money will doubled shortly.
