Life and Dots of Daniel

How I manage my budget

It was through sheer determination and self discipline that I managed to survive through the darkest hour of my working life. Alright, I exaggerated a little. The darkest moment I meant was surviving the first three months of my working life in Kuala Lumpur with only 700 bucks a month . 

The moment I got my first pay check last month, I was like in heaven watching money all lumped in my bank account. The ironic was I couldn't touch all of it as I needed to pay the debt. Mum and dad had been very supporting in offering me some extra cash. Being a thick-faced person I even borrowed some money from my good buddy ahderk who have so much trust in me (running away with his money?) just to make ends meet.

I know there are a lot of fresh graduates like me out there who just got a job and trying to juggle with the balance sheet. The big question is "HOW TO START MANAGING A BUDGET?" Marvin, a brother of my friend, had shared something rather useful. Just go to his blog for further reading

In this post I am going to share my five little ways in managing my monthly budget.

#1: Start now, not later and not tomorrow.

I write down everything I want to remember. That way, instead of spending a lot of time trying to remember what it is I wrote down, I spend the time looking for the paper I wrote it down on. ~ Beryl Pfizer

As technology advances I have the freedom to choose from jotting down my expenses in an Excel spreadsheet or on a plain sheet. For the sake of convenience Excel is a good tool. I make it a habbit to write down what I spent everyday. I divided them into two main categories, namely the fixed expenses and the variable expenses.

In the fixed expenses, I divided them into family, rental and broadband. The reason I fixed these is because they are defined.

There are certain expenses that we can not be so rigid with. I group these items into food, petrol, personal care, going out, phone, clothing, groceries, house fund, laundry, charity, utilities, misc and emergency.

When one has defined well the expenses into categories, it makes budgeting fun. You set aside certain amount, in accordance to your judgement, for that particular category. Next, I will share a general thumb rule on how much to save and how much to spend.

#2: Save it for the rainy days.

You cannot keep out of trouble by spending more than you earn. ~ Abraham Lincoln

I once asked a financial advisor regarding how much should a young adult save. He gave me a rule of thumb, set aside one-third for savings. Heeding his advicec, one-third of my salary automatically goes into another bank account which I do not have any convenient means of taking out the cash. This I do it religiously at the day the salary was banked into my account so that I won't spend them.

Apart from saving one-third of my salary, I also opt for savings through EPF and life insurance. These savings will be of much help in my golden years, that is if I am still alive and kicking.

Why bother to save? When the time comes, when I am investing in marriage and making babies these savings will help ease my burden. It is certainly a lot easier to save when one is still single.

#3: Divide monthly and accumulate for annual fees/taxes.

Every little thing counts in a crisis. ~ Jawaharlal Nehru

There are some fees that we have to pay annually, in my case; car insurance, road tax, life insurance, engineering institution,  and my domain and hosting fees. They seemed to be a huge amount when summed up but when we divide them into twelve portions and set it aside monthly they become smaller. I know this is psychology but it helps.

#4: Swipe your credit card with the money you have first set aside.

There is temptation to use a credit card for Spring Break, or for Winter Break, and most are not mature enough. Credit card companies know this. ~ Mary Gorman

Alright, this credit card thingy is a little tricky. I am not against credit card, in fact I love credit card in a way that its services allows me to have some handy credits when paying for products or services.

I treat credit card as my money. Say my phone bill costs me 100 bucks per month, in my budget I allocate the 100 bucks for that particular bill so that at the end of the month I am able to pay the bank. I do not want to end up owing the bank and paying those interests.

My advice is be prudent when using the credit card services. Treat credit card as a form of payment and nothing more than that. 

#5: Don't end up poor at the end of the month.

What saves a man is to take a step. Then another step. ~ C.S. Lewis

I never like the idea that one has to resort in admitting that they are poor at the end of the month. When prudence financial management is practised, there is no such thing as "Oh, I am surviving on bread and water".

I make sure I have the money to spend throughout the month. It sure is a great temptation to spend when the salary has been banked in, I admit that. Creating a budget-monitoring-worksheet is the best way for me to keep check my financial status.

Every one has their own ways to manage their budget, what I shared is simply just mine. It may not be the most perfect thing in the world but I know it is the best for me because I tailored it for myself. There are still a lot of things to learn out. 

One of my big aim is to own a landed property in a suburb of Kuala Lumpur. That is why I better start saving and dreaming now.

You might also like to read:

• It’s a travelling month
• Weekend50 Plan
• Selamat Berpuasa
• Tips: Putting on your name tag
• Financially burdened civil servant embarrasses the civil service