Easy and Effective Ways to Manage Your Personal Finance

Managing your money is an easy 3-step process:

1. Find out your financial situation: Do a worksheet to find out your net worth. It is a listing of what you own and what you owe. The difference between the two is your net worth 

NET WORTH
Assets
Cash and bank accounts
Investment in stocks and unit trusts
Life insurance policies (Cash value less loans)
Real estate (fair market value)
Cars (market value)
Other assets
Total Assets
Liabilities
Outstanding bills
HP loan
Mortgage balance
Credit card debt
Other liabilities
Total Liabilities
Summary
Assets
Less liabilities
= Net worth

2. Set goals: The most important goal of personal finance is avoiding debt. There are two  simple formulas to set your goals:

• Without debt: Income= Expenses + Savings
• With debt: Income = Expenses + Savings+ Debt repayment

          

Your savings serve short-term and long-term purposes:

·    Short term: Emergency fund, big-ticket items, down payment for a car, holiday and other purposes

·    Long term: Down payment for a house, children’s education fund, retirement fund and other long-term commitments

3. Follow the budgets: It takes self-discipline and self-control for you to follow the budget faithfully. It means you must control the temptation to spend what you want and be happy with what you have.

You should monitor your financial situation at regular intervals like checking your net worth at the end of each year and make necessary changes to your changing lifestyle and income levels. The aims of personal finance remain the same: stay out of debt and achieve financial freedom.

Personal Budget for Financial Freedom

A personal budget is a tool to manage your personal finance. The objectives are to control your expenses to be within your means and stay out of debt. The other plus point is to include in the budget an amount to pay yourself first. With regular savings, you will be able to make your money grow and build your wealth. The ultimate aim is to achieve financial freedom.

A budget without debt

Income	Expenses
	Savings

From the diagram you can see that:

Total Income = Expenses + Savings

It is an ideal situation in which you are debt-free.

A budget with debt

Income	Expenses
	Savings
	Debt Repayment

The diagram shows that:

Total Income = Expenses+ Savings +Debt repayment

You will note that saving is still necessary even when you are paying off debt. The savings are for emergency purposes and when you are in such a situation you will not incur further debt

Income

Your regular income should be featured here. They are your salary, bonuses, part-time income, income from rental and other sources

Expenses

Expenses include the following:

Household expenses: They are groceries, utility bills, telephone bills, gas and building maintenance

Transportation: Petrol, parking and toll

Entertainment

Insurance

Income tax

Children’s expenses: Monthly allowance, books, tuition, stationery

Loan commitments: Mortgage and hire purchase loans

Donations

Savings

Emergency fund: This is to cover unexpected outlay such as medical expenses, car repair and other exceptional items not covered in the monthly budget

Big-ticket items: Save and buy in cash instead of getting a loan and incurring interest

Recurring Expenses fund: Money is to be set aside monthly for yearly, semi-annually and quarterly payments such as quit rent, assessment, car maintenance, road tax and car insurance. When an item is due you have the available fund to meet a payment.

Debt repayment

Most likely your debts are mainly from credit cards. You have to stop using the cards until the outstanding amount is fully settled

Variance analysis

Month:

Category	Actual	Budget	Variance
INCOME
Salary and bonuses
Part-time income
Rental
Other sources
TOTAL INCOME
EXPENSES
Household expenses
Transportation
Entertainment
Insurance
Income tax
Children’s expenses
Loans
Donations
TOTAL EXPENSES
SAVINGS
Emergency fund
Big-ticket items
Recurring expenses fund
TOTAL SAVINGS
Debt Repayment

Find out at the end of each month whether you are sticking to your budget or not. Identify the reasons and adjust your spending in the areas that you have overrun the budget or revise your budget to suit the current situation.

A budget is about self-discipline and self-control in avoiding material wants in life and stay out of debt.

Self Improvement 101- 7 Areas of Your Life

Life is standing still when there is no change. When there is no change there is no progress and no improvement. You make changes by


• Leaving your comfort zone

• Doing things differently

• Receptive to changes in life

• Taking risks

• Not blaming others but be responsible for your own life.


Here are the 7 areas to make changes in your life for the better:


1. Health: Health involves physical, mental and spiritual fitness. Total physical fitness also involves suppleness, strength and stamina. Do exercise such as jogging every day to improve your stamina. Do weight lifting to improve your strength and perform flexibility exercise to promote suppleness of your body.

2. Career: One effective way to make progress in life is to set challenging goals and one aspect of the goals is to advance your career in life:


• Be efficient and effective at work, because the end result is productivity

• Capable of solving problems instead of going to your boss

• Be a trusted brand: be punctual and deliver as promised

• Getting along well with your co-workers and be interested in the people around you

• Be noticed by people who can promote you within the company

• Get additional skills required by the company to complement your area of speciality.


3. Personal finance: The most important thing is not to get into debt and live beyond your means. The ultimate aim is to build wealth and strive for financial freedom especially during your retirement.

4. Homelife: A harmonious and happy home life will influence the other areas of your life positively and profoundly. Spend more time with family members. Talk more often and watch less TV.

5. Relationships: It is about getting to know the right people. People who inspire and motivate you. Get in touch often to create a strong tie.

6. Personal emotions: Emotional intelligence is one important aspect of personal management. Are you able to control the outburst of negative emotions such as anger, resentment and jealousy? Replace your negative emotions with positive ones. Think of happy thoughts, be cheerful and greet people you meet with a smile

7. Intellectual development: Keep abreast of developments in the area of your expertise. Read every day to be informed, motivated and inspired.


Personal improvement is a challenging and fun thing to do. Just enjoy the progress and improvement along the way for a better life ahead of you.

Frugal Ways to Live

A frugal life is a way to discipline yourself and exercise your willpower from temptation such as advertisements to seduce you to spend more to live the way as suggested by advertisers. You are happy to live the way you want and you don’t bother about how others live or what others think you should live.  Here are the ten ways to live a frugal, carefree and meaningful life:

1. Transportation: Instead of owning a car which depreciates in value and costs a lot to maintain, take advantage of a public transport system such as MRT or buses.  Where public transportation is inefficient, get a small car capable of taking you from point A to point B.  A small car uses less petrol and the maintenance cost is much lower.
2. Clothes: Look for comfort and durability instead of brand names. Shop for apparels when there is a sale on. You can get the same item much cheaper.
3. Home: Get the right size to accommodate family members to live in, not too big and not too small. Keep it simple and neat to promote the flow of positive energy.
4. Shopping: Always use a shopping list and stick to it. Shop when sales are on or buy an item when there is a promotion. Use appropriate coupons for further savings.
5. Savings habit: Pay yourself first to build an emergency fund or save for a big-ticket item. The habit of savings means you are living within your means and you will stay out of debt.
6. Need or want: Always ask yourself: Is it a want or a need? Live a simple life with the essential items only.
7. Invest in the long term: Avoid get-rich-quick schemes. An establishment takes time to grow and so your investment will also take time to grow and appreciate in value
8. Give up bad habits: Quit smoking, drink less and avoid gambling. These habits are not only bad for your financial health but also your physical health.
9. Develop passive income streams and more income sources: Income from your investments and rental income are examples of passive income. You don’t spend time or effort to generate these sources of income. What can you do to earn extra cash when you are free? What are your strengths? Are you good in language?  You can conduct language classes as a tutor. What about your hobby. If you are interested in photography you can become a freelance photographer. Do you enjoy blogging? The potential to earn money with a blog is huge.
10. Reduce expenses: Eat more often at home, avoid junk food and soft drink Watch less TV and stop subscribing to cable or satellite TV. Don’t surf the net aimlessly. Be active; go jogging instead of joining a health club. When you can walk, you don’t drive.

A frugal life is a simple life and yet an enjoyable and healthy life which gives you peace of mind.

10 Bad Habits to Avoid and Reduce Your Expenses

Do you have these bad habits which are not only a drain of your financial resources but they are also detrimental to you good health?

1. Smoking: A packet of cigarettes costs about RM10/=. If you smoke a pack a day it means you will be burning away RM3, 650/= a year. At the same time, you are also ruining your health. When the amount is invested you will be richer by many times more than the amount you have burnt and you are also in good health to enjoy your wealth later.

2. Drinking: It is more than a waste of money because the habit is always related to drunk driving and in many cases they are fatal.

3. Use the car more than necessary: Don’t just think of your car when you think of transportation. Your two legs are an excellent means of going places easily and conveniently. Why waste petrol and car maintenance when you can walk?

4. Junk food: It is foolish to use your hard-earned money to buy something which does not give you nutritional value and it can be easily turned into a bad habit to consume regularly and sabotage your health and well-being

5. Soft drink: Why waste money to get a soft drink when water is freely available at home? Excessive consumption of sugary drink will bring you critical illnesses and long-term sufferings

6. Gambling: Gambling leads to debt and bankruptcy. It is the worst habit you can ever have in life.

7. Surfing the Net: Don’t waste electricity and cost of connection when you surf the Net aimlessly. It is a waste of time and energy when you can be productive in other ways.

8. Inactive: When you don’t move your body often you are more likely to succumb to illnesses and as a result incurring unnecessary medical expenses.

9. Watching TV: It is yet another bad habit that makes you lazy besides taking away your money to pay for the monthly subscription and not to mention paying more for electricity. The longer you watch TV the lazier you will be. In the end, nothing gets done. When you are connected to the TV set you are disconnected from your family members.

10. Disorganized: Don’t store things such as grocery items at home haphazardly. When you can’t locate an item you waste money and time to get one outside. By the time an item is discovered, it has long passed its useful life and you have to throw away. Not planning your trip is another way to waste precious time and petrol


By avoiding these bad habits you will be richer by the amount of money that you can save and even more.

10 Healthy Habits to Boost Your Memory

While you can improve your memory by employing various techniques, a healthy lifestyle is also effective in memory improvement. Just incorporate the following healthy habits to boost your memory naturally:

1. Work the brain more often: Stimulate your mind by acquiring mental skills such as learning a new language or a musical instrument. Promote brain power by playing puzzles and games. One of the best habits is to do continuous learning to excite and nourish your mind.
2. Reduce stress: Do Ti Chi or yoga to enjoy peace of mind and reduce stress. Stress affects your health and memory negatively. Avoid working in a noisy  environment to protect the proper functioning of  your memory
3. Proper diet: Blood sugar is at its lowest in the morning, it is necessary to .eat breakfast to promote metabolism. Avoid eating processed food and consume less sugar to prevent mood swing and lower mental performance. Give up smoking to avoid damages to your brain.  Fish, nuts, berries, eggs  and curry are good for your brain
4. Organized life: A proper place for everything so that you can retrieve an item easily and not confuse and irritate your mind. Use a checklist and to-do list to be better organized. Don’t tax your mind with many things to remember.
5. Regular aerobic exercise: Aerobic exercise such as jogging enhances the intake of oxygen into your brain. The other good thing is that you can improve your memory by soaking under the sun.
6. Receptive to new things in life: Challenge yourself to accept and learn new ideas in life. It is a wonderful way to activate the mind. Look for new friends to get different and refreshing views from them.
7. Be happy: Positive emotions promote peace of mind, calmness and allow your mind to work better. Your mind is not disturbed and you can concentrate to do the task at hand easily.
8. Sleep well: A good night’s sleep allows the healing of damaged brain cells and promotes rejuvenation.
9. Avoid air pollution: Living in a polluted environment will decrease brain efficiency. It has the same negative effect of staying in a closed room. Get more fresh air as the brain depends a lot on oxygen intake for proper functioning   
10. Take breaks: When you are working especially in the office, remember to take breaks between tasks to clear the clutter in your mind and reduce stress.

  

Live a healthy lifestyle to promote better memory  

Simplify Your Financial Affairs with one Financial Institution

Nowadays financial institutions are like supermarkets of its kind. They can offer more than just loans, savings and checking accounts. You can simplify your life by choosing just one bank to take care of your personal finance:

1. One savings account: This is the account to save for your emergency fund as well as savings for a big-ticket item.  
2. One checking account: You can have a checking account. Most likely you will not need it because you can do online transfer of fund and your credit cards will take care of your monthly recurring payments.
3. One wealth management account: You can see at a glance your various investments in unit trusts on a page. Easy for you to manage and make decisions.
4. One Share trading account: This account will look after your stock and share investment. Your current position in various counters is stated clearly for your perusal.
5. One HP loan account: Check your car loan status here to avoid overdue in monthly payments.
6. One mortgage account: Find out how many more years to go to complete your housing loan repayments. See how you can make a lump-sum payment to reduce your liability here.
7. Wills and trusts: The bank will also take care of your estate planning so that you can rest assured that your various properties will go to the right people as you have instructed.
8. Two credit cards: Get one Visa card and one MasterCard. When one of the cards is declined you still can use the other one. Arrange to pay all your recurring payments such as insurance premiums, utility and telephone bills with one of the cards.   
9. Insurance coverage: Get insurance coverage to protect your car, house and family. Save for your children’s education and your own retirement by taking out investment-linked policies.
10. Online banking: Do banking at home to transfer fund, make payments and do online purchases. Check all your accounts status online too.

  

There is no need to visit the bank except to deposit cheques and do ATM cash withdrawal.  A simple life is a hassle-free life