Living Within Your Budget

UNLESS you keep to a budget, you are practically inviting unnecessary debt into your life and making it impossible to save. These steps will help you figure out how to draw up a budget so you can control your spending accordingly.

1 TRACK YOUR INCOME AND EXPENSES

Determine your overall income - Are you on a fixed salary and know for certain how much you are taking home each week? Are you a freelancer whose salary varies from month to month? Having a rough idea of how much money you expect to earn is key to creating a successful budget.

Identify how you are spending money - What are the bills that you have to pay every month? Do you go out to dinner with friends every Friday night or go to the movies once a week? Looking at where your money is going will allow you to better track it.

Add up the amount of your regular expenses and subtract it from your pay cheque. Do you get a negative number? If so, you are living way beyond your means. If you have money left over, split it into a few groups:

- FLEX MONEY. This should be about 10 to 20 per cent of your

(pay cheque) - regular expenses. This is to pay for something that turns out to be slightly more expensive than you anticipated.

This can happen with utilities if petrol prices suddenly go up or you get a flat tyre.

- SAVINGS. Ideally, this should be about 30 per cent of your pay cheque, although even 10 per cent (if you do it consistently) is quite good. Build up enough savings for an emergency fund (about four to six times your regular expenses), then start saving money to invest.

- SPENDING MONEY. This is whatever is left over after you subtract flex and savings money. It is what you would spend on things like clothes, eating out or fun activities.

2 CREATING YOUR BUDGET

Set budget and financial

goals - These should be for the short term and long term. Shortterm goals include not spending more than a certain amount of money every month or saving a few hundred ringgit every month. Longterm goals include being able to put down a mortgage payment on a home or car. Make sure you have something to work toward, to stay on track.

Make a list of what you

need to pay for - These include essentials, like rent, electricity and phone bill. Make these of paramount importance in your budget.

Use software - If you have personal finance software programmes, like Quicken or Microsoft Money, they have builtin budget-making tools that can customise your budget.

3 MAINTAINING YOUR BUDGET

Don’t go over the budget

- It sounds fairly obvious, but it is easy to go over the budget even when you have one in place. Be mindful of your spending habits and what your money is going towards.

Keep a journal - In the early stages of keeping a budget, it might be helpful to keep a daily journal of your spending habits. Write out what you spend money on each day. Keep an eye for repeated purchases that may be easily avoidable, like a trip to Starbucks for coffee every morning. Don’t count on windfalls - Don’t factor in potential sources of revenue such as year-end bonuses or tax refunds. You want to include only guaranteed money in your budget.

Leave your debit/credit card at home -

When you are out for the night, it’s very easy (and tempting) to leave your debit or credit card at the bar and ring up a tab. Don’t! This is a very easy way to incur a high bill that will set you way off your budget.

Take your money out for the week in one go -

If you want to spend only RM250 each week, go to the ATM on Monday and take the amount out then. Once you run out of the week’s money, then that’s it.

HOW TO RAISE MONEY

This can be difficult, whether it is for personal or charitable reasons. The following steps should make the process a lot easier.

Formulate a plan on paper. Record your financial goal and organise yourself. Otherwise, you will get a shock when you realise how much you really need. Is this a set goal (for example, I need RM10,000 for a new car) or a continuous effort (for example, I need RM3,500 a month to keep my organisation running)?

Decide how you are going to make it happen. Get a job if you don’t already have one. If you do, consider getting a second one. This doesn’t have to be an extremely demanding job - provide tuition classes for schoolchildren in a subject you are good at or run errands for someone who needs help.

If you are starting a business, find investors by presenting a business plan and a predetermined amount needed.

Use available free resources first. Consider asking friends or relatives for loans or gifts. You can also approach individuals or organisations for capital or sponsorship.

Create an online fundraising page. Create a web page, send the link to your family, friends, co-workers, teammates and etc, and collect donations online.

Put your plan into action and stick to it. Raising money can be hard, but you need to work at it. Make sure to thank those who help you achieve your goal.