![]() Once you have an idea on how a balanced budget looks like, you can create your own budget to achieve your financial goals. This budgeting rule serves as a guideline to lead you towards the right direction. The most important thing about budgeting is, it should be personalised to your lifestyle and spending habits. You still need to work hard to make an sustainable impact on your finances. And it does not work like a miracle where your finances will improve and your debts will disappear overnight. Though this budgeting method sounds simple enough, it takes some discipline to stick to it. You would have saved up a sizeable retirement fund to supplement your EPF savings. You would have saved RM692,000 for your children’s college education. You would have saved about RM52,000 for the down payment of your first home (RM520,000) You would have saved RM15,000 within 1.5 years for your Europe trip. Here’s how 20% of your nett income makes a difference: Year If you allocate 20% of your income for your goals, you will ensure that your finances will be on track to reach your target.Īssuming you start with RM3,500 nett income per month, and on average you get a 5% salary increment every year. However, having a rough goal will help you work towards achieving them. ![]() Not sure what your financial goals are? Ask yourself what do you want in five, 10, 20, and 30 years down the line? How do you envision your retirement?įinancial goals are not set in stone, and should be reviewed every few years. This refers to savings you’re setting aside for emergencies and to reach your financial goals. The key here is to ensure the overall spending allocated for wants does not exceed 30% of your nett income. Perhaps, by preparing your own lunch for the next few days, or forego paid entertainment for the month. If you have splurged on a nice dinner with your friends, then you will need to cut your spending elsewhere. This category will require you to exercise discipline in order to be on track. Retirement, down payment for a new home, child's education, etc. One guideline that we like to use for percentage budgeting is the 50/30/20. It is a simple and straightforward concept – instead of allocating fixed amount to every line item, you establish a target percentage for each expense category. One simple way of keeping track of your money is through percentage budgeting. We can’t say it enough times: Don’t spend more than what you earn! And the best way to do that is to keep track of what you spend. So, how do you do it? What can you sacrifice and what do you spend on? Here I break down budgeting in the easiest way for you, and show you how you can benefit from it: The 50/30/20 budgeting method We can’t have it all – buying our first home and shopping every weekend, something’s got to give. Perhaps, we should do some self-reflection and look at our finances to figure out how we can cut and trim to match our current cost of living. But the disparity between income and cost of living is not that great that it is impossible to survive. I mean, sure, cost of living has skyrocketed and income is trying to catch up, albeit in snail-pace. But if I may be brutally honest, I believe the biggest problem we have is the lack of financial planning. Our millennials survey found that the biggest concern most Malaysians have when it comes to their finances is the high cost of living. These stories, though heart-wrenching, can be frustrating to hear. It is also not unheard of for Malaysians who are just clueless as to what happened to their salary by the second week of the month. On a daily basis we hear from our readers and users about how they need to get more loans because their income is insufficient for them to survive after repaying all their existing debts.
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