Budgeting: a critical way to save more money
A lot of people have problems on saving money hence this is often used as the excuse of not to start investing. They often ask on tips or tools to save more money. In fact, the real reasons on failing to save money are only two:-
- They are not earning enough money for their basic lifestyle
- They fail to control their expenses / spend beyond their means.
Mostly, people fail to save are due to the second reason. In order to resolve this, budgeting is the way to enable expenses control. Budgeting allows people to plan and track. This enable people to know where their monies go and hence able to save more money.
One should start budget based on the income. In general, one should not spend more than 50% of their income on necessities. The budget will serve as the benchmark whether one overspend beyond their means. 20% saving is recommended for long term goal and the remaining 30% can be spend on wants including contributing to charity organizations.
When there is a budget in place, one would be more cautious when it comes to spending. For example, when one needs to buy a car, it will calculate whether the car installment will exceed the budget. If it is, he is likely to postpone the purchase until he has more income.
As you can see many Malaysians are falling into the debt trap which they often think that they can serve the loan installment when they purchase expensive cars and houses. “Thinking” is not effective when it comes to finance management. If you want to have control, you must be able to see and evaluate the numbers.
Let’s start budgeting to save more money.
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