How to Manage Your Own Money?

There is a saying, if you don’t care about your money, your money will not about you too. It just like humans, if you never take care of your wife/husband, very likely they won’t care about you too.

But how do we start? Which part of our life?

1. Salary / Income

So how to manage your own money? First thing that you need to know what is the exact amount of money you make each month. Make sure is the net amount that you can get in cash. Other money might be going to the government retirement scheme or income tax. Perhaps you might be working for yourself, and receiving different amounts of salary, it would be good to fix what you can get monthly so that you won’t overspend.

For example, you $2000 is sufficient funds for your monthly expenses if you are making $5000 in a particular month, but you remain to withdraw $2000 only for the monthly usage.

Do remember to list down other income sources that generate side income, or extra money. For instance, some freelance jobs, selling old stuff, stock market, part-time online business and so on.

 

2. How to start saving?

How to Manage Your Own Money?

After we know the total amount of cash we have, we can start calculating the committed bills. For instance, your house bank loan, your car loan, insurance, phone bill, home utility bills, etc. Then the remaining cash that we have, it is always good that we can save 10 – 20% before we spend on our lifestyle.

Our lifestyle that included, the expensive restaurant food, the movies in the theater, the Starbucks coffee, the cafe-hopping weekends, the premium gym center so on and on.

a) Lifestyle

How to Manage Your Own Money?

Lifestyle is something that cannot be easily defined and be the same on each individual. Some of us must have a good coffee, and willing to spend more on quality coffee and food. Some of us don’t care about what we eat, as long as we have branded bags, stylish and up-to-date fashion. It depends on what is your favorite spending and how do you want to spend your money.

 

b) Achievable goal

My suggestion to you is to always set a goal, for the money you save for, what do you want to use them, and what is the final goal? Once you know the faster the money you can save, the sooner you will reach your goal destinations, we will not spend all we have. So what goal is big enough to control our spending?

Goal examples, to buy a house that belongs to you. Okay, it’s boring, and it is not even achievable in some places. Remember to set a legitimate goal. How about travel around the world without a time limit? Buying a family car for daily usage. To save up enough money to earn enough dividends from the stock market, that can cover annual living (THIS IS POSSIBLE GOAL) and we will do not have to work again. To start a business and not to work for other employers ever again.

 

3. What to do with the savings?

How to Manage Your Own Money?

a) Inflation

Before we reach our goal, where shall we keep our money? Our money is depreciating as long as we are not doing anything about it and place in the bank. This is because of the economy, our money will have to bear with the inflation rate. Each year the average inflation rate in the world is from 2%. Some countries are slightly higher, it can be as high as 3.5%. That simply means that, if our money sitting in our savings bank account, or sleeping in our bedroom, the value of the money is getting lesser value than its value year by year. It is just simply the nature of the world of the economy.

 

b) Bank

Perhaps bank will give you a return of 0.3% – 1%, of return, some even offer a fixed deposit, the return can be bargained, and in order to be able to beat the inflation environment, make sure the interest rate that the bank offer you, can be better than the inflation rate, which is what mentioned above, 2-3%. Cool so far? Please ask me a question below if you are unsure.

 

c) Investment – Put your money to work

How to Manage Your Own Money?

Often heard the surrounding people said that they invest in their clothing, their car, watches even their girlfriends. Let me clarify to you, an investment that does not have the potential to make you profit, return or money, we do not consider that as an investment. Unless you are talking about practicing good karma, and hopefully good karma will react well on us. Otherwise, we do not use the word investment. How to invest and where to invest?

 

4. What to do to make our money increase its value?

a) Keep looking around and do not give up searching for ideas to invest

To avoid being risky in all kind of investments, it is always better to learn how to do, and what to do first, before we dump our money into it. They are people making money, and of course people that lose money. If we do not know the game rules, most chances we will lose the game. There is a lot of knowledge and information we can find, to fill us up before we start dipping ourselves into the deep blue sea. Make sure you learn how to swim, fully equipped, and aware of the water current first, before you fully dive in. Once you do all the safety practices, very unlikely we will lose money in our investments.

 

Let’s set a goal first

How to Manage Your Own Money?

Let’s set a not too big, not too small goal first. My goal is to continue to save up money for investment, especially focusing on passive incomes. It will eventually make my money work harder than me physically working for money. Let me know what is your goals below, do feel free to leave me some comments and thoughts!

 

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