Tame My Budget 7 : Test Your Strength

I like to share 3 very simple ways that could help you to kick start your money saving frenzy. I got the tips from Suze Orman through her page at Oprah.com which I think a very practical way to boost your habit into admitting that we too can handle our own financial state.

Of course, in order to take up this 3 steps, you have to be honest with yourself and try as you might. Not to give up too easily and trust that you can do them. Let me explain the 3 steps:

1) Choose any 1 day and try not to use any cash during the whole of that day

• Especially when we are a compulsive spender, we tend to buy things that we thought we going to need them, but end up we tend to regret the purchase.
• Try not to use cash 1 whole day require us to keep on questioning ourselves either we need to buy the thing or not.
• Since the practice is only 1 day, we have to quickly learn to postpone the purchase for another day. Sometimes postponing a purchase give time for us to actually realize that we do not really need to buy the thing at all.

2) Choose any 1 week and try not to use your credit card for the whole week

• Similar to step 1, this help you to question yourself from being a compulsive spender.
• It takes 1 week to catch on to the habit because when using credit card, we tend to spend more compare to use cash.
• Question and postpone all your potential purchase especially on those high value purchase from using credit card will help to harness your own habit not to quickly grab anything just through swiping your card.

3) Try not to eat out at restaurant for the whole month

• I guess this is the most hard thing to do, especially to do it for the whole month.
• Of course you can start to do in 2 weeks and gradually increase the habit for the whole month.
• This is specifically for those who have kitchen but usually decided to eat out because of millions of reason such as too busy, no time to cook, do not know how to cook, and so on.
• Learning to prepare meal at home will open up doors that unlock potential savings such as learning to shop for the cheapest raw food, finding good deal on frozen food or learning how to shop just enough to cover your meal.

For those who do not have kitchen and no way that you cannot eat out in restaurant, let me throw in some of my personal tips when dining out:

• Do not simply go to the most lavish restaurant. Go to the cheapest restaurant available.
• Plan your meal so that your total meal cost for 1 person will be less than $5.
• Avoid fast food at all cost since it is not nutritious, it do not give you as much energy as you need and it is ridiculously expensive compare to the quality of food they provided.

Give these 3 steps a try and learn to shape your lifestyle to a more manageable practice. With successfully implementing these 3 steps, you are in a comfortable way of changing your habit to be more money concern.

Tame My Budget 5 : Promotions and Great Offers

I watched Oprah show yesterday that discussed over some money savings tips. One of the discussions is when a housewife demonstrated how she could save almost 80% through shopping for groceries.

Her tips that I managed to jot down are:

1. Spend time to list down all the things that you NEED to buy.
2. Buy local newspaper and look out for FREE vouchers and coupon.
3. Browse online for coupon and voucher that you can print
4. Understand the sales or promotion dates for your local department stores
5. Avoid shopping at convenient store

She also demonstrated how she make use of the store’s discount coupled with free voucher and coupon from local newspaper or online for get the best out of the offer. She has been doing this for the last 15 years with total savings of $17,000 through budget shopping alone. Cool.

I am sure Malaysia also has good deal on promotions, free coupon and voucher. Let me look around for our local deal and will update here at Money Matter.

Grow Your Money : Why Save Money?

How your budget is going along? Managed to slow down the negative variances? When I first did my budget, I feel stressful, tired and very de-motivated. It is not wrong to feel that way. Anyway, you have work hard to earn yourself that monthly salary, then why should you work even harder not to spend them? Why should we cut down our food, the time we normally spend in cinema or game arcade, the trip around the world or all those things that we love sooo much to do, just because we need to commit to our budget. Might as well spend all our income to enjoy ourselves and screw our budget, right?

Budget do not means that you have to sacrifice all your fun time. Simply said, when we do not have budget, we spend too much on having fun, until we overspend what our income allowed us to. Every month of overspending, causing us to try and gain more money for our enjoyment through loans and credit cards. Now, we reached that level where our asset (source of income) is too low compare to our liabilities (expenditure) and bank chased us to settle our debt. We had all the fun before, now time to sacrifice our high maintenance lifestyle to keep our life back on track.

You should set a short term goal so that you know how close you are to achieve it. At least, that will give you an ability to see how is the progress. Your first short term goal, is that with all your accumulated income, you must shape your life to spend on 70% of your income only. That 70% included paying bills, daily spending and also paying all those monthly installments. The balance 30% must be set aside for savings and emergencies.

Why should I save my money? I work hard for that salary, I should enjoy spending them. Saving money means that I can enjoy my saving after 10 years, right? So, what is the different of spending my money now than spending my money 10 years later, when I am older and do not have any will to have all the fun.

Saving money do not exactly means that you can only enjoy it once you are retired. Saving money also do not means that you are paranoid and worry something bad might happen to you in future. Do you know that saving money can help to increase your income in near future?

For example, if your accumulated income now is $2000. 70% means that you can only spend $1400 and saved $600. If that $600 were invested in an investment with 10% return per year, by the end of 1st year, you will get $720 dividend. Instead of compounding the dividend, you use the $720 to support your income for next year. This means, that $720 is supplying additional $60 income monthly for the 2nd year. So instead of having only $2000, you now have $2060 income and with 70% of that, you can spend $1442. If you continue practice this habit, by the 6th year, you should have total of $2964 income supported by your investment dividend, 70% of it which is $2075 for spending and accumulated saving of $40,440 for emergency. Imagine that! From able to spend $1400, now you can spend $2075 and still have money for savings. The more money you put aside and grow them, the more dividends you going to get. That dividend is all yours to spend. Who said that savings is boring and meaningless?

Saving can actually help you to gain your monthly income. More monthly income means more money to spend and more money to save which in turn will grow more money for your future income. That is exactly what the saying “Rich people become richer and poor people stays poor” means. If you know how to maintain your budget and learn to grow your money, the money will in return work for you instead of you need to work for your money.