How Do You Manage Your Money?

Managing finances may come naturally to some and not to others. So how do you manage yours? Do you use any budget software or simply has a chart of your own? Do you actually know how much you earn, spend and save? Or every time you simply take it as it goes?

Personally, I simply use my own DIY excel chart to keep track of my finances. Though it's not really perfect but at least I know where my money goes to. Many books and techniques have been written in this area but I think one of most important feature of any personal finance theory will be - Pay Yourself First!

Paying yourself first simply mean, when your income hits your bank account, you automatically decide an amount to not be used for anything else but for your savings. And this Pay-Yourself-First amount shall not be spent on things but may be used for investment, retirement, etc. It trains one to be disciplined but most importantly, by paying yourself first you are safe guarding your money from the unnecessary spending - unless emergency. Subconsciously, you will also be telling yourself that your well being matters first.

The typical amount that has been advocated by most books is to set aside 10% of your income for a start. When you are able, do increase it. Those in the higher income brackets are even able to do between 50-70% of their income. For me, it has been a steep learning process. I did start with 10% inconsistently but now I have been seeing fruits of my labour when I consistently pay myself minimum of 30% every month. Though sometimes when emergency strikes, it will eat into what I've been saving but as long as I'm disciplined in paying myself first, I have created a safe amount of emergency fund.

What this process has taught me throughout the years are the following:
1. I matter.
2. Nobody is responsible for your money but yourself.
3. It delays instant gratifications
4. It creates a pool of emergency fund
5. It's not about how much you earn but how much you save

I hope you may benefit from this little sharing of mine. In this uncertain times, you may not know if your income will still be there one day. But when you are still in control of that, you can make a difference by protecting and growing your wealth through baby steps. Unless of course, you have rich parents, then feel free to squander your money. Just make sure you are in their wills. :p