Saturday, May 25, 2013

The Magic of Money

“Money is so elusive,” a friend once said. “It keeps disappearing.”

Don’t we all have the same feeling on occasions?
Well, I have two words for it and the first word begins with an “F”.

Financial Budgeting.

It can help us to manage our money and prevent the disappearing acts.
Of course, it is highly recommended that we should always pay ourselves first, that is to set aside money for savings whenever we get our pay checks. However, for those who feel that it is impossible, or don’t know where to start, financial budgeting can help.

Some find doing financial budgeting a painful process. A friend described it as doing the same boring homework every day.

Here are some points you may want to keep in mind to get started if you do not have a trusted financial adviser to guide you.

This post was written for and first published on Volunteers@CDAC blog at

1) Start with your Fixed Expenses

This should be the easiest in the exercise. Paying off a loan? How about that insurance policy? Note them all down. This is handy in more ways than one. Thinking of starting that business you’ve always dreamt about? Or pondering over leaving your job? Knowing your fixed expenses can help you plan how much savings and buffer you need to build up before taking that plunge.

2) There is No Need to be 100% Accurate

Most people get frustrated and give up the exercise to keep track of their expenses when they can’t recall everything that they had spent on or had forgotten to keep track for a day or two.

The main purpose of keeping track of your expenses is to know whether you are spending within your means. While we aim to be as accurate as possible, it is not a test and you don’t have to beat yourself up if you can’t remember every item you had spent on to the last cent.  

My suggestion:
Be a really good “student” for at least 14 days and do your homework conscientiously. This will give you a good gauge on the average you spend on a typical day. So in case it slips your mind on a typical day, you can safely use the average.

3) Automate it

What will also help is to automate your payment of expenses. Arrange to pay your bills by GIRO; it will avoid issues of late payments which will incur unnecessary charges. In addition, the transactions are recorded in your statements which can help keep track of your expenses and take away the need of relying on memory.

You may also want to consider making payments by credit card whenever possible for the same reason that you will have a record of your spending. But be warned, you should only use it when spending money that you can afford and not end up with credit card debts with exorbitant interest rates.

4) Err on the Side of Caution.

When in doubt, err on the side of caution. Commission or variable pay will make up part of your income. It is however better to underestimate income than overestimate.

As for expenses, I tend to round up my expenses and project that I will spend more so I can set aside more funds.

5) You don’t have to do it forever - unless you wish to

The good news: there is no need to keep track every day forever! I would say the main purpose of the exercise is to know your spending habits, such as how much you are spending and whether you are spending within your means. Once you understand your spending habits and have made changes to bring it under control, you may just have to spend some time to do it annually or whenever there is a change in lifestyle such as getting a new job, a new house, or when you become a parent.

Happy tracking!  

By Benjamin Ang 


This post was written for and first published on Volunteers@CDAC blog at

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