Tag Archives: savings

Financial Planning Begins With Budget Analysis

Budgeting Analysis

Budgeting Analysis

Many of us may face this frustration where we do not have much money left before our next pay day. How come some of us are good in savings while the rest overspend? Do you want to avoid this frustration again in the future where money is always not enough?

Then it is time for you to look into budget analysis, otherwise commonly known as budgeting. It is advisable for you to take a note of your expenditure everyday, mainly in the five categories – family expenses, family overheads, personal expenses, taxes and luxury items / holidays.

Next step is to identify which expenses are the ones that is not necessary or which expenses you can reduce. For example, some loved to spend money on high end items. Instead of buying high end items, how about those which are of lower prices without compromise on the quality? Some of us love to go holidays frequently. Instead of going frequently, can you cut down on the frequency? Some of us love to buy the latest electronics gadget, Instead of keep buying the latest electronics gadget, can we continue to use our existing ones which are still functioning well?

There are many apps out there where you can keep track of our daily expenses. It is a good way to do budgeting but you must have the discipline to do it everyday. Else, after a while, it is back to the square one where you overspend again.

Another way to ensure that you have savings every month is to open a few savings account in the bank. One account is purely for savings for the future, one account for family expenses and overheads and one account for personal expenses. With different accounts, it will create a discipline in you so as not to overspend and ensure that you have savings every month.

Once you done your budgeting, then it is time to re-look into your existing insurance portfolio to see if you are sufficiently covered for your future. Should any unforeseen events happen such as critical illness, disability or even premature death, is your insurance payouts sufficient to pay for the expenses continuously for a period of time and how long can it last, given that inflation rate keeps rising over the years?

Is it time for you to review your existing policies now? It is better to make sure that you are sufficiently covered now than to regret when something happens.



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Are You A Saver or Spender?

Looking at the table below, can you tell the difference between the two scenarios and understand its implication?

Difference between these 2 scenarios?

What is the difference between these 2 Scenarios?

This table explains how we spend our income. In Scenario A, we spend our income and save the balance. Therefore, our savings may fluctuate every month depending on our expenses for that month. In the Scenario B, we set aside a sum of money for our savings first, and then we spend the balance. If we have any balance left, our savings will be more for this month. This is a form of discipline savings for ourselves so that we can accumulate more in the future.

So question you have to ask yourself is, “Am I a Saver or a Spender? Do I have a consistent sum of money save for the future or do I always complain that money is not enough for me?”

If your answer is that you are a saver, congratulations to you as you started your foundation for wealth management correctly and you are on the right track to accumulate more wealth in the future.

If your answer is that you are a spender, then you have to change your lifestyle now and reduce your expenses. First and foremost, do you know where did you spend your money? Did you keep track of your bills and receipts? Do you have a notebook to record down your expenses every day and categorize them properly so that you can identify where you spend the most on?

Once you identify the category, think of ways to save money, where you can reduce your expenses in the category. Some of the common money savings tips will be, instead of eating at restaurants every weekend, how about changing it to once a fortnight or once a month? Instead taking cabs and travel every day, how about taking public buses and trains? Instead of buying a luxury item in every boutique sales, how about buying some other brands instead? Instead of changing mobile phone every time there is a new launch, how about changing it only when it is faulty?

Reducing your expenses can be quite hard at first and some of you may find it uncomfortable to change as you are so used to the lifestyle you have now. However, if you see the benefits of having more money in your bank for emergency purposes or for your future big purchases such as a car or a house, then you find that it is worth to pay the price now and enjoy the fruit later. As many industry specialists have advised, we should have at least 6 months of our income as our emergency funds in our bank savings account.

So do you have at least 6 months of your income in the bank now? If not, start savings quickly now and build your foundation strong so that you can enjoy in the future without having any worries that money is not enough.

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