Financial planning is the first step to taking charge of your finances. Four steps are involved:
- Set your financial goals.
- Know where your money goes.
- Examine your spending habits.
- Create a spending plan.
Step 1: Set your financial goals
Financial goals reflect things you want to do with your money for a given period of time. Setting goals will make sure you spend and save in a way that enables you to reach your goals. Your financial goals can be for short term, medium term or long term depending on factors such as your age, income, marital status and family commitments.
|Clear credit card debt
|Buy a car
|Buy a house
|Save for retirement
Step 2: Know where your money goes
Next, you need to know how you have spent your income. Do this by noting down your spending over a period of time, say eight weeks.Your aim is not to cut your spending but to note where you have spent your money.
Step 3: Examine your spending habits
If you find that you have no spare funds or you would like to grow your savings, you need to examine your spending habits. Look through your list of spending and ask yourself if they are needs or wants.Trim off the wants and look for signs of bad spending habits that you need to change.
Step 4: Create a spending plan
Once you have studied your spending habits, you can now create a spending plan that will allow you to achieve your financial goals.You can use Bank Negara Malaysia
's "Buku Pengurusan Belanjawan Keluarga
" (Managing Household Budget Book) which has been designed to assist users in creating and monitoring their spending on a daily, monthly and yearly basis.
Reprinted with permission from BankingInfo (A Consumer Education Programme)
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