We asked expert for their best cash control tips in areas that can easily get out of hand – and here they are!
1. Pay yourself firs, says Bill Bachrach, author of Values-Based Financial Planning: The Art of Creating an Inspiring Financial Strategy. Before you start spending your monthly salary, set aside money each month towards your savings, insurance and retirement plan. Also, set aside a sum equal to six months of your income for emergencies. This should be over and above your other savings.
2. Have a budget. According to Angela Christine Tan, General Manager, Investment Service Department, RHB Bank Berhad, Budgeting can be the key to finding additional money to invest. “To get a clearer picture of your expenses, keep a daily record for a couple of months and note down everything you spend. You’ll develop a better understanding of your entire financial picture and be able to identify specific areas where money seems to disappear.”
3. Cut Down on the “latter factor”. The small amount of money you spend daily on posh coffee or cigarettes can add up to thousands of dollars a year. And if a new mobile phone is on the market, try to resist the urge to buy it – especially if yours is working just fine.
4. Get smart with credit cards. “Although convenient and easily obtainable, a credit card can end up being a tool for financial disaster if not managed properly,” cautions Lee Jim Leng, Senior Director, Head of Investment Banking Services Division, UOB Bank, Malaysia. “It would be wise to limit the number of credit cards you have. Choose to keep the credit card which suits your lifestyle needs better. Alternatively, you can use debit cards which have the same convenience as credit card – but you don’t end up with a debt.”
5. Learn to live within your means and be happy with it. “Try not to be so consumed with the desire for more,” advocates Jean Chatzky in her book, The Ten Commandments of Financial Happiness.” Look around. Take a breath. Remind yourself that wanting more doesn’t breed contentment, it breeds more waiting,” Chatzky says.
6. Avoid the “sale” mentality. When you buy a $100 item on sale for $60, you don’t necessary save $40. You spend $60. It is only a good deal if you need the item in the first place.
7. Small saving add up. Try emptying your purse of loose change every so often, or ask your husband to empty his pockets. Put the coins in a piggy bank. You could easily save hundreds of dollars a year for treats.
8. Use interest – free installments wisely. For pricey items such as electrical appliances, furniture or jewelry, retailers often offer interest-free installment plans. The catch? It’s only zero per cent interest if you pay installments on time and in full. Otherwise you pay high interest rates on the sum you roll over.
9. Take cover. There’s such a thing as being over-insured, but most of us are likely to be under-insured. If you have dependents, consider insuring yourself against death, critical illness and total and permanent disability.
10. Plan for the long term. As Leo Gough notes in The Citibank Guide to Building Personal Wealth, “We’d all like to get rich quickly, but experience teaches us that a well-disciplined and measured approach to building wealth is far more likely to produce good result in the long-term.”
11. Build in a bit of fun. You may vow to live on boiled rice and water for years to save…… but realistically, if your budget is too tight, you’ll inevitably break it. Write down everything you spend it a month – every hairclip and cappuccino. Now decide what you must have, and what you can cut. Are you willing to give up weekly manicures to afford a luxurious monthly spa treatment? Keep one treat that’s important to you won’t feel bad about saving in other areas.
12. Know your risk appetite riskier investment tend to offer greater potential reward. Leo Gough explains, “Analyse all the risk of each investment and decide whether the potential rewards justify taking the risk, in your case. “If you can afford to lose any money, don’t go for high return and high risk investments.
13. Try to surround yourself with experts. If you want to learn about money, learn from someone who has a lot of it, “advises Charles Givens, author of the successful book Wealth Without Risk. No superrich pals? Talk to independent financial advisers and bank advisers to get different views you can consider.
14. Check bills and keep receipts. Studies estimate that every fifth bill from supermarkets contains inaccuracies, on average. So check every bill you get, from your phone company, credit card company – you name it. Ask for proof if you don’t agree. Why pay for their mistakes?
15. Understand that financial control wins you freedom. “Before we can get control of our financial, we must get control of our attitudes about money,” says financial guru Suze Orman in her book The 9 Steps to Financial Freedom. “Financial freedom is about realizing we are worth far more than our money.”
16. Cheaper is not always betters. If that cheaper item breaks and needs regular fixing it’s no bargain. Sometimes it pays to invest in something a little more expensive, but better made, that will last.
17. Resist the temptation to spend more, with every pay raise. In his book Don’t Sweat Small Stuff About Money. Richard Carlson point out there are to different ways to get risk: 1. Make more money or 2. Have fewer wants. But there’s middle ground. If you avoid automatically spending more every time you get a pay rise, you’ll discover a different type of abundance - peace. Why not invest the “extra” money every month instead? After all, you’ve lived without it for years anyway.
18. Plan your purchases well. “If you want to buy a big ticket item, like furniture or a new fridge, and you’re not in a rush, wait for a sale,” advises Karen Ng, Vice President, CitiGold Wealth Management and Branch Banking Sales, Citibank Malaysia. And make a habit of doing pre- shopping research and compare brands and prices.
19. Money talk is not dirty talk. Make Monday night, money night. Don’t shy away from talking finance with your husband. Pick one night a week to discuss budgets. Plus, add a “fun section” at the end of the discussion, like how to pay for your next holiday, advises Jean Chatzky.
20. Try not to be a desperate housewife. Blindly letting your husband handle all the money chores makes you financially vulnerable. You should know where and when that money come in – and goes. Do you know his salary? And your mortgage details? How much insurance do you both have? If you don’t know these facts, start finding out now. You may think you’re being a nosy parker, but it’s better to have an accurate picture of your financial situation as a couple, so you can plan for the family’s finances together.
(From : The Malaysian Woman’s Weekly - 2005)
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