Budgeting is the most important part of any financial plan. No matter how much you are earning, you will still need to plan your finance, starting with a budget. Budgeting is not about spending less or not purchasing costly items. Budgeting is about being in control of how much you can spend, depending on how much you have and how much you earn. By spending wisely, you get to enjoy more out of life without being tied down to compromising future obligations or plans, such as unnecessary debt.

Here are some tips on how create and maintain a budget.

  1. How to Create a Budget

    A budget allows you to compare how much income you have versus how much expense you incur on a regular basis.

    Start by creating tables for every month of the year. In each month, list in one column all of the income earned, including: bonuses, rental income, dividends, Investments returns, etc. In another column list all the expenses, according to: fixed (rental, installments, etc.) and variables (bills, shopping, entertainment, etc.). For this, you will need to gather all of your bank and credit card statements that you have for that period.

    Once the table is prepared, review all the expenses. Compare them with your income and identify any gaps, and where your expenses have exceeded your income. Also, identify major expenditure and income trends (e.g. expenditure increases during festive periods such as Ramadan or Hari Raya).

  2. Basic Budget Worksheet

    If you do get stuck while trying to create a list of expenses, you can try using a standard or basic Budget Worksheet. These are usually available in stationery stores or can be downloaded from the Internet. Normally, such worksheets contain lists of the common expense items, which can help you delve deeper into your spending habits.

  3. Identify your areas of weakness

    The exercise of budgeting itself will help you to identify areas of weakness, such as repetitive overspending patterns, unnecessary expenses, high utility bills and other social habits that may affect our savings and long-term plans. To take control, you will need to first identity these areas of weaknesses, so that you can change the way you spend and save more effectively.

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