“Before becoming a money master, first be a self master” â€“J.P. Morgan
A finance guru once said that there are three ways to be rich: 1.) Marry it. 2.) Inherit it. Orâ€¦ 3.) Make more than you spend. Feel free to use any combinations of the three. The last way is the simplest but not the easiest.
Where Did My Money Go?
Have you wondered how you basically end up using all your money paycheck after paycheck with little or no savings left? After reading all the financial books and seeing a thousand planners, it all boils down to character—discipline.
Itâ€™s similar to food and diet where you basically count your calories and plan your meals. All it takes is discipline. It is not the amount of money you make that is the issue for most. Itâ€™s the amount you keep. (I know you heard it a million times. But itâ€™s the truth.)
Sources and Uses of Cash
How does your cash flow? I know you hate numbers. I used to hate it too. But money is basically expressed in numeric terms and thus having knowledge of basic mathematics is a must. Make a budget. (So clichÃ©!) Everytime you spend, list down all your expenses. This amount must not exceed your budgeted expense. You can use software such as the basic excel templates to keep track of not only your expenses but also your finances. An example of a money managing software can be found at http://www.pocketsmith.ph/.
Whatâ€™s Important to You?
How do you decide what to spend on? Simple. You have to know whatâ€™s important in your life. Assuming you plan to take your family to a vacation in Hong Kong. In doing so, youâ€™ll be indebted and you might risk not saving enough for the kidsâ€™ college education. Ask yourself why are you taking this family vacation? Your answer might be â€œTo have an enjoyable quality time with your family.â€ Is there any affordable site that would meet your goal of mainly â€œhaving an enjoyable quality time with your familyâ€. Iâ€™m sure you could list down a whole lot. Pick about 5 or 10 of them. Decide as a family.
A book by David Bach called The Automatic Millionaire started something called the Latte Factor. The basic idea is that you can save a whole lot by simply reducing nonessential expenses in your budget such as Premium Coffee Shop Coffee (Latte). Some things are unnecessary, such as daily intakes of soda. Water on the other hand is actually cheaper and healthier.
Hope these helps!
About the contributor:
The writer is a financial planner, investor, speaker and a self confessed cheapaholic. (Cheapaholic- a term he invented to mean someone who is addicted to being very cheap). Send in your questions. He will try to answer any questions you might have, preferably on finance and money matters. Although he does not object to questions on love and relationships, he never had one and due to his extreme cheapness, will probably never have one (In case youâ€™ll send it mistakenly, he promised to forward it to HeaRty).
Disclaimer: Advice posted in this portion is merely opinions and views of the writer. It does not constitute formal advice. The writer will not be responsible for any of your gains or losses. If symptoms persist, contact your trusted financial planner.