If you are earning a decent salary, but always wonder at month end where has all your money gone, you need to seriously work on your money management skill.
A year back, a speaker on financial management gave me these advices:
1. In order to have better money management, you must take record down all your income and expenses in detail into dollar and cents for AT LEAST 3 months. Personally, i will record down in an excel sheet on a daily basis.
2. Then you will be able to track where have you spent all your money and in which area, such as necessity, entertainment, education, etc. I categorize my expenditure in the same excel sheet as well.
3. It seems a tedious work, but if when you start doing this, you will get more organised. And when you are more organised, your money will be organised too. Got the trick? At month end, you will know whether you spend more than your income. From there, you start to adjust your spending pattern and budget your expenses.
4. When you are discipline in recording your expenses, the next time when you take money out of your wallet or purse, you will be more alert and aware of your spending. In other words, you will start to control your spending habit.
After practicing this simple money management for a few months, I find that i get more organised with money, and i continued the habit of recording down my income and expenses everyday until now. In fact, most money management tips given by those renowned experts advices the same thing. So for a change, do what the expert advice and you will see the difference. So when should you start? Not tomorrow, next week or next month but NOW! Don't give excuses that you will start when you bonus comes or when you have a lot of money to manage.
For the next step, to grow your money, i find that the money jar system thought by T.Harv Eker has been very useful.
You split your net income after tax into 6 different accounts. You can do it by having multiple bank accounts or using a physical jars. Even if you are study or living on retirement savings, you still need to use the jars system.
You can start using the money jar system with as little as $1. The important thing is to cultivate the habit of managing your money. When you start managing your money, you will have lots of it.
The 6 different jars are:
1. Financial Freedom Account (FFA JAR) - 10%
This is your golden goose that will bear you golden eggs. This is your key to financial freedom. Take good care of the golden goose and she will take care of you.
The money that you put into FFA account is used for investment and building your passive income. The revenue from your passive income should go back to this account. You can only put money into this account but you CANNOT spend it. The purpose is to grow this FFA account to continue generate passive income for you.
2. Long Term Saving for Spending Account (LTSS JAR) - 10%
This is the account that you can use to spend for high value nice to have items that you have been craving for, eg. 42' LCD TV, touch screen PDA phone, a nice car, etc. You can also use this account to pay off your debt.
You can also split your LTSS account into 2, 5% for each account, with different purpose. You can use LTSS account to save for your house, car, travel tour, children education, etc. The idea is, dont spend your money before you even have it. You delay your purchase until you have the money to buy it. Don't spend on credit. You should clear all your debt before you start spending this LTSS account.
3. Education Account (EDU JAR) - 10%
As T.Harv Eker puts it, "If you are not growing, you are dying". You can use money from this jar to attend training courses, buy some books, audios or videos for personal development and self improvement.
This EDU JAR is investment for your own education, not your children'. You are you most important asset.
4. Necessity Account (NEC JAR) - 55%
This is for daily necessity that you can't do without, it includes rent, utilities, food, mortgage, clothing, transport, etc.
When your income increases, you should reduce the percentage of this NEC JAR and divert some to GIVE or FFA JAR. You don't need to spend so much anyway.
5. Play Account (PLAY JAR) - 10%
Its time to relax and give yourself a good break! This is the account where you can pamper yourself and feel like a millionaire. Once a month, go somewhere or do something that you have never done before. You can bring your partner for a romantic dinner in a luxury restaurant, go for an diving escapade, pamper yourself with 5 hours spa treatment, sail on the sea, anything that you have wanted to do but always put in on hold because its luxury to you. You have to spend all the PLAY JAR every month, or at max every 3 months if it is something very luxury.
Go and have fun and get a taste of the luxury lifestyle of a millionaire. Saver often find it very hard to do this, because they have been conditioned to save and save and save only. They will never safe enough. This is the change for you to experience the richness of life.
6. Give Account (GIVE JAR) - minimum 5%.
If you can reduce NEC JAR by 5%, then increase GIVE JAR to 10%.
All millionaire gurus always give this same advice. You have to give back to the society. The more you are willing to give, the more you will receive. It's a universal law. You are telling the universe that you have abundance of wealth and in return you will attract more abundance into your life.
Be a generous giver. Put smiles to the needy. You will feel good when you have done your part to the society. You can give your money to charity organization, someone that you know is in need of money, or maybe just the old cleaner down the lane who is working hard for living. See the gratitude in their eyes when they say thanks to you. Your give of life means a lot to them.
Visit my blog:
http://mytrainingseminar.blogspot.com 
Jan 2 2009, 10:54 PM
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Furthermore, RM34.50 can't even get you a decent shirt nowadays.
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