Boody's Personal Financial Fitness Program (P.F.F.P)

Finances finances… With the price of everything going up, it’s hard for the lower class to survive and the middle class to stay afloat. Life is sucking for people that are employers as well as employees. Economic conditions aren’t getting any better, and so is the political atmosphere. I’ll try to steer clear of any political news in this post today. I’ll be focusing more on personal finance, a favourite subject of mine (after all, I am a Certified Financial Planner ;-p).

Well, for a financial planner, it sucks to say I don’t make enough money to support myself (but then again, even millionaires complain they don’t have enough money). Nobody will ever be satisfied with what they have. Most of the time, we always want more. So in this case its not about how much we earn, its how we use what we have (this of course is true if u make more than RM1,500 a month). If you earn less than that working full time, then I strongly believe you are below my poverty line.

The first thing I would always ask people is how many bank accounts does a person have? Most people have 1, at most 2. 2 is fine, but in my opinion, that is the minimum. I believe we should have 3 but if you can’t keep track of it then 2 is good enough. Why isn’t 1 account enough? Well, first of all this is probably the account which your employers will deposit your salary in. SO at the end of the month you will go to this bank account to withdraw and spend your money. And every time you don’t have enough money, you will go and withdraw till there’s no more. So what happens at the end of the month? You get the same syndrome as every1, which is “I’m broke by mid/end of the month” syndrome. And by broke I mean you really have no cash or other places where you stash your own cash. And there are thousands of people who live like this everyday for many years. Then one fine day, it hits them, WHAM!!! I don’t have savings in case of emergencies. Very uncool.

My first suggestion is to at least open 2 bank accounts. Now what do you do with that other account since you always complain got no money by mid or end month anyways. Well, ask yourself this,”How much am I wiling to save at the beginning when my salary is out?” Maybe for starters try RM100 or 200. If you save 200 a month and put it into that reserve bank account, you will have 2,400 bucks at the end of the year. And that is like 1 month’s salary for most young people. Once you have transferred that 200 into the other bank account, feel free to spend all the money in Account 1 as you have already saved first. At the end of the month, Account 1 maybe empty, but you can take heart that you still have some savings for a rainy day. Also, bear in mind you do not touch this sum of money unless you really need to. It is of no point if you continue to dip into this account cause you will then be no better off in the first place.

My 2^nd advice is to track your expenditure daily if not every few days. Write is down on a 555 booklet or in your PC. I have mine in excel format, cause its easier for me to auto sum it and do various calculations with it when I do my review. This takes a lot of discipline, which I have to admit, I still lack. And what’s the point of doing this? Well the point is that we need to know where our money goes. I’m sure all of us have at least once wondered, hmm… I had 200 in my wallet/purse yesterday. I wonder how come its only 20 now? So that makes us wonder where did we spend our money on? If you continue to track your daily expenses, then you will be able to review it at the end of the month and see the things that we overspend on. Could be shopping, buying too much snacks and et cetera.

Once you have reviewed it, see how much you can reduce your expenses. Maybe start by reducing it by RM 50 a month or a week. If you save RM50 a month, then you would have the RM200 a month in the other bank account already. Or if u already have that RM200 aside, then save this other 200 again. Then you will have a savings of RM400 a month or 4800 yearly. Now, isn’t that a huge amount? In 4 or 5 years you have enough money for a down payment of a house or car or even both.

So if you follow my advice, you are already on your way to financial freedom (albeit a small step). It may not be much, but if you don’t start the engine, you are never gonna move. You will already solve the problem of “I don’t have enough money to spend, how to save?”. Get started as soon as possible!!!

Part 2 of Boody’s Personal Financial Fitness Program (P.F.F.P) will be out soon.

Boodyboy, out!!!