Extra money - How you manage it?

Sometime, you may have an extra income or extra bonus beside your monthly income. In addition, this may due to the winning of the lotto or some cash prize from the competition. How could we handle this extra money?

They are several way to manage this money:

a. If you don't have any goal to use this money, it is better to save it in the bank or deposit in the fix deposit before the subsequent investment or debt payment. We tend to have a habit that if we have many cash inside our wallet, we may spend it without any proper planning.

b. You can use the money to buy the necessary items in your life.

c. Treat it as a special purpose spending, such as buying magazine, or books for mental invest ment. Besides than that, you can buy some gift as to strengthen your relationship with your relatives.

d. Use it to pay back the debt, especially the credit card debt.

e. Use it to do investment in mutual fund or investment in stock market if the extra money is enough to do so.

Who need to do money planning?

Money planning or financial planning is not the rich people game. For us, who still live within our salary or beyond the salary, we really need to understand the financial planning.

Sometime we thought that we have car, house, and not debt in the credit card, we are safe and no need for further financial control. However, if something unexpected happen and we don't plan the money properly, it will push us to the bottle neck of the financial crisis.

Who need to do financial planning?

a. Fresh graduate who have the new jobs
For the fresh graduate, this is better to have a medical card insurances and the life insurances. However, another insurances like investment link which combine the life insurances, medical card and critical illness is a good insurance to consider. In addition, the premium is much lower for those who buy the insurance in the early stage. However, don't overbuy the insurances and must be wisely in picking the insurances since there are too many insurances and some of the insurances may not applicable to your current situation.Beside insurance, the fresh graduate need to force himself to saving a portion of the salary every month.

b. Those who around 30s, and have property
At this age, people may have family, and have property such as house and car. This stage is the time when you need to check for your insurance coverage and may increase your sum of protection. In addition, they need to put out some money for investment to increase the value of the money.

c. Retirement
Those who retire will finsh the KWSP saving within 3 years. It is a very risky spending since many people now can live up to 75 years. At this age group, they can consider to put the KSWP or the retire fund into fix deposit and invest in low risk unit trust. Instead of money from the KWSP, they can also have extra income from the dividend or interest from the unit trust or dividend. The medical insurance is a must to buy. If the condition is worsen, at least it can prevent any big burden solely to the children and reduce the cost of medicine.

Financial planning is the long term education in your life. Money is yours and you have to learn to plan it wisely to prevent any unnecessary regret. Start it in early stage and you will observe your wealth accumulation in later years. However, all the planning is base on your disciplinary to execute.

Manage your money

Many of us just spend without thinking about our current financial status. Sometime, we may just feel regret when we spend a great amount of money after buying something that we really not needed.

Before we use our money wisely, we need to follow several steps as below as a way to manage our money.

a. Understand your financial status
This will let you understand your assets and your liabilities. With good understanding, it help you to set your goal clearly.

b. Clearly set your goal/objective
Set the goal. With a goal, it will drive you to meet the goal. For an example, you find that you have debt, you set your goal to paying back the debt within 2 years. The goal can be in short term or long term. For long term wise, it may involve your retirement, your children education fees and so on.

c. Set the plan and strategy
What is the strategy and plan in order for you to achieve the goals you set.

d. Find the correct tool for money growth
Due to inflation, the money will depreciate if we don't plan it properly. The tools here is mean the investment. This is like how you invest, either put into bank account, mutual funds or stock market. For the protection wise, you need to chose the correct insurance plans to protect you and your family.

e. Adjust of the plan according to the current situation to meet the goal
Once plan and planning is set, you many need to check the status for every six months to make sure that it all in control. Soemtimes, some unexpected issue may arise and you may need to readjust your plan accordingly in order to achieve the goal. Hence, review, adjust and readapt the planning and strategy is important.

The recommended financial magazine for beginner

I find that the magazine "Personal Money" form the edge provide information about the financial tips and planning for the public. This magazine is simple to read and as a beginner for the financial planning of yourself, this magazine sure will be a good reference to start with.

Are your salary increament beating the inflation rate?

You may find that your increment for this year is just 5% -6%. You feel happy and would like to treat yourself with nice food in local hawker stall. When you order the food, you may find that the price has increased. You will also shock to know that the herb tea you used to drink also has increased it price.

You then just say, never mind, it is just for 10 cent to 20 cent increment for the drinks, and may 50 cents increment for the food. It is just alright since you have an increment in salary recently. However, if you calculate clearly, you may find that the the price is increased that higher than your percentage of the salary increment.

For example, the herb tea, it become RM 1.10 since last year due to the spike of the oil price that hit the history high. However, the price keep on become stable although the oil price drop. Recently, the price has up to RM 1.20. Just imagine, a RM 1.00 drinks has increase into Rm 1.20. It is a 20% increment of the prices. Do we really aware of it?

For the fried rice, may be the original price is RM4.50 with a sunny shine up egg. That's mean you need to have extra RM 0.50 fo the egg (Normal fried rice is RM 4.00). However, some restaurant has increased it into RM 4.80, with the add-on egg for RM 0.80. The single egg itself has increased for 37.5% from RM 0.50 to RM 0.80. Does our salary really beat all those inflation ?

We may hear that this consumer item increase for RM 0.10 or RM 0.20, but if we look at the percentage of the increment, it may even higher than what we have in our recent salary raise.

Even the tol have increased. Some tol increase for more than 35% as compare to last year. Oil price also have increase during last year for more than 18% since last year (RM 1.62 to RM 1.92).

After reading until here, you may find that I am too calculative for every item in the live. And then you may say that some item also decrease in the price such as LCD TV, hand phone, and other electronics stuff. The price for the car also very attractive and lower as compare to last time. I could not deny that those items have decrease in price, however, those item will keep on depreciate the value during the time passes. The hand phone you buy today may depreciate down to 50% if a new model is coming up to the market.

In here, I am not saying that the salary we have are not enough. Just that we need to invest our money in order to make it worth and would not depreciate in a long term run. With the correct financing planning and investment tool, we can secure our money and increase the value of the money we earn today.

I am not an expert in those thing yet. I still in the beginner stage. We all need to start to learn how to do the financial planning now.

How to Record Your Salary / Earning

It is a good to record your income and expenses in an excel file. It is a first step to enable you to plan your financial. By having a clear record of your money earning and expenses, you will able to understand which items in the expenses need to be reduce if you need to save extra money for future investment.

Cash Inflow :

1. Work Income
a) Income I
b) Income II
c) Income III
d) Performance Bonuses
e) Others

2. Investment / Business Income
a) Bonuses
b) Dividends
c) Director Fees
d) Interests
e) Rentals
f) Others

Cash Outflow with suggested percentage :

1. Housing/Living Expenses ( 30%-50%)
a) House Payment / Rental
b) Water, Electricity & Phone
c) Meal / Eating Out
d) Groceries
e) Maintenance / Household / Furniture
f) Medical / Nutrition
g) Clothing / Hair / Facial
h) Children / Dependents Maintenance
i) Maid / Assistant
j) Quit Rent / Assessment
k) Property Insurance
l) Loan Repayment
m) Others

2. Transportation (10%-15%)
a) Car Payment
b) Petrol
c) Toll & Parking
d) Maintenance
e) Road Tax & Insurance
f) Others

3. Entertainment & Recreation (3%-5%)
a) Entertainment / Social Function
b) Vacation / Travel
c) Wedding / Gifts
d) Sport/Recreation
e) Club Fee & Expenses
f) Others

4. Miscellaneous ( 3% - 7%)
a) Income Tax
b) Books & Periodical
c) Donation / Contribution
d) Seminar / Continuous Education
e) Others

5. Insurance (3% - 5%)
a) Life, Critical Illness, Accident, Medical
b) Others

6. Children Education Funding (8% - 15%)
a) Education Insurance
b) Unit Trust
c) Bond
d) Others

7. Financial Independence (15% - 25%)
a) Endowment Insurance
b) EPF / Retirement Fund
c) Bank Saving
d) Unit Trust
e) Equity
f) Property
g) Others

Salary Survey

Median Salary by Years Experience - All People in All Surveys (Malaysia)

Compare your salary: Get a free Salary Report

Median Salary by Job - All People in All Surveys (Malaysia)

Compare your salary: Get a free Salary Report

Median Salary by City - All People in All Surveys (Malaysia)

Compare your salary: Get a free Salary Report

Salary Survey

This is the survey done by the jobstreet malaysia by 3.5 milion database. I not sure how accurate of this survey. I think they are still have people higher than this salary range for the similar age and working experince. Ironically, they have people below this salary range.

In They are people earning less than this feature but yet still can life peacefully. How much is enough? RM 5K, RM 7K or RM 10K per month? Or RM 20K per month? Some people may earn less than you but he may have many money in his bank. The more you earn, the more you will spend and cause the need increase at each stage of the increment. If you earn 4K per month,but you just spend about 3.5K per month for your house loan, daily expenses, petrol and tol, and also entertainment, congratulation to you! You should be happy since you are not living with loan behind. And may be to you, additional increament will be a gift for you and as a tool to accumulate your wealth.

However, if you earn 10K per month but you try to live as luxury as you can, with buying tons of unneccessary high tech gic or stuffs, without any money left in your pocket, are you still consider rich? In this moment, you still complaining for higher salary.

If we look back how we survive during the school days, with limited pocket money, but we still live happily. When we come to work, and have salary and money, we start to increase our desire to have more things. This should be a good motivation for us to work better for better earning. However, if we over demanding our desires, it will be a time that we all suffer and complain about the salary.

My Salary Myth

Many colleagues thought that my salary is high. I think they must have miss perception on this. My salary is still within 4 digits Ringgit Malaysia. Nothing special about it. I do not have high salary such as up to 5 digits Salary per month. I just think my salary is just similar to the typical engineer with the similar experience. May be I am under paid.

I heard that people that within the similar age group of me are well paid up to several thousands USD who work in China or in East Asia. I also know that those people who is similar age to me may have my monthly income by several hold.

To me, as long as I live within the salary range, and yet still have some space to squeeze some portion of my salary to bank or investment, that is enough for me. I am not crazy in car or other fashionable stuffs. Although I know I may like to have it, but I also step back first and think deeply before I buy. To me, those stuffs will depreciate in two to three years time, and not worth to have it just to fulfil my 4th or 5th layer of need. The most fundamental things that we need is food and water. Those stuff just is an addition to your lifestyle.

May be my life is towards simple. Sometime I think that myself is over stingy on the daily needs. However, I will rewards myself with the hard work I done to saving the money.

Many people like to complain about the salary and seems like to compare to each others. To me, increament will not happen every year and it will be a bless if you able to get increament. No one know how good is my work. May be I am over rating myself and expect too much in the apprasial review. That is on how the higher management to judge on you whether you get promoted or have increament. If I could not get an increament, it may include the unfairness in the system, but I still need to consider why I am not deserve to have increament. In this world, nothing is secure. We need to help and improve ourself to beat the inflation. We could not solely depend on the salary we earn to sustain our life. The work we have may have the danger of being lay off. As long as we get preparation, life is still moving on.

Save Money Tips

1. Don't buy things you do not need
Sure, it's easier said than done, but sometimes you might want to forgo that extra bottle of soda or bag of candy at the supermarket exit, or anything else that won't benefit you in the long run.

2.Figure out what you need to save for and how much you need to save
For short-term goals, this is easy. If you want to buy a video game, find out how much it costs; if you want to buy a house, determine how much of a down payment you’ll need. For long-term goals, such as retirement, you’ll need to do a lot more planning (figuring out how much money you’ll need to live comfortably for 20 or 30 years after you stop working), and you’ll also need to figure out how investments will help you achieve your goals.

3. Set savings goals
Once you determine how much you need to save, establish a timeframe (i.e. “I want to be able to buy a house two years from today.”) Set a particular date for accomplishing shorter-term goals, and make sure the goal is attainable within that time period. If it’s not attainable, you’ll just get discouraged.

4. Figure out how much you’ll have to save per week, per month, or per paycheck to attain each of your savings goals
Take each thing you want to save for and figure out how much you need to start saving now. For most savings goals, it’s best to save the same amount each period. For example, if you want to put a RM20,000 down payment on a home in 36 months (three years), you’ll need to save about RM550 per month every month.

5. Add together the installment amounts (monthly, weekly, or per paycheck) for all your savings goals
Can you afford to save this total each period? If so, great; if not, proceed to the next step.

6. Pay yourself first
Savings should be your priority, so don’t just say that you’ll save whatever’s left over at the end of the month. Deposit savings into an account (or your piggybank) as soon as you get paid.

7.Keep a record of your expenses
Write down everything you spend your money on for a couple weeks or a month. Be as detailed as possible, and try not to leave out small purchases.

8. See where you can trim your expenses
You’ll probably be surprised when you look back at your record of expenses: RM 50 on ice cream, RM 200 on parking tickets and tol? You’ll likely see some obvious cuts you can make. Depending on how much you need to save, however, you may need to make some difficult decisions. Think about your priorities, and make cuts you can live with.

9.Reassess your savings goals
If there’s absolutely no way you can fit all your savings goals into your budget, take a look at what you’re saving for and cut the less important things or adjust the timeframe. Maybe you need to put off buying a new car for another year, or maybe you don’t really need a big-screen LCD TV that badly.

10. Make a budget
Once you’ve managed to balance your earnings with your savings goals and spending, write down a budget so you’ll know each month or each paycheck how much you can spend on any given thing or category of things. Try to leave a little room for minor unexpected expenses.

11, Stick to your budget
A budget won’t do you any good if you don’t follow it religiously. Build some self-discipline, and remember why you’re on a budget in the first place.

12. Open an interest-bearing savings account
It’s a lot easier to keep track of your savings if you have them separate from your spending money. Look around for the best savings interest rate that offer by bank.

13. Don't use your credit cards
This is one of the most effective ways to reduce spending. Use cash for as many purchases as possible - you'll be more conscious of what you are spending your money on.

14. Kill your debt
Simply calculating how much you spend each month on your debts will illustrate that eliminating debt is the fastest way to free up money. Once the money is freed from debt payment, it can be easily re-purposed to savings.

Money

Many people complain that they don't have enough money. The salary is low and the increment is hardly can beat the inflation rate in Malaysia.

To me, no matter how much money you earn, as long as yo don't know how to do a proper planning in your expenses and investment, you will hardly can achieved financial freedom. Everyone can have financial freedom although he is not rich.

There is an argument between rich and financial freedom. "If I am rich, I can have many things and don't have any concern in living." He may right for the first half. It is hard to deny that money is very important. However, if you are rich, you may end up to be poor or bankrupt if you don't know how to do a proper financial planning.

No matter how much you earn, as long as you live within the salary or earning ranges, you can be consider a rich man.

Many people seems to be rich, but they may spend their living using credit card or loaning from bank. In Japan, 71% people in the range of 20-30 who RM160,000 or below annually are living in poor. They have no money in hand at the end of the month, unable to pay the credit card and hardly can handle their electricity bill or cell phone charges.

To me, I consider I am not rich in quantity (I mean my bank account is not having more that 5 digits), but I still consider myself rich in quality. I always try to maintain my expenses are well controlled and still have some extra money for me to do investment or saving. I may just driving a local Iswara car, but to me, as long as it is convenience to me, I am satisfy. I have no big dream in driving the nice big car that need to have money installment more than RM1,000 per month. I cannot afford to have it base on my salary. I just live and spend according to my priority.

As long as we understand the money, control the money, we will not be the slave for the money.