How to take control of your finances

Think of how much time you spend planning your holiday or managing your job workload. Now, think of how much time you spend managing your money.

Do you spend the same amount of time managing your money, as you do planning the other parts of your life?

Unfortunately for many of us, managing money is an afterthought. Money is a byproduct of the jobs we do. It’s a tool for us to purchase anything we want after a month’s hard work. However, the pandemic has showed us that job insecurity is a huge threat and it’s time we manage our finances well, because anything can happen.

To start, here are 5 ways to take control of your finances:

1. Inventorize your assets and liabilities

The first step to taking control of your finances is to clearly know what you are dealing with – knowing where you are at now. Chances are most of your financial information are fragmented; with bits of pieces here and there. Maybe you have more than one bank account, more than one credit card, more than one loan…and the list goes on.

This step is a game changer for me. I have more than one e-wallet and sometimes I would load cash into it and totally forgot it was there because I don’t frequently use it. It’s only until I started inventorizing everything that I’d go like “Oh ya, I still have this here, should I leave this pile of cash here or move it else where?”.

Until you put all of them – both assets (what you own/have) and liabilities (what you owe) in one page – be it a spreadsheet or a piece of paper, you won’t be able to get a clear picture of your financial standing.

2. Set financial goals

After understanding your current financial position, it’s time to decide what do you want to achieve financially. Is it to retire early? Is it to buy a house? Is it to pay for a wedding? etc. Setting clear financial goals will determine – how much do you need to save and invest, and what you can do to get there.

A good way to start is to use a savings goal calculator – eg. a retirement calculator which would require you to ask yourself – when do you wish to retire, how much you wish to spend on a monthly basis post retirement and how long do you expect that savings to last for. The calculator will automatically project your required savings and it gives you an idea of how much your appropriate goal should be.

The downside of not having any financial goals is that you will have no sense of purpose, making it easier to be complacent with your current financial habits and to give in to your impulse.

3. Break down your financial goals into actionable steps

Now that you know what you want to achieve, you need a plan to get there. Every grand goal is made out of smaller tactical goals and by achieving them, you inevitably achieve your ultimate objective. Building on the example of your plan to retire early, of which you need to save eg. $3000 monthly. You either:

  • Reduce your expenses – Actionable plan example: cook at least 3 times a week
  • Increase your income – Actionable plan example: start a side hustle based on the skills you have
  • Invest your money so it grows at a faster rate – Actionable plan example: start learning about investments and investing in the stock market

‘Take care of the small things and the big things will take care of itself.’ – Emily Dickinson.

4. Make time to take stock

Once you’ve set your financial goals and plan in motion, remember to make time to measure how you are doing against your financial goals. Depending on your financial goal, sit down at least once a month to take stock of how much you’ve spent and saved, and compare this with your goals. This gives you an idea of whether you are on track or not, and what changes has to be made.

Personally, I have a habit of recording my expenses (I can’t recommend it enough honestly) and weekly/monthly, I make it a point to look through how much I’ve spent and if I’m on track against my savings target. Frankly, some months I slip too, especially when there are more birthdays within the month, and I make a mental note as to what I can cut back to balance it. I also use this to manage my personal investments to assess which investments are doing well and which are not. After all, this is our hard-earned money, it’s only right that we spend time to monitor how it’s doing.

Remember – ‘What doesn’t get measured, doesn’t get managed.’

5. Follow at least one finance youtuber/website

An important step is to continuously improve financial literacy. After all, we don’t know what we don’t know. In the age of internet, there are tonssss of free and good content by youtubers who are passionate and knowledgeable about personal finance. By tuning into at least one of them, we are bound to learn something new. Maybe it’s an insight about a stock, maybe it’s about a way to hack our expenses etc.

I personally learn a lot from these youtubers – especially how they breakdown complex concepts and also their thought process in assessing stocks. My personal favourites are Graham Stephan and Andrei Jikh and in the Malaysian scene – Mr Money TV and My Kaya Plus.

Best of all, by following one of these youtubers, you are part of a community with the same financial goals and willingness to learn. That in itself will spur you on in your financial journey.

Disclaimer: I’m not a professional financial advisor and this is not financial advice. I’m just sharing based on what I learned in my own journey, and what I practice, hoping it will inspire you to learn more too.

Good luck!

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Check out other articles within the ‘Lets Talk Money’ blog series.


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