Friday, March 17, 2006

With 30 cents up, it’s time to do a budget

Is this sound very familiar to you?

You received your salary on the dot and based on a rough calculation (some use only their 10 fingers), deducting estimated expenses for the month (it was food, beer and transportation for me), you gather that there is a surplus of almost RM1,000 (I know RM1,000 is bloody lot for some. This is just an example ok?). However, come middle of the month and you are at the ATM machine withdrawing cash, you soon realise that there is less than RM50 in the account. You start to panic. It is not enough to sustain you for the next 15 days.

You sheepishly walk away from the ATM machine, thinking what had happened? Did the bank have wrongly debited your saving account? No, you think again. Did you overspend your income? You think again and you realised that is it – you spend more than what you can earn.

Every one of us has gone through this phase at one point of our life before. Some do it on monthly basis, forever being short of cash by middle of the month sigh (some within the first week of pay day – I know because I have friends who do that). At this point, many of us are desperate for cash and start to borrow money from friends and family.

There was a time when I was working in a bank, I too find myself short of cash by middle of the month. I know my salary is more enough to sustain me until the next salary date but by the middle of the month, I seriously do not know where all that money has go too. There were too many “surprises” for me at the ATM machines. Like others, I complaint that my income is just not enough for my expenses. That was a lame and cheap excuse indeed.
One day I sat down and thought to myself…I was working in a bank and surprisingly unable to manage my money. That was pathetic man! If a banker cannot managed his own money, then how he is going to manage other people’s money. It’s like a legal clerk not knowing how to prepare a legal document, a supermarket cashier not knowing the best deal in supermarket, etc…you get my drift.

So I started to a budget and keep track of all my income and expenses (ok, I got this idea from MSN Money) and immediately I saw where I was bleeding cash. There seemed like I was spending more for magazines, drinks and more importantly, giving other people unnecessary treats (no wonder a lot of girls wanted to go out lunch with me).

Anyway, by the time my budget tracking was up and running, I noticed that my surplus cash (the surplus used to be a deficit) began to increase. Soon, I had enough to actually deposit it as long term saving. How did I do it? First of all, I did not use any “canggih” software like Microsoft Money. All I used was a simple Ms Excel with 2 sheets - one for consolidated figures and another for daily figures.

My budget Excel has these components:-

1. Daily expenses – basically I put up these columns: date, type of expenses, amount and grand total

2. Monthly budget – I actually budget out for the next 4 – 5 months ahead so that I can plan out contingency in case there is a major expenses coming up in couple of months (like renewal of car insurance)

3. The comparison between budget and actual income & expenses – I have the daily expenses and I have the monthly budget - I compare them (it is easy to do – simply use the Ms Excel formulas) and see where I have overspend.

This is how my crude Excel sheets after 5 years in use. Google up “how to do budget” and you will get almost 404 million links on that.

In the first month I started to use a budget to keep track, I was surprised on how many ways I was overspending. So, I started to tighten my expenditures and the overspending amount started to go down bit by bit. By the time I got married, I had enough in my savings for the wedding expenses. Even with a kid (if you are a parent, you will know what I mean - having kids means higher expenses), it is still manageable.

So, with the 30 cents up, it only means one thing – it is time to relook and rework the budget. I am sure that it is still manageable.
(Filed under Tag: Money)

1 comment:

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