In our 2nd article we mentioned “Effective Tips/Habits to Start Saving!” where you save a sum of money before you start spending your remaining money.
We always tend to overspend (on food). With poor decision comes poor management, but in the
end it doesn’t even matter. So the question is what can we do about it?
Budgets are essential to giving you a clearer picture of what you can and cannot afford.
Firstly, we should start planning either at the start or end of the month.
We should find out the average amount of money that we want to spend on food and etc. This gives
us better knowledge on our spending limit.
However, even after cautiously planning the spending limit for the month, there are still chances
that the plan don’t work out and we have to fork out money from our savings.
So in order to prevent this situation, it is better to have an “Emergency stash”. An emergency stash is
a sum of money set aside for unforeseen situation such as last minute class outing, sudden shopping spree etc.
One of the more important tip that I can offer you when budgeting is, “Pay yourself first” This
concept is preached by some of the most influential and wealthy people in this world, such as Mr. Warren Buffet
, and if it’s good enough for him it’s good enough for the rest of us.
Paying yourself first is a concept that sets aside money aka ‘paying yourself’. When you get a sum
money, often people pay out to retailers and hawkers but forget to set aside money for themselves.
Investing the money that you paid yourself, would generate interest. Without any effort, you're
making money! How easy is that!!!!
If you guys are interested in the concept recommended in this video, you can check out a book titled
“The richest man in Babylon”, this book trigged my passion for finance. If you can find the book in
stores or the library, it’s a great read!
(ps. Did anyone get the linkin park reference? :D)
The Youthfinance team.
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