Monday, July 31, 2023
Taking Control of Your Finances: A Step-by-Step Guide with Paywatch
It's important to check on your money situation every once in a while, especially if you're thinking about buying something big like a new car or house, or if your income or expenses are changing.
The good news is that most of the information you need is right at your fingertips. By following these steps, you can make smart decisions that pave the way for a secure financial future.
Step 1: Create a Monthly Budget
Start by assessing your income. Calculate your monthly earnings, including salaries, wages, interest, and any other sources of income. It's important to consider the take-home pay rather than the gross pay, accounting for deductions like statutory deductions like your EPF and SOCSO.
Step 2: Estimate Your Expenses
To effectively estimate your expenses, track your spending over a month. Take advantage of the tools offered by your deposit account, such as downloading financial statements or scanning receipts with your smartphone. Categorize your expenses into fixed costs (e.g., rent, insurance) and flexible expenses (e.g., food, utilities, entertainment). For expenses that aren’t consistent, calculate the monthly average based on a three-month period.
Step 3: Determine the Difference
After you've added up all the money you make and all the money you spend in a year, you can take away the total expenses from the total income to see how much money you have left over. This helps you understand how you're spending your money. If you have more money left over than you spent, that's good! But if you spent more money than you made, that's not good and you need to make changes to spend less money.
Step 4: Track and Adjust
Creating a budget is just the beginning. Keep track on your monthly income and expenses to ensure you stay on track. Finding the right balance may take time, but it's a vital step toward financial stability. Consider using our Budget Worksheet to evaluate your personal finance situation and make necessary adjustments.
Build an Emergency Fund:
After you make a plan for your money, it's really important to keep some of it saved for the future in case something unexpected happens. You should try to save enough money to pay for three to six months of your regular expenses. This will help keep you safe in case of an emergency. When you check on your money situation, make sure to put some money into your emergency fund. You can find ways to do this by saving some money from your income each month. To help you get started, you can use our Emergency Fund calculator
Manage Debt Load:
It's important to think about and manage your debt, like the money you owe for a house or a car. When you know how much you owe and make a plan to pay it back, you have more control over your money and your future. Paying back your debt is a big part of being financially healthy. By checking on your money every so often and following these steps, you can make smart choices, reach your goals, and have a better future. Let's work together to make it happen!
At Paywatch, we're committed to helping you take control of your finances and offering innovative solutions to support your financial well-being. Start your journey towards financial empowerment today! Learn more about budgeting and managing your finances on our website.