10 Bad Habits to Avoid and Reduce Your Expenses

Do you have these bad habits which are not only a drain of your financial resources but are also detrimental to your good health?

1. Smoking: A packet of cigarettes costs about RM10/=. If you smoke a pack a day it means you will be burning away RM3, 650/= a year. At the same time, you are also ruining your health. When the amount is invested you will be richer by many times more than the amount you have burnt and you are also in good health to enjoy your wealth later.

2. Drinking: It is more than a waste of money because the habit is always related to drunk driving and in many cases they are fatal. 

3. Use the car more than necessary: Don’t just think of your car when you think of transportation. Your two legs are an excellent means of going places easily and conveniently. Why waste petrol and car maintenance when you can walk?

4. Junk food: It is foolish to use your hard-earned money to buy something which does not give you nutritional value and it can be easily turned into a bad habit to consume regularly and sabotage your health and well-being

5. Soft drink: Why waste money to get a soft drink when water is freely available at home? Excessive consumption of sugary drink will bring you critical illnesses and long-term sufferings 

6. Gambling: Gambling leads to debt and bankruptcy. It is the worst habit you can ever have in life.

7. Surfing the Net: Don’t waste electricity and the cost of connection when you surf the Net aimlessly. It is a waste of time and energy when you can be productive in other ways.

8. Inactive: When you don’t move your body often you are more likely to succumb to illnesses and as a result incurring unnecessary medical expenses. 

9. Watching TV: It is yet another bad habit that makes you lazy besides taking away your money to pay for the monthly subscription and not to mention paying more for electricity. The longer you watch TV the lazier you will be. In the end, nothing gets done. When you are connected to the TV set you are disconnected from your family members.

10. Disorganized: Don’t store things such as grocery items at home haphazardly. When you can’t locate an item you waste money and time to get one outside. By the time an item is discovered, it has long passed its useful life and you have to throw it away. Not planning your trip is another way to waste precious time and petrol 


By avoiding these bad habits you will be richer by the amount of money that you can save and even more.

Source: 10 Bad Habits to Avoid and Reduce Your Expenses

Smart Shopping Reduces Expenses

Whoever said money can't buy happiness simply didn't know where to go shopping.  ~ Bo Derek

Beware of little expenses; a small leak will sink a great ship ~ Benjamin Franklin

Grocery shopping is fun in the cool comfort of the mall. You can make shopping more pleasurable by adopting the following strategies to get what you want and worth every cent of your money.    

1. Shopping list: The most effective way to go shopping is to get a list ready. The key is to stick to the list and not buying anything else. The other advantage is to get what you need in one go and avoid going back to the mall again and again for items you have forgotten to purchase. 

2. House brand: Go for house brand instead of the popular brand for common items such as toilet rolls and tissues. House brand items are cheaper and they are just as good if not better.

3. Discount accord to specific credit card holders: Shop at those malls which offer credit cardholders with discount.  You don’t get a discount when you shop with cash. The most important thing is to be disciplined and not to shop for something you don’t need just because you can charge it to your card.

4. Promotional items: Watch out for items you need with special offers. Check out items you can purchase with further purchase at a discount.

5. Coupons: Take advantage of coupons to cut costs for items listed on your shopping list.  Don’t use a coupon to buy something you don’t need just because it is a bargain.

6. Prepare a list in advance: In the course of a week jot down items to be purchased so that you will remember to get them when you go shopping.

7. Do it once a week: It is not a good thing to go shopping often. For me, I do it once a week. The whole idea is to avoid buying things we don’t need and also to avoid wasting petrol and time going shopping.        

8. Avoid junk food: The right way is to shop for food with nutritional values and things that offer durability. Avoid processed or preserved food. Don’t buy sugary beverages or fried items.    

      A bargain ain't a bargain unless it's something you need.  ~Sidney Carroll

 He who will not economize will have to agonize. ~ Confucius

Source: Effective Shopping Reduces Expenses

Credit Cards and Young People

According to a report from Credit Counseling and Debt Management Agency of Bank Negara Malaysia or The Central Bank of Malaysia, among the cardholders below the age of 30, 50% of them are unable to settle their credit card debt and they have to declare bankruptcy. In the survey, among the delinquent cardholders, 22% cannot properly manage their personal finance and another 27% cannot control the use of their credit cards.


What can young people, especially fresh graduates, do to manage their personal finance? Here are some useful tips


• Pay in cash: You will not get into debt when you pay in cash for all your purchases. Your spending is limited by your financial resources.

• Use a prepaid card or debit card issued by Visa or MasterCard: For a start young people should use a prepaid card (it is preloaded with a sum of money and you use it as a credit card until the amount stored in the card is exhausted). You can also use a debit card and it is linked to your bank account. Like a credit card, you can charge your purchases to your card up to the maximum amount of your available fund in your bank account. You will gain credit card experience this way.

• Credit card: When you are using a credit card for the first time, remember to treat it like cash. For each Ringgit, you charge to the card back it up with cash for the same amount to meet payment at the end of the month. Do not opt for the minimum payment. You will not only incur interest but at the same time, it is the route leading to unmanageable debt and eventually bankruptcy. Use the card for convenience only. Don’t buy in credit to attract interest and debt.

• Impulsive spending: Do not show off your credit card by entertaining your friends lavishly with it. Do not buy what you want but use the card to spend according to your monthly budget. In this way, you stay out of debt. Getting into debt is easy but getting out of it is very difficult. Spend only your own money but not the bank’s money. Nothing is free in this world.


You can keep your credit cards but you have to spend within your monthly earnings and treat your cards like cash in your pocket or in your bank accounts. Settle the credit card bills promptly and fully to build your creditworthiness.

Source: Credit Cards and Young People

7 Things to Do Before You Retire

Preparation for old age should begin not later than one's teens. A life which is empty of purpose until 65 will not suddenly become filled on retirement. ~ Arthur E. Morgan

It is reported that the average lifespan of Malaysian is about 75 years. When you retire at age 55 there are still 20 years ahead of you to live. What should you do before you retire so that you are financially independent during your golden years?

1. Settle all debts: Settle all your housing loan and car loan and most important of all, your outstanding credit card debts. To be debt-free is the way to live a carefree life for senior citizens. 

2. Reduce investment risk: Assess your portfolio and rearrange to reduce risks. As a simple example, when previously your investment consists of 60% stocks and shares and 40% fixed income perhaps you should now change to 40% shares and 60% fixed income.

3. Stick to a budget: When you retire, there will be no regular sources of employment income except your own savings and investment. It is important to stick to your budget so that the fund can last you as long as possible.

4. Emergency fund: It is needed more than ever before, especially to cover unexpected emergency medical treatment and related expenses. The amount should be readily available. 

5. Cash flow: Determine the amount you require every month and ensure that there will be steady streams of cash to meet your monthly needs. 

6. Mental attitude: When you retire from work, you do not retire from life. The key is to live a meaningful life when you stop working. Continue to stimulate your mind by learning new things that you are interested in. Blogging is an excellent way to fill your time. You learn about blogging and write articles on your blog every day.

Don't act your age [in retirement]. Act like the inner young person you have always been. ~ J. A. West

7. Look after your health: When you need insurance the most at old age, insurers stop covering you or if they do, it is going to cost you a bomb. The key is to look after your health to avoid critical illnesses and falls.

After you're older, two things are possibly more important than any others: health and money. ~ Helen Gurley Brown

Are you ready to enjoy your retirement?

Source: 7 Things to Do Before You Retire

10 Effective Ways to Save Money

The time to save is now. When a dog gets a bone, he doesn't go out and make a down payment on a bigger bone. He buries the one he's got. ~Will Rogers

What are smart and effective ways to save money? I can think of the following:

1. Savings as an “expense” item in your budget: In your monthly budget treat savings as part of your total expenses so that you can leave it to your savings account. If you try to save whatever is left over, there may be nothing left. 

2. Balance from your monthly expenses: In addition to the monthly allocation for savings, you can save the difference between what you have budgeted (more) for spending and what you have actually spent (less). 

3. Your annual bonus: Do you spend the full amount to buy what you want or do you save part of it? A bonus is not part of your usual income and the amount is not allocated to cover your monthly expenses, save it. 

4. Your annual increment: What do you do with your annual increment? Do you spend more because you have more to spend? Why not save part of it? 

5. Tax refund: Do you get a tax refund from your annual returns? This is an extra amount to save.

6. Pay off debts: Debt attracts interest and interest attracts more interest and you are paying interest for nothing. To keep your hard-earned money, settle all your debts as soon as possible. 

7. Make extra income the easy way: One positive way to save extra money is to earn more by working part-time. What are your talents and what are you good at? Can you provide useful services and charge a fee? 

8. Curb your wants: If you can discipline yourself, you can control overspending and avoid falling into the debt trap, you will save more money. 

9. Trim your expenses: Look closely into your monthly spending and do away with unnecessary items such as entertainment.

10. Keep fit and avoid bad habits: Physical fitness is more than just for the sake of health. It is insurance against critical illnesses. Just imagine the huge amount you can save on medical expenses just by staying fit and healthy. The other issue which is relating to your health is smoking and drinking. By avoiding these bad habits you are not only saving your health but you control your purse strings as well. 

Good health is not something we can buy. However, it can be an extremely valuable savings account. ~Anne Wilson Schaef

Make all you can, save all you can, give all you can. ~John Wesley

Source: 10 Effective Ways to Save Money

Do You Know Your Bank Balance?

Have you ever issued bounced checks? Do you know your available bank balance before you issue a check? Do you maintain a daily record of your banking transactions? The only way to have a trouble-free relationship with your bank is to keep your bank accounts in order. The only way to do it is to keep your own record and reconcile it with the monthly bank statements. Here are the things that you can do so that you are in control

of your own bank accounts:

1.       Keep a simple record: You can keep track of your banking transactions on a piece of paper or you can use Excel to do a better job. From your opening bank balance just deduct checks issued and add money deposited so that you will know the balance in your account:

Your own record

Date                  Transaction                         Amount               Balance

01/05/2011     Opening balance              1500.00                 1500.00

03/05/2011     Check issued No. 1001    900.00x                  600.00

10/05/2011    Check deposited                500.00 x               1100.00

20/05/2011     Check issued No. 1002    700.00 x                 400.00

31/05/2011     Check issued No. 1003    200.00                   200.00

31/05/2011     Check deposited              1000.00                1200.00                                

2.       When you receive the bank statement: You knock off those similar items in the bank statement and your own records such as checks issued and money deposited. There will be outstanding items appearing in the bank statement as well as your own record. Now you should take up those items in the bank statement that you have not taken up in your own records such as interest, standing orders, and other bank charges. These charges are to be deducted from the balance of your own record.  The final figure is the closing balance of your bank account

. However, it is not the amount available in your bank that you can use. You have to do a reconciliation with the bank statement to determine the available fund.        

Bank statement (It is assumed that your opening balance and the bank’s opening balance are the same)

Date                  Transaction                         Amount               Balance

01/05/2011     Opening balance                    1500.00                +1500.00

05/05/2011     Check No. 1001                     900.00x                 +600.00

12/05/2011     Check Deposit                        500.00x                +1100.00

22/05/2011     Check No. 1002                     700.00x                  +400.00

31/05/2011     Bank charges                            50.00x                  +350.00            

Your own record updated

31/05/2011     Bank charges                           50.00x             1150.00

                            -

3.       The process of reconciliation: Remember there are some items in your own record which are not reflected in the bank statement, such as checks issued and money deposited not taken by your bank. You should now deducted those unpresented checks and add money deposited but not yet taken up by the bank from the bank balance to arrive at the reconciled balance. This figure should be the same as your own closing balance.

Bank Reconciliation Statement as at 31/05/2011

Balance as per bank statement                                                 350.00

Add:  Amount deposited but not taken up by bank                 1000.00

 Less: Amount withdrew but not yet taken up by bank            200.00

Balance as per your own record                                            1150.00

You can do reconciliation at any time because you can go online to check your bank accounts.  But what is the available fund that you can utilize?   

             

4.       What is your available balance: The fund that you can safely mobilize is the amount stated in the bank statement less all unpresented checks issued by you. According to my simple example, you can now safely issue checks up to   950.00 without bouncing a single check. 

Reconciled Balance                                                       1150.00

Less: Amount withdrew but not yet taken up                  200.00

Available fund                                                                 950.00

Do you think this article is helpful to manage your bank accounts? 

Source: Do You Know Your Bank Balance?

Effective Ways to Avoid Credit Card Debt

The most important thing about credit cards is your mindset. When you have a credit card, what is in your mind? Are you going to entertain yourself and your friends with the card or to buy things you want on credit? Stop thinking about the word credit and treat your credit card like cash. Take advantage of your credit card for the following purposes only:

The objective of holding a credit card

·         Convenience: Avoid carrying a lot of cash

·         Get reward points: To redeem for things you like

·         Savings: Get cash rebates and pay less

·         Simplify your life: Let credit card issuers settle your monthly bills

·         Smart buying: Purchase big-ticket items in installments without incurring interest

·         Online transactions: You need a credit card to transact online.

The wise ways to avoid credit card debt

The keyword is discipline: You have to pay your credit card bill every month fully and promptly. This is to avoid charges on late payment and incur high-interest charges by paying just the minimum amount. Interest is compounded and snowballed on the outstanding amount. It can easily go beyond your means to pay and you can end up bankrupt.

Treat your credit card like cash: It means you set aside the same amount every time you charge something to your card. At the end of each month, the amount you set aside is earmarked for credit card payment.

Self-control: Control your urge to want more things in life. Stop reading advertisements that are luring you just to buy, buy, and buy.

Say no to credit: Getting into credit card debt is easy, but getting out of it is difficult. Avoiding credit and getting cash advance from your credit card is the best thing you can do for yourself.

It is a very simple idea: no credit, no debt, and no money problems.

Source: Effective Ways to Avoid Credit Card Debt