Can’t wait to receive the next pay cheque as your last one has run out after you settle all your bills and other expenses? And the cycle always repeats? Well, the alarm has rung! Time to plan and manage your finances properly before you fall into the debt trap!

Here are several practical baby steps to help you manage your finances in a more organized manner:

PLAN

Plan your budget two to three months in advance and make sure it works around your monthly income. Do not forget to include any new commitments such as any vacations, educations, buying a new house, etc into your plan. Then, adjust your future commitments accordingly. If you are married, communicate your finance management plan with your spouse to gain understanding and cooperation.

LIST

Every month, list down everything you will need to pay for until the next pay cheque, e.g. utilities, car installments, house installments, petrol, food, groceries, insurance, etc. Estimate how much each of them will cost and deduct them from your monthly income. Ideally, you should get a positive value.

REDUCE

If you get a negative value in Step 2, it means you are living beyond your means. In order to reduce your expenses, you need to first eliminate all unnecessary “habitual purchases” such as snacks, coke from vending machines. Then, work on reducing your expenses on utilities. Simple steps like using energy-saving light bulbs, turning off lights and switches when you are not around, turning off the tap water when you are brushing your teeth can actually save you some bucks if done consistently.

SAVE

If possible, assign 20 – 30% of your pay cheque as your savings every month. Make sure this money are non-accessible to you. Keep them in the bank. Use these regular savings to build up an emergency fund. You should also get a good insurance coverage if you don’t have one.

INVEST

What better way to grow your income if you don’t invest your money. Start looking for investment opportunity once your emergency fund has grown sufficiently big to last you 5 – 6 months without any income.

MAINTAIN

Follow Step 1 – 5 consistently and you are well on the right track to becoming an efficient manager of your own finance. Give yourself a pat on your back and keep up the good work!

It is tough at the beginning to organize our messed up expenses but once you have kick-started the process and be committed to it, it will be as easy as snapping your fingertips!