1. List your debts
The first healthy kick-off is to know exactly how much you owe and to whom. Hey, better come clean now. Identify and list all house mortgages, outstanding vehicle loans, credit cards, fixtures/fittings/electrical purchased via installment schemes. If you are ignorant on the amount you owe, it is difficult to aspire to be a debt-free individual.

2. List your fixed and liquid assets
Tally all your fixed assets i.e. estimated market value of all your fixed assets e.g. houses, cars, etc. together with liquid assets i.e. cash in bank, investments, shares, stocks, etc. Do not include “expected” money like inheritance, tax refunds, interests or gains from investments. Expected money is not the money you have in hand.

3. Know your net worth
Subtract the figure of number one from the figure in number two (assets less liabilities). The net amount is your NET WORTH. If it’s positive, congratulations and keep up the good work to further increase it. If it’s negative, you’ve got problems and need to work on it immediately. Ultimately, it is not the number that matter but rather it serves as an indicator of where you are now, where you will be heading in the near future and what course of immediate actions to take.
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4. Know your income every month
It is surprising to know that many people do not know their net income that they actually bring home each month. Calculate your net income from the salary earned after deducting personal taxes, EPF and SOCSO (for employed individuals), insurances, obligations and any other deductions. This is the amount you have to work on every month to pay debts, spend and SAVE.

‍5. Identify your spending leaks
Be honest to yourself. We all have our own spending leaks. Identify it and surprisingly, a lot of times it may be unconscious. Some people must have their morning coffee at highly acclaimed coffee stations; some women must acquire the latest fashion wears; frequent change of hand phones; antique collectibles, etc. Now that you are aware of it, take conscious steps to control it.

‍6. Start to keep your receipts
This requires a little discipline. Start to store receipts in an envelope, labeled by each month. Keep receipts at least until the return or warranty period lapsed. Not having receipt could be costly at times. Another benefit is that it also serves as a proof to the bank should any dispute of a debit charge arises.

‍7. Balance your cheque book
Reconciling your bank statement with your cheque book every month should be habitual even if you are using online banking. Monitoring payments issued by your debtors and yourself are necessary to ensure a correct balance every month.

‍8. Start to track your spending
Get a note pad and write down your spending daily. This will give you an idea where your money is going. At the end of every month, you’ll have a clear idea what spending areas you need to control.

‍9. Create a personal budget
Once you know the net income and required payments every month, you can create a budget to better manage your finances, hence control spending and increase SAVINGS.

‍10. Start a Systematic Investment Plan
This is an alternative approach to conservative savings in the bank. A Systematic Investment Plan (SIP) is a disciplined approach to savings whether it is for retirement, children’s education, vacation or even an emergency fund. For example, you can invest a regular sum of money monthly in a fund of your choice over a period of time. The SIP operates the principle of cost averaging and maximizes the potential returns of your money. However, some risks are involved as the returns are usually higher than conservative savings.

My sincere hope is that you are on your way to become a better money manager of your own hard earned money or your loved ones.

Disclaimer : This finance article are provided for personal finance and investment information and are not to be construed as investment advise. Get the advice of a professional financial advisor to help direct your investment strategy. The views and opinions expressed in this article are the author’s own..