Money Tricks

Everyone knows that money is never enough, no matter you make a few thousand, or five figure a month. The standard of living keep increasing, but the wage in Malaysia is not tracking the trend. I'm not going to moan on the failure of government to transform Malaysia into a high income country, but they should have done it. Inflation is at all time high, cost of food almost hike 30% since 3 years ago, blah blah blah.... we need to save for the rainy days and for your retirement ages (too early to think about it? Think again).

I just read an article of published in money.cnn.com, "Secret of extreme savers". I'm not an extremist, but as soon as I flip out my burnt pocket, I know that I need to do something, sooner rather than later. I want to share the points that being highlighted, hope the lucky reader could be benefited.

1. Avoid debt (50%)
   Save for the big ticket items such as new cars, house, and so. Pay in cash. Imagine an auto loan amount of RM50,000 with interest 3% and 5 years repayment plan. If you pay in cash, you could save up to RM7,500. (That's the magic of mathematics)
   
2. Delay gratification (35%)
   Hold yourself for 3 - 6 months for anything than cost you more than certain amount, which make some financial sense to you. I did it for the smartphones and DSLR. I'm cut off my wishlist, but still happy with my ancient Nokia phone and Alpha 200. FYI, one HTC phone is around RM1,500 and Sony A55 or Canon D60 is around RM4,000. (I tell myself to wait and wait)
   
   
3. Create multiple stream of income (20-25%)
   Have taken up tuition classes, added some income and hopefully I can stabilize everything by next year, optimize the schedule, and make more time for myself for other things. I realize that I have been spending money like nobody business in 2011, for the new house, wedding, honeymoon, etc. Maybe I should conduct one-to-one, or one-to-two tuition?
   
   
4. Live below your means (60%)
   That is not happening to me. Our appetite is big enough to swallow an elephant. The semi-D, the renovation, furniture, electrical appliances, etc, I guess most of them are top brands. Sometimes, it is difficult to balance the brand, price and quality. I have to sit with my wife to have a discussion about this one, because most of the time is me that request to pay more for the 'quality'.
   
5. Cut down on every day expenses (40%)
   Cut unnecessary spending such as beverages (bring your own tumbler), less dining out (taking meal at home), join reputable and well-organized race only (not all chapalang ones), consolidate travels (cut the back and forth trips). I'm thinking to plant some vege at my new home, sounds interesting.
   
6. Track your spending (30%)
   Yeah, my wife and I are doing this, but we did not make use of the record. Maybe we should spend some time together to review the spending, or to set a target saving amount for every month. I told my wife that we need to start budgeting already. Try to jot down everything, you'll be amazed how much you've spent on food, dining out, snacks, and some unnecessary items. (Does that inlcude Coach bags as well?)
   
7. Live on one salary while bringing in two (38%)
   Yeah, my wife is very much looking forward to stay at home, running the house work and taking care of the children when the time comes. Therefore, I think it is a great time for us to actually live on one's salary while saving the other portion. Spend the small chunk and save the big chunk, how good if we can save RM3,000 per month. That would be RM36,000 a year. Should be able to get a 5-6 year old Japanese car :P
   
8. Automate savings (35%)
   I have a couple of standing orders that keep sucking money from my deposit account. I did not really realize that but I tend to make it so. That's force saving. If I set aside RM200-300 per month for this purpose, I could end up saving RM2,400 - RM3,600 a year. Not much, but still it is money. People do it at RM500 - RM1,000 per month, perhaps I should try that too.

Maybe one or the combination of techniques can help you to save money. It is not an easy task, it takes effort and determination to be a prudent saver and a cautious consumer. Take up the responsibility and ownership of your own money. Multiply it, you be surprised how powerful money is.


Good luck.

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