Budgeting

Before you go out and invest all your money in unit trusts, you need to remember that you still have that stack of unpaid bills sitting on your coffee table. 

Unless you are very rich, chances are that you will have to plan how to spend that salary of yours each month. This means budgeting for your food, lodging, loan payments, kids tuition fees, your 4D tickets and so on.

Only after you have fulfilled all these commitments would you know how much you can afford to invest each month. 

If the amount left over after paying off all your bills is too little, then you have to adjust your monthly budget accordingly so as to reach your investment goals. 

Making and sticking to a budget is the most realistic way of ensuring that your money gets spent in the way that you want it to. 

There are a variety of popular electronic tools, like Microsoft Money, that you can make use of to plan your budgets. Or you can simply use fundsupermart's Budget Calculator to help you plan.

Sticking to it

The hardest and most painful part about making a budget is sticking to that budget. If you think "I'll make up for this month's excess by spending a bit lesser next month", you're in trouble. You know that seldom is the extra amount spent this month made up the next month. Its just commonly forgotten and absorbed under "where did it all go?".

So how do you stick to your budget? Well, the most efficient and proven method is to set yourself Goals. With a pre-determined goal, you would be more motivated to sticking to your budget. There is now a consequence to not sticking to your budget -- you don't achieve your goals.

To find out more on setting your goals, proceed to our next class.