How to Do Monthly Budget

It's always important to have a monthly budget to keep control of your finance,
Every successful budget need to be automated.

Here are a few tips to have a successful budget:

1. Pay yourself first. Always allocate a fix amount of saving before paying other expenses. Always remember, expenses is to pay others. Saving is to pay yourself first. This is the most important. The savings is guaranteed once you do this.

Wrong Formula: Income - Expenses = Saving
Correct Formula: Income - Saving = Expenses

If you use the wrong formula, you will never know how much you are saving each month, because we tend to spend a lot. Discipline is one of the hardest thing to control. By saving 20% of your income first, you now gain better control over your finance, automatically.

2. Make the saving automatic. Use Standing Instruction for your bank account. Use a separate account to keep your savings. (Savings account and account for saving is different thing). Recommend to perform Standing Instruction a day after you get your income. In this way, you have a created a system for yourself.

Example:

1st of Jan - Income deposited into your bank Account (Account A).
2nd Jan - Perform Standing Instruction to another savings account (Account B).

Do not touch Account B unless it is really necessary.

Spend only the leftover in Account A.

Standing Instruction Example for local banks:
Maybank
CIMB

Many type of payment are suitable to use Standing Instruction:
House Loan / Mortgage
Car Loan / Hire Purchase
Insurance
Phone Bill
Internet Bill
Parent's Allowance
Charity

Standing Instruction can be used for monthly or yearly payment. Check with your respective banks for the features.

3. Record all the (major and important) transactions. Create an spreadsheet to keep record of your income, saving and expenses. It really makes a different when you can see on paper how you are using your money. Another good thing is that it gives you more confidence as you see your saving account grows. It also help you to evaluate how you are spending your money.

4. Don't lose money. It's important that you don't overspend or being penalized for late payment charges. Make sure you pay on time for credit card, house loan, car loan etc. Every ringgit saved makes a different. Losing extra money will increase your expenses unnecessarily.

For house loan and car loan payment, since it's a fix amount every month, just use Standing Instruction.
For credit card, as much as possible, do not use it, unless you are really sure you can handle it.

5. Delay gratification. One of the problem we have is that we always shop by impulse. It is really important that we do not be easily tempted to spend on unnecessary things. Always focus on the needs, and not just the wants. Probably being a minimalist is the best solution. Don't spend on things, spend on people. The immaterial is sometimes more valuable than the materials.

Here are some important items that you may need to include in your budget:

Income
Gross Income - EPF - SOSCO = Nett Income

Saving
20% to 30% of Gross Income

Expenses
Tithe / Charity
Parent's Allowance
Utilities
All Loans
Transport Related
Entertainment
Food
Clothing
Room Rental
Toiletries
Insurance
Misc


Sample of Good Budget Template:
https://www.akpk.org.my/tools
https://www.smartsheet.com/top-excel-budget-templates

Happy budgeting.