10 Tips on Positive Financial Habits

Photo courtesy of ~rock-violin.

Last week I went to a financial intelligence talk at the Performing Arts Theatre. I was invited by Mr. Robert Chiong, my dad's friend, a mutual fund agent. The talk was supposed to be held last month but it was cancelled due to the flood so the talk was postponed.

The speaker of the talk is Mr. Karthigesu, a former Bank Negara auditor, and now he's doing e-marketing business and coaching. He's also the Indian version of Robert Kiyosaki -  Rich Dad, Poor Dad.

Here's a list of 10 positive financial habits to take control of your personal finance:

1. Write down expenses. Get hold of your cash flow and most importantly your expenses. Record them daily either by recording them into a book or into a software such as Microsoft Money. Keep track on your spending, set your monthly budget and eliminate those necessaries.

I'm using Microsoft Money 2006 - yea, I know mine's outdated but it's the only software I had in my PC and it's FREE! - Pirated version of course.

Did you ever write down and record your cash flow? If you never done this before, start now and be an accountant of yourself.

2. Pay yourself first. This one of the most powerful strategy on building wealth. Aside from all your monthly budget on foods, groceries and bills, take 10% of your gross income and put them into the bank or invest them in mutual fund or stocks. You can also hide them under your bed.

Way back during my diploma studies in Miri, I live alone, every month my parents bank in money into my account and I have a habit of keeping 10% of the money into a box - I call it home bank. These money I save in the home bank are used for my wants (ie. Movie DVDs, audio CDs, PC games, movie tickets etc.) and also for emergency needs - you won't know when you need them.

Did you pay yourself yet?

3. Avoid credit card purchase. Unless you are willing to pay the balance on time or you will just build a prison of debt. Credit card is really convenience - no cash? No problem. You just need to do some acrobatic action moves... *swipes swipes*... and land a signature move on the paper. Well done, now you can bring your medal back home.

Most people realize its high annual interest rate but what they don't realize is that they spend more than what they earn - purchasing goods because they come begging. If you have a habit of impulsive "swipes" purchase, you may consider to freeze your cards into ice.

4. Wait for two weeks for MAJOR purchases. Currently I'm not using my desktop computer to do stuff, I'm using my mum's laptop. My desktop has gone hair-wired and I really (need) to have a new personal computer, either a desktop or a laptop, but of course I would prefer to have a desktop. But my dad told me to decides carefully (in one week) whether I really (want) a desktop or a laptop.

Why I want a desktop - graphic and gaming, bigger storage, bigger screen, cheaper, robust and it is easy to replace and upgrade the hardware.

Why I want a laptop - mobility, less cables and cords and less usage of space on my study desk.

Finally, I came out with a decision - laptop, because mobility is my highest priority. So I browsed the laptop flyers I took, looking for laptop that performs almost as powerful as a desktop PC and I found one that really fancy me - ACER Aspire 6935G.

After deciding my dad told me to wait for another two weeks for the major purchase. The reason behind this is:
1. If my desire is emotional, I would realize that I don't really need it.
2. Give time - to plan, save up and budget.
3. Price might probably drop

So if you are about to make a major purchase, wait... Set a waiting period before you buy to determine whether it's a needs or wants. This will definitely help you to save your money.

5. Read money related article. Read at least one article everyday to improve your financial intelligence because it will help you to be more responsible and manage your money effectively thus taking control of your finances.

To be financially literate, you need to have knowledge about money. You might consider buying magazines or  google on "financial and money related articles". Get Rich Slowly is my favourite personal finance blog.

6. Shop with a list. The most important thing to do before going out shopping is to make a list on what to buy and make sure you stick to it. This will help you to keep your grocery bill down.

Most of the time when we go out shopping we tend to buy stuff that we don't really need at the moment. With just only 3 items in mind before we step into the stores, we ended up with a packed full trolley at the counter.

Supermarkets are professionally designed to make you, the shopper, shop till you drop. Avoid making eye contact with those eye-catching sexy items that want you to put them in your trolley. They're professionally groomed to catch your eyes so that you fall into their trap.

Be a smart shopper and shop with a list.

7. Have a piggy bank. Make this your habit, put all your loose changes in a piggy bank or coin jar or coin box or whatever you name it. As I grew up I still practice this favourite old-fashioned saving method.

When I was a kid, I still remember that I have three "tiger" banks designated for savings and spending. One is for my bank savings and another two is for toys, comics, foods and other stuff.

As I grew up and become a teenager I only have a coin box for the loose change. But this time I keep track with its flow, how much did I put in and how much did I've spent, and recorded them in a small book. After years of devoted practice, I came up with the home banking idea - a better and well managed piggy bank system.

The idea of having a piggy bank is to promote saving habit - the basic of financial skill. Save your loose changes and put them into the piggy bank and watch the money rolls.

8. Eat in, not out. Dining out has became a very popular trend in our amazingly busy culture nowadays. We knew that dining outside are very costly but we're either just simply too busy or have no time or just lazy to cook.

Whatever your excuses are, dine out less and try to learn eating at home or bring lunch to work/school. Burn the stove or burn a hole in your pocket.

9. Avoid convenience or speciality stores. Avoid frequent visits to convenience stores such as 7-Eleven because most of their goods costs more expensive than those in the supermarket. This is because they are operating 24 hours a day.

Also avoid frequent visits to specialty stores such as those trendy coffee outlets like Coffee Bean and Starbucks which would be very costly for students like me. Instead try to hang out at local coffee shops or just make your own coffee at home and enjoy it.

10. Don't outsource. Save your money and do what you can do such as washing your car, maw the lawn and do your own laundry. These activities will also benefits you with good light exercises and workouts.

Since most weekends I'll be free in the evening. During these free time I'll spend some wet moments with my car. Although it might be a bit tiring but I found it rewarding because I can save up RM 9 for a car wash every week. Guess how much I can save up? RM 36 for a month and RM 432 a year!!

Instead of paying the carwash operator RM 9 why not wash the car yourself? Save up the money and put them into your piggy bank.

*Another additional tip from me
Quit Smoking. Everyone knows that smoking is a very bad habit and knows its ill-impact in our life. Imagine how much have you spent on those damn cigarettes, what if you save those amount of money in you bank, maybe now you may can even go travelling or maybe buy a bike with CASH!!

Stop damaging your health and your wealth. No buts, just quit smoking.