Getting your monthly salary is something that most of us usually look forward to whether it’s beginning of the month or end of the month. During our working hours, our monthly salary is something that we will always look forward to. Why? To some of us, it may be because of our hardwork & salary is a form of reward to us or it may be something we want to purchase. Whatever reason it is, when we get our salary we will definitely know or plan how to spend it. It can be from paying your monthly loan, spending on some nice dinner with your friends & family or rewarding yourself with a shopping spree. Ask yourself, how do you usually reward yourself or spend upon receiving your monthly salary?
Common advise that we usually get is to save before you spend your salary. Is that a normal practice that you currently have? If the answer is yes, how many percent do you usually keep? Or the answer is no, perhaps you may want to review your financial planning & start to save some money. This common questions will lead to more question for you to understand more about your financial planning. But first, is financial planning that important? I personally think so. You can read my previous post on Why Do You Need A Financial Planning to understand better on why you need a financial planning.
How Do You Spend Your Monthly Salary?
Take a piece of paper, start listing down your monthly expenses. You can start by listing down the fixed expenses first such as car loan, house loan & other fixed expenses. Take your total salary minus your monthly fixed expenses. How much do you have left? Next, look at the amount of money that you allocate for your savings or investment. If you have allocation ask yourself, is it enough? “Am I able save more?” If you don’t have any allocation on that, it’s okay. You can plan it now.
Now lets look at other expenses, how do you usually manage your daily expenses & food? Do you go for fancy dinner all the time? Do you spend too much money on your shopping & buy stuff you don’t need? Don’t feel guilty if you do so. We all kinda need to reward ourselves too :). The tips is not to overspend. Many people use their monthly salary to reward themselves differently. It can be in form of shopping, buying a new car or house, investing, eating fancy dinner & etc. Of course there is no right or wrong on how different individuals reward themselves but the way we manage or spend will define how our future will look like.
I’ve been driving my beat up Naza Suria for 11 years. Changing to a new car is something that I’ve been battling with myself for more than 2 years. Each time I have the idea to change a new car, I keep telling myself that my old car can still move. Driving a mini car with 183cm height is not easy. I am tempted to buy a new car but thinking about it as a extra liability kinda shuts down this idea. Buying cash is an option but I rather use that cash to invest & grow my money. It is a hard battle sometimes to choose between buy a new car or to save & invest but saving & invest always win :).
Imagine paying RM1,000 each month for a car for next 7 years. RM1,000 x 12 month x 7 years = RM84,000 excluding road tax, insurance & car maintenance. Or imagine you invest RM1,000 per month for 7 years with minimum 5% ROI per annum. RM1,000 x 5% per annum x 7 years = RM100,330.53. Which one would you rather?
Same thing goes to our shopping & fancy dinner too. It’s okay to enjoy the finer things in life sometimes but if you over do it, this will also affect your saving & investment amount. Imagine if you can save RM300 extra per month & you invest it for 10 years with 5% interest. You will get extra RM77,496.03.
I’m a strong believer of work life balance. Work hard & play smart. I believe that I should be rewarded for my hardwork but overspending is not an option for me. Rewarding myself with a good holiday, shopping for my favorite stuff & fancy dinner is something I do sometimes but it is always within my budget. Saving & investing are my main priorities & my main reward to myself & my future.
It’s also important to enjoy your life to the fullest. You can always spoil yourself or your family with something nice but it should be within your budget so you wont get yourself in financial trouble or debt. It’s good to dine in good food or spend something to make yourself feel good. Go for the holiday that you always wanted to. You work hard for it anyway but don’t forget to reward your future self by saving & investing too. End of the day, we are responsible for our financial & our future.