Not enough money to go around? Spending all your money before the end of the month? That’s because you’re not managing your money properly! If you continue to live your life in this way, even if you are paid RM10,000 a month, you will still not be able to make ends meet. Therefore, it is advisable to divide your salary into 3 portions when you receive it, that is, the 532 method.
The 532 method is to divide your salary into 50%, 30% and 20%: 50% for living expenses, 30% for savings and investments, and 20% for self-education and entertainment. Before you start implementing this income distribution method, you need to have an emergency reserve of 3 to 6 months, which you can use in case of emergency.
Then, the first thing you should do when you get your monthly salary is to put 30% of it into a bank account for savings and investment purposes. Each month you will see the money in your savings and investment account grow, which will give you more incentive to move forward.
Once you have saved 30% of your salary as a savings and investment account, you will need to spend 50% of your salary on living expenses such as rent, utilities, phone bills, etc. This 50% of your salary also covers your daily meals. If you can, you can choose to keep a record of every expense so that you know what you are spending your money on.
The remaining 20% of your salary is used for self-education and entertainment. You can use this 20% to buy books, watch movies, travel, etc.
Of course, you should always think twice about any purchases you make. Apple phones are great, but is an Apple phone what you really need? There are times when the cheap Android phones get laggy, but put up with it and it will pass.
Besides, the Toyota VIOS is beautiful, but is it really worth bleeding your wallet every month? The most basic purpose of a car is to get around, not to show off. Young people can start by choosing a cheaper domestic car to live with less each month and save their money to make it go up in value.
‘Income – Savings = Spending’, which means you should always save when you receive a paycheck, and then spend the rest of your paycheck to live within your means.
