There are 2 types of saving plan people commonly used to save their income. First is to set aside an amount of money every month to transfer into a saving account. This is called forced saving. Second is to spend whatever they have, any remaining left will be transferred into saving account. The latter type of saving plan is very dangerous as you are not in control of your expenses. You only save when there is any remaining. The first type of saving plan is a better option, as you know how much you will be able to save in a year. Any extra savings from the planned expenses can also goes into the saving account.
To find out how much you are able to set aside for saving every month, you need to record down what are the "fixed expenses" first. Example of fixed expenses are handphone bills, insurance premium, parent allowance etc. Next is to record down the daily expenses which are variable day to day. You can make use of Microsoft Excel to keep track of your monthly expenses or apps that can be downloaded from your handphone which I found most people are using it to keep track of their expenses. I know it is very tough to keep track especially you have to know how much you have in your wallet and also remember what you had spent on and how much. It is not easy but you still have to do it.
In summary, you need to do this if you planned to retire or to achieve financial independence. Without a saving plan, you will not be in control of your finances. Needless to say about retirement or even financial independence. I had been diligently keeping track of my monthly expenses since 2006, a good 10 years and many years to go until the day I achieve financial independence. So how about you? Have you start keeping track of your monthly expenses?
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