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As we all know, some people in the workforce don’t earn much, and some salaries haven’t been increasing much in the past years. It is inevitable to not spend at all. Most people would tend to relate a person with no life if he or she does not spend at all, that’s why we will somehow spend some of our salary to pamper ourselves a little. However on that note, we have seen many examples of people spending too much and end up having a hard time surviving till the end of month. *The question is how should we manage our personal finances?*

Here are four tips for workers in managing our own salary:

*1. Make sure you know how much you actually earn*
Even though it sounds obvious, it is an important point to note. All of us have the illusion that we actually know how much we earn. In fact we receive less than we actually do. 5% of your monthly salary is taken out   for the Mandatory deductions, which leave you only the remaining 95% for other commitments such as utility bills, telephone bills, rental etc.

*2. Separate your expenses into different categories*
Now you’ve worked out how much actual disposal income you have. Go on, start spending them! Before that, it is advisable to categorise your spending into different categories, like food, recreation and retail. This is vital if you want to avoid overspending. If you know where your money goes to, you can identify which category is eating up the most money, and you can adjust your budget accordingly, trimming down on those which you have spent too much.

*3. Start saving, now!*
Let’s say if you have a disposable salary of #150,000, never ever spend all of it. One of the most common but biggest mistakes is that people spend all of what they earn. Saving is important for a few reasons. Firstly, it is meant for the rainy days when you require the extra cash for emergency purposes. You will be thankful that you have sufficient amount to tide over the hard days and a sense of security that you are relying on your own finances. Next, it helps you with any long term or short term goals you have in mind – say going on a vacation or even a car.

From now on, start saving a fixed amount of your monthly salary (or whatever scheme your payroll is based upon). Make it a commitment. You will see your personal wealth building up eventually. Once you have a decent pool of savings you may consider doing some low risk investments to see it grow further.

*4. Never buy anything on loan (except for mortgage perhaps)*

Very simple: never buy anything you can’t afford.

When you enjoy your financial freedom amid a tight budget, remember one thing: money is a resource. Spending is necessary and its part and parcel of our daily lives, but never overdo it.  Always have a budget plan to save for the rainy days.

I hope this helps some of us.


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