I started getting serious about budgeting and managing my finances in general back in late 2015 when I was at university, an international student in Malaysia. And it was all thanks to personal finance blogs I happened to find on the internet.
Before that, I only knew whatever my parents had told me about money: save and spend it. Except I wasn’t good at saving money. Besides, as someone studying abroad and relying on my parents’ financial aid, I didn’t have the luxury to have extra money. All I received at the end of the month was just enough to cover my rent and living expenses.
However, I was tired of living in that ‘paycheck to paycheck’ lifestyle, thus, in 2016, I started to keep track of my money and laid out a budget. Somehow, I was determined to save some money on the side, even if it meant only saving RM50 a month.
(Approx. conversion rate: US$ 1 = RM4)
I ended up saving around RM4,000+ by the end of my studies.
In this blog post, I’m going to break down my budget planning in details at that time and how I pushed myself to save more than my original target.
Grab a snack and let’s dive into it.
1. Choosing your expenses tracker
The first thing I had to do to start budgeting was to find out a way to keep track of all the money that was coming in and getting out of my accounts. Excel didn’t really work for me, so at first, I opted for a super simple and straightforward mobile app: Monefy.
All you have to do is to set your accounts, so for me, it was ‘Cash’ and ‘Savings’, and every time I would spend money, I would record it in. I either did it on the go or every night, I would sit down with all my receipts (and memory) and note it all down. You can choose your expense’s category and then you’re all set!
At the end of every day, week or month, I could see how much and where I spent my money with just a quick glance.
I did that diligently from April to December 2016. It was just me and one app.
2. Building a habit of saving money
In parallel, I was determined to save a small portion of my monthly allowance, which I set at RM100/month. After paying rent, this was the first thing I had to do once I’d receive my stipend. It’s a common piece of advice in the personal finance world: pay yourself first.
Then, I could do whatever I wanted with whatever was left. It’s much easier to deduct all your necessary fixed expenses first and then use the rest of the money. It’ll guarantee that you always pay what you need to pay on a monthly basis. And this advice doesn’t only apply to savings, but to rent, utilities, etc.
This should become a mechanical habit: get money, pay rent, save RM100. Every. Single. Month. The more you do it, the easier it gets. Habits are formed by repetition.
3. Opening a second savings account
But where would that RM100 go every month? I didn’t want to put it in a jar and allow that much money (for students, especially) to be left unattended in my student room. However, I couldn’t just leave it in my savings account (international students only get one, the default one) or I would be sure to spend it since it’s there!
So I opened a second savings account. I figured, this time, I would compare all the savings accounts in Malaysia (and check my eligibility) and open the one with a higher interest rate. However, as an international student, I had to go to my school and fill a form and get my request to open a savings account approved. If you’re in a similar position, save yourself two trips to the bank (yes, I went to the bank twice because of my ignorance) and be informed by your school’s and student visa’s rules.
Fortunately, it worked! Thus, my default Maybank account would be for everyday use and my then new CIMB account would be used to keep all my savings. Once I had transferred the RM100 every month to the new savings account, I would just forget about it, put the ATM card away, and only use my default Maybank account.
By the way, my choice for the savings account also depended on how much I could afford to deposit initially. I was lucky enough that, as I was going back to Malaysia after a visit back home, my grandma gave me an Ang Pao of RM500, which I then used to kickstart my savings journey. Only took RM50 for immediate use; the rest went straight into the bank.
4. Setting savings goals
Often, you won’t be motivated to save money for long unless you have a goal: why are you saving money? What’s the point? You need to sit down and answer these questions before you end up spending all your money during your lowest days.
I used to list down my financial goals on my wall. As a personal finance enthusiast, my main goal was to build my emergency fund, which is 3-6 months of expenses saved for the worst. And of course, having an emergency fund for me meant that I could then save for retirement, then save to invest, and so on. Having an emergency fund also motivated me because I had aimed to stay and work in Malaysia, and I had to be prepared for the costs that would come with that.
However, what really motivated me (which I also wrote on the wall) was that I didn’t want to go back to that horrible feeling of not having enough money… like I used to feel when my account would be so close to 0!
Savings goals can be anything: from saving for a special trip to becoming an entrepreneur. The important thing is to know where you are going.
5. Stepping up your budgeting system
Saving money is a habit which I cultivated using the above steps in 2016. In 2017, I decided to step up a notch and add another layer to my budgeting system: as a complement to the Monefy app, I had started to document my budget with pen and paper! This was a really personal choice but I loved to have both a digital and a traditional way of recording my expenses and my ‘income’.
The thing with using a free money management app is there are certain limitations (and of course, I didn’t have the budget to get the premium version), such as being limited in the number of accounts and categories you can create. On the other hand, when you track everything by hand, you are free to build your own money management system.
Here is how my little budget notebook looked like. (And yes, I called it Mint, inspired by the same US personal finance app.)
First, at the start of 2017, I would write how much I owned in cash, in my default bank account and in my savings account to see where I was at (recorded in Malaysian Ringgit, but I wrote ‘$’ so it’d be fancier). Then, I wrote a savings goal for the year and a little reminder which said:
“Remember: continuous savings (system) is what counts the most (instead of a goal).”
Basically, building good habits are more important than just having a goal; if you’ve set a goal, you’re leading yourself to failure if you don’t instil good habits first.
At the start of every month (or whenever I would receive my allowance), I would update the amount of money I owned in each account. Sometimes, I would also update my goals or set specific budgets (e.g. a weekly food budget). That’s why I love notebooks; they allow for a lot of flexibility… since they’re just blank pages!
And every day, I would write every ringgit spent and earned, with a simple but cute tracking date-and-bullet-points design.
6. Colour coding as a reward system
As you can see, I have used two pens of different colours: blue and black. Black for expenses and blue for income. Soon, I realised that having a colour-coded system motivated me to increase my income. Simply because I wanted to have more blue lines than black ones (they do pop out more, right?). Maybe you can write your income in your favourite colour or use highlighers—anything goes!
Seriously, it was so satisfying to pick up my blue pen and write with it! I tell you, the human brain is so weird! Suddenly, that blue colour had become a significant motivator for me to increase my income by hustling more. In fact, I was working as a freelance writer from time to time and I even earned some money through a blogging affiliation with Grammarly.
7. Speaking of hustling… and not falling for lifestyle inflation
Building a budget system and a savings habit allowed me to manage my money more efficiently, and soon, I was in love with numbers. And I wanted to make them grow.
That’s the beautiful thing about starting a budget and tracking your expenses. Ever heard the saying: if you love money, money will love you back? No? As you start to take care of your money and pay attention to it (like a child!), you will find ways to improve it, and by improving it I mean, you will find ways to either cut useless expenses… or grow your earnings.
That’s how I was able to save that much money at university; it’s not simply by putting aside RM100 every month, but also taking freelance jobs and NOT USING the money I earned from my internships. My monthly expenses were about RM800 a month and every extra other ringgit was transferred to my savings account. I did not fall into the trap ‘lifestyle inflation’, in which you increase your expenses as your income increases.
In fact, I did the opposite: during my years of study, I would keep moving to cheaper and cheaper rooms so that I could make the most of my money and use it for purchases that mattered more to me… while making it easier for me to save money.
If you are new to budgeting, this last section isn’t necessary. I’m sorry if I overwhelmed anyone! The core of budgeting is to take control of your money and not let money control you instead. Knowing where your money goes and comes from gives you the power to make better decisions in your life and not feel like you’re falling behind. If you want to remember anything from this blog article it is this. So keep that in mind.
Ready to start your budget?
If you would like to ask me a question or if I have missed anything which you would like me to cover, leave a comment below!
D. K. Waye.
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