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Wednesday, August 29, 2012

3 Tips to Control Your Expense

There is old Indonesian saying "hemat pangkal kaya" that means thrift makes you rich, and I totally agree to this. Sometimes people who have much money love to buy unimportant stuff or something they don't really need actually. It's bad habit because it's not good for your finance health. For more advice you can read my post about why rich people get richer and poor people get poorer.

Here 3 tips you can do.
1. Differ necessary needs and passion needs
When we were a student at junior high school, we already learn some basics economy about need basic, they are primary need, secondary need, and tertiary need. Primary need is everything you need at present, for example food, cloth, and house. However, there is also stuff to classify as primary need, for example you have to buy tie to work at office, etc. Secondary need is completing need, for example motor cycle, computer, etc. It's lower level of primary need. Tertiary need is luxury need. Usually tertiary need is attached to rich people as prestigious status.

Well, let's back to our topic. You should differ which one your necessary need and which one your passion need. For example, you already have shoe, you have been wearing it for years. It looks old but still can be wore as well. In one day, you passed by a shoe store and you saw a cool shoe. You want to buy it, and that's what I called passion need. Would you but it? I suggest no! Why because you already have shoe and still wearable.

2. Manage your expense
It's about money management. You need to learn about money management because it helps you to manage your saving and spending wisely. You can learn basic money management in ManagingMyMoney.com. Set aside your money into these category: Primary saving 60%, Investment 20%, Expense 15%, and others 5%. Use expense 5% to buy you passion need and necessary need. Include your monthly salary.

3. Invest!
Investment is very important for your future. Set aside 20% of you money management. It's good habit for those cannot handle their expense. You can buy property, land, jewelry, gold, stock and foreign currency.