Taking stock of your finances

Do you spend more than you earn? Before you start managing your money, take a closer look at your current cashflow.

You need a clear understanding of where your money is going to assess the health of your finances.

Keeping track of your income and expenses

Take these steps to have a better idea of where your money goes:

1. List down all the income sources

Make a note of:

• Your salary

• Interest earned from savings

• Income from investments such as dividends and coupon payments

2. Make a second list of your expenses

Write down:

• Your household and personal expenses

• Loan repayments (e.g. housing loans, car loans)

• Credit card bills

• Health and life insurance premiums

• Taxes etc.

3. Add up the expenses

How much of your income is left after your expenses? If your income is not enough to cover your expenses, examine your spending habits to see if you need to cut back.

Now that we have a good idea of what we spend our money on, let's take a look at how we can manage our money to meet our needs and goals.

Checklist

Are you spending within your means?

Use this checklist to take stock of your spending habits. Can you answer 'yes' to all of these? If so, your spending habits are healthy!

• I spend less than my income.

• I save at least 20% of my income every month.

• I pay my credit card bills and other debt obligations in full and on time every month.

• I review my budget regularly.