Entry 38
Steps to manage your money

1. Spend on necessities, and only splurge occasionally.

2. Don’t spend what you don’t have. Try not to own a credit card. It’s not healthy to be tied to debt frequently, especially when you cannot afford to pay the credit card bill in full every month and the interest charges are hefty. I’ve heard stories about airline stewardesses spending outside their means and the banks have to keep chasing them to pay up. You don’t want that, do you?

3. Save a percentage of your salary. For me, 25% is an ideal percentage for saving. The more savings the better, but there’s no need to be a scrooge.

4. I know some who coincidentally recommend me the 50% cash-30% bonds-20% stocks formula for managing your savings. They made this up by twisting the widely known 50-30-20 budgeting ‘rule’. You can grow your wealth by investing 50% of your savings on securities and the remaining cash keeps your bank account liquid simultaneously. This also brings me to my next point.

5. It is alright to invest, as long as you know your risk appetites and limits. The above formula may not resonate with everyone but it serves as a general guide. Research and know the risks of every investment you make and don’t trust advisors or bankers fully. If you are a very careful investor, you will sow the seeds of rewards and enjoy growth in wealth. I bought a hybrid investment-linked product when I was 16 and it helps me understand the importance of money. Only when you save, you have extra money for investing or for emergencies. Backup cash gives everyone peace of mind.

To conclude, save as much as you can and invest carefully to increase your wealth.