“What should I do if I am bad with money?”

It’s not an easy question to answer, even if it’s a relatively common one. Firstly, give yourself credit for recognising this shortcoming and for not using it as an excuse not to work on your finances. The reality is, not everyone has a head for numbers, and that’s fine.

Nevertheless, here are four things that could help the situation.

1. Income – savings = expenses

People are often taught a variation of the above: income – expenses = savings. So, for instance, if you earned RM5,000 a month, you would spend first and save whatever is left.

The problem with this is, it leaves you with irregular or inconsistent savings, or could lead you to overspend. If you have debts to pay, you might then have to fund the excess via borrowing. It’s not ideal.

Instead, here’s what you can do. When you get paid, deposit 20% into another account – one that is meant to build your financial future. This could be in the form of a fixed deposit, SSPN, EPF, loan, or amanah saham bumiputera account – whatever is available to you.

Next, pay off your credit card debt, if any, from your remaining 80%, as well as any essential loans. You are then free to live off the remaining amount.

2. Live within your means

This might be a cliché, but it’s one that will always be true and relevant.

Say you earn RM5,000 and put RM1,000 into one of the accounts mentioned above. What happens if your costs for the month end up being RM4,500? Should you take money back out to fund the shortfall?

It depends. If the RM500 is an emergency expense – medical fees, unexpected repairs or maintenance – then it’s totally understandable and acceptable to withdraw the required amount.

But if you are thinking about the latest gadget, getaway, gift, or entertainment indulgence, the answer is a firm no. You should fund these from the remaining RM4,000 – 80% of your income – or, even better, think about what is considered essential/immediate so you’ll be better at managing your finances.

Here is a trick to building wealth: it’s not so much about financial smarts – it’s all about having control over your spending. The act of making the effort to save consistently is powerful.

3. Make new friends

Some equate the act of saving to being a miser and servant to money. They believe one can only feel happy and accomplished if one has all the cash in the world to spend.

If your social circle consists of folks who only think this way, it’s time to change their mindset – or get some new friends.

As a working adult, it is necessary to have friends who are responsible in their financial lives; who might not necessarily be wealthy, but who know how to look after their spending and set themselves up for a secure, even prosperous, future.

Friends who aren’t necessarily rich, but have a rich mindset, will encourage and inspire you to achieve your own goals.

4. Set small goals with small rewards

This is about making your finances as enjoyable as possible. Instead of complicated formulas, set simple, easily obtainable goals and ascribe a reward should you achieve them.

For instance, if you save 20% of your income consistently over three months, you’ll reward yourself with a good meal at your favourite restaurant. The objective here is well defined, the action simple, the reward pleasurable.

Subsequently, you could set yourself a new goal or adjust the existing one to suit your objectives, as well as augment your reward based on what you are able to afford.

Continue to do so and make this a system, a habit, and a culture you can practise over the long term.

This article first appeared in KCLau.com. Ian Tai is a financial content writer, dividend investor, and author of many articles on finance featured on KCLau.com in Malaysia, and ‘Fifth Person’, ‘Value Invest Asia’ and ‘Small Cap Asia’ in Singapore.