How to Get Your Personal Finances Sorted
I’ll admit upfront — this may not be the most exciting blog post. But it’s one of the most important steps anyone can take when it comes to money. Before you think about investing, saving for retirement, or buying assets, you need to get your financial basics in order.
It doesn’t matter whether you’ve been investing for years or you’re completely new to this. Going through this exercise will benefit you massively. Some of you may already be doing it, but many aren’t. Hopefully, by the end of this, you’ll start today.
For myself, I’ve been preparing a personal Net Worth Statement every month. It may sound nerdy, but it has kept me on track with my goals. It also highlights when I’ve been careless, overconfident, or made poor decisions — like the time I bought a car worth three times the price of the house I’d just purchased. Lesson learned!
Net Worth Statement
Your financial life can be summarised into four key areas:
Income
Expenses
Assets
Liabilities
This is one of the oldest and most effective methods in personal finance. The idea is simple: If you sold everything and paid off all your debts today, what would you have left? And month by month, are you living within your means or falling behind?
If either number is negative, you’ve got work to do.
1. Income – What You Earn
List everything that brings in money each month:
Salary from your job
Side income or business income
Interest on savings
Dividends from investments
Rental income
Child support or allowances
Anything that puts cash in your pocket belongs here.
2. Expenses – What You Spend
This is where most people underestimate. Track exactly how much you spend each month, including:
Fixed commitments (loan repayments, bills, subscriptions)
Variable expenses (food, petrol, entertainment)
Annual or irregular costs (insurance, car maintenance, holidays)
Discretionary spending (clothes, gadgets, etc.)
Even small daily habits like coffee or snacks add up quickly.
A simple way to get accurate numbers is to track your spending for at least one month. Better yet, three months. You can also use apps that link directly to your bank accounts and cards to automatically track and categorise your spending. If you prefer, an Excel sheet works just fine.
3. Assets – What You Own
Assets are things you own that have real value and could be sold. Examples include:
Your home (personal residence)
Investment properties
Shares or unit trusts
Bonds or fixed deposits
Cash savings
Cars, jewellery, watches (realistic resale value)
The most powerful assets are income-producing ones — assets that generate cash flow.
4. Liabilities – What You Owe
These are your debts and financial obligations:
Mortgages
Car loans
Personal loans
Credit cards
PTPTN or other education loans
Money borrowed from friends or family
The goal is for your assets to be worth more than your liabilities. If not, your net worth is negative. That’s not the end of the world, but it means you’ll need a strategy to dig yourself out.
Putting It All Together
Once you know your net worth, you have a snapshot of your financial health. From there, you can identify what needs fixing. Let’s take a worst-case scenario:
Low income
High expenses
Few or no assets
Lots of liabilities
Here’s the step-by-step approach:
Reduce Expenses – cut unnecessary spending. Be strict for now; treats can wait.
Increase Income – look for higher-paying opportunities, side hustles, or negotiate for a raise.
Clear Liabilities – focus on high-interest debts (like credit cards) first. Every ringgit saved on interest is money earned.
Build Assets – once debts are under control, start saving and investing. Begin with cash savings, then move into shares, unit trusts, or property.
The ultimate aim is to grow enough assets that generate passive income to cover your expenses. That’s financial freedom — when you no longer need to work just to survive.
Conclusion
Sorting out your finances isn’t glamorous, but it’s essential. The process doesn’t take long — you can complete a basic net worth statement in about 10 minutes. Do it monthly, quarterly, or at least once a year.
The key takeaway: track your progress. Your goal is to see your net worth increase over time. And if it dips, you’ll know exactly why — and whether that money was spent wisely or wasted.
Start simple. Use a spreadsheet, or an app if you prefer automation. The important part is to begin. Over time, this small habit will give you clarity, discipline, and the confidence to build a secure financial future.