Do you always wonder where your salary went? Every 15th and 30th of the month you’d have a monologue with your wallet and ask, “Where’s my sweldo?” Yikes! You need to start a budgeting plan if this is you.
Just to answer, I did. Yes, uh-huh. I asked my wallet that question quite a lot a few years back.
Then I changed my habits and got to know simple and practical yet effective budgeting strategies to keep my income and finance in check. The first person who introduced me these five (5) budgeting basics was my ex-boyfriend, who’s now my darling and capable husband, Sev.
Mind you, these budgeting basics DID NOT magically change my wallet status overnight. It doesn’t work that way. Instead, budgeting will involve consistent and regular habits and discipline that you need to build over a period of time. You can develop your budgeting habits in a short span of time, or maybe a long span of time. As for me, it took me 1 year.
So let’s stop asking our wallets “Where’s My Sweldo?” and let’s start these Five Budgeting Basics for the Millennial Filipinos like me.
1. Create your expense tracker.
Yes. You read that right. You need to take down your expenses and track it on either your planner, notebook or even your smartphone app. You need to know where your money goes, so you’re not wondering where it went. Logical, right?
If you’re a creative who loves stationaries and notebooks like me, then get yourself a good notebook where you’ll write down your income less your expenses.
If you’re techy and great with Excel, like my husband, create your own Excel sheet with the formulas to auto-compute and populate your sums and differences with your income and expenses. You can also use mobile apps like Daily Budget whose design and simplicity I personally like.
Make sure that you track your expenses consistently per day and monitor it per week and per month. You’ll be amazed where you actually spend your money on.
2. Reduce and remove the expenses that you don’t really need.
Now that you have your expense tracker, you need to reduce or remove the spending you have on certain things you don’t need. Or else, you’ll end up young, dumb, broke, as the song says.
A good example is when I found out that I put so much money in spending bags, shoes, and clothes every payday. When I looked at my tracker, it showed that I used 50% of my income on shopping alone! No wonder I didn’t get to save nor invest my money a few years back. Not to mention I already have enough bags, shoes, and clothes. (The fashionista and shopaholic in me. Gosh!)
I reduced my shopping expense to just 10% of my income and the remaining 40% that I now have, I save half of it for my emergency funds and the other half for my investments and VUL policy.
3. Use the 10-20-70 Rule!
This is practical and effective budgeting strategy where you allocate percentages of your income to very specific goals and purpose.
- 10% of your income goes to Tithing. Since I am a follower of Christ, I follow this wholeheartedly for the Lord God is the source of my provision, wealth and the fact that everything is His. I am only giving back what He has entrusted to me as His steward.
- 20% of your income goes to your savings. This is also called your emergency fund. Build enough emergency fund for you and your family so that when rainy days come, you’ll have funds to use.
- 70% of your income now goes to your basic needs and lifestyle. This includes your everyday needs like food, transportation, rent, utilities, phone load and even shopping.
You should be the one to tell and dictate where your money goes. Not the other way around. This is your hard earned money we’re talking about, so might as well take control of your spending and take control of where you’ll put your money.
4. Invest in financial education and improve your skills in managing your own money
Read books, read blogs (just like this one), attend seminars, watch YouTube videos on finance and investments, and even follow a finance expert online like Fitz Villafuerte of Ready To Be Rich, and David Isaiah Angway of Win Long-Term Consultancy, and even reading online magazines that focused on wealth management like the Brighter Life by Sun Life Financial Philippines.
The best aid in budgeting and managing your finance has always been about education yourself. That’s what I did, and that’s what other experts did. An expert was once a beginner, and all beginner starts with learning.
5. Get a mentor and/or an accountability partner that will guide you in managing your finances.
This is a must-need for everyone because saving and keeping the right discipline with your finance is difficult when you’re just by yourself. No one will motivate you, nor encourage you, nor give you feedback to correct if what you’re doing is not effective or is wrong.
Plus, getting a mentor will give you added knowledge and skills not just in budgeting but also in investments and businesses.
Just start TODAY and be consistent in improving your finance.
Just like I said, simple and practical strategies. Anyone can do these simple steps, even you, my bright reader.
I know that not everyone is equipped with creating their own expense tracker and even creating their own financial plan like the 10-20-70 rule. If you’re one of them, it’s okay. There’s nothing to be embarrassed about. If you have the motivation and your BIG WHY is getting your finance straight then start with any of these 5 Budgeting Basics.
You can also get mentored by me and I’ll commit my time and energy by working with you on improving your financial situation. Just contact me and let’s set an appointment so we can get started on your Financial Stewardship & Mentorship Session.
Enjoy your sweldo!
Your Stewardship Mentor