As you well know, I don’t like budgets. Just thinking about them makes me wince. I have tried, but really, I cannot pretend that I already have the hang of it. Just can’t.
Before you think that I spend irresponsibly because I have junked the traditional concept of budgeting, let me tell you what works for me. I simply figure out how much I should save and invest, then spend the rest. That’s it. I enjoy the moolah. Let the money chips fall where they may. I can smile while forking over money at the restaurant because I know the purse strings keeping the savings fund are tightly shut.
That’s just me, though. I understand and absolutely admire who religiously jot down their expenses and add the figures up in nice little columns. As I always said, financial planning requires a customized approach. If that is the approach that works, then it’s the best one.
Today, however, I found a great little tip that will enhance anybody’s approach. This is like the Post-it, the Velcro, and the Zip-lock of budgeting. The clever and simple tip that would give our financial plans the punch that they need.
Our Budget 101 article today over at the Personal Finance section of INQUIRER.net says:
List down must-save-for expenses that do not occur monthly. Examples of this are annual income taxes, Christmas gifts, tuition fees. Break these down to a cost per month and factor this into the budget you will make.
Do this with me now. Get your pen and paper and put your thinking caps on. What are the expenses, especially huge ones (say, more than P5,000 or whatever), that occur regularly every year. Make this a sweeping exercise. Take stock of your life and imagine yourself in situations in the past where you have struggled with payments.
Hmm.. Tuition fees are probably the first on the list for parents. If you’re still paying for insurance, then add that. Mortgage payments, annual income taxes and property taxes, car tune-ups and maintenance, and vacations. Make sure you add everything. Oh, and don’t forget Christmas and birthday gifts and celebrations. Those little trinkets we give away add up to a big budget.
Done? Take your time. You don’t have to rush (so don’t do this in the office by the way hehe). Give yourself time to think. Better yet, do this with your partner and your kids!
If the list is complete, divide it by 12. Then add the amount to your savings plan.
See what this is making us do? It’s allowing us to plan ahead. It’s helping us to stop living from paycheck to paycheck. This will keep us a step ahead of our money, and not a slimy, slippery step behind.
Let me know how it goes J. Let’s share what works and doesn’t work. Good luck!
October 7th, 2007 at 8:31 am
I got my first budget tip from a Church sermon. The tip involved using separate envelopes for each budget item and putting the exact amount in the envelopes every payday. We listed things down only once a year when we did our envelopes. We did not have to track our expenses (i.e. if the money ran out in the envelope then we stopped spending). We paid our bills on time straight from the envelopes. We knew exactly how much we were saving (envelope#1, as I recall it, we deposited our savings in the bank every month).
This was great for us back then who was just starting and lives from paycheck to paycheck.
I still remember the biggest downside to this….where to put all those coins.
August 3rd, 2007 at 4:30 pm
just asking, yah very much you can save IF you put your mind into it. start a little for capital growth for a certain period.once you have that go into a venture where your strenghts will shine.where are you good at. invest on those. dont worry if you do not know everything you can ask help from others. think big, just go.
August 3rd, 2007 at 4:01 pm
just asking, Efren Cruz once told me of a group of minimum-wage earners who saved enough money to set up their own small business. One of them will retire rather comfortably. Hopefully I can tell you about their story soon.
Those who are earning minimum wage should not lose hope. It might mean being totally careful about how you spend. It might also mean trying to find a side-line or learning to do service for others so you can have additional income. Read about the story of the janitor in one of my earlier posts who was able to do it.
August 3rd, 2007 at 3:58 pm
pinoy investor, i love the sound of that book. im going to heed your advice and read it :).
August 2nd, 2007 at 4:20 pm
Is it still possible to save even if you’re just earning the daily minimum wage? ( in our area, its P243 per day, gross )
I partly support the daily expenses of my mom and my brother sometimes borrows money from me.