I’ve had ups and downs in terms of my financial health. When I started to work in 2010 and up until 2012, I used some app to manage my money. It was as simple as logging what I will earn for the month, and logging my expected spending. I’d say it was effective ’cause I was able to save up some amount that allowed me to fund some trips on my own.
I earned a bit more year by year and was able to save more money by maintaining my lifestyle–well, that was until 2013 when life was so crazy that I decided to wing it and stop tracking my expenses. To add to that, I resigned in 2013 and took a lower-paying job to work for a non-profit, while still maintaining my IT salary lifestyle which was more “extravagant” than what I could afford (e.g. taking a cab to and from work, eating out every weekend, etc). I returned to my old company and somehow got comforted by having some extra amount to spend again. Yet, I continued to not maintain any budget for about 3 months or so.
Seeing my bank account looking so terrible was my wake up call. It was time for a change. Some time in 2014, I went back to my habit of managing my finances and I’ve never looked back. It’s been great so far–there’s room to make investments here and there, and there’s no concern about being chased by someone for me to pay for a loan :) Year by year, I learn something new about how to handle my money and it gives me peace at night knowing that I am being a good steward of the money I have been blessed with.
MONEY is such a key component of adulting. I’d say it’s particularly even more crucial to learn how to manage our finances while we’re single and starting off in the workforce, as the habits we’ll surely carry over to family life whatever habits we form during this period.
I do not claim to be an expert, but I understand the fear of facing our finances (aha alliteration) ’cause when I was 3-5 years younger, I was so overwhelmed by everything I found via Google. Things were just too complex for my someone like me who had very little history on managing my money. If you are feeling the same way (like my sister–who I constantly bug to report to me how she’s doing with her money) and are just starting out, then I hope to help you out with an easy guide to managing your finances:
1. Define a budget.
I cannot emphasize this point further. This is most essential thing in the world. There are so many apps and website offering help (BudgetSimple is a personal favorite) but if you want to stick to good ol’ simple Excel, then I have a gift for you!
2. Determine your essentials.
What do you HAVE to spend on? While drafting your budget, it’s essential to make a distinction between needs and wants. You may even want to categorize your expenses into stuff that will help other people and stuff that are just for yourself (this I do). Put an amount on the important stuff (e.g. savings!!!!, family obligations, food, transportation, church/ministry contributions, etc) before allocating an amount for the nice-to-haves.
It may work differently for you, but what has worked for me is to prioritize stuff in this order: savings, tithing + ministry, family, self.
2. Daily budget management is key.
Once you’ve got your budget laid out, it will make no sense if you don’t actually refer to it. I have a relatively complex way of tracking my expenses and am imposing utmost discipline on myself, and this requires me to record all transactions I do daily. I keep my receipts as much as possible, and log what happened to me financially at the end of every day. Fine, I skip some days (when I’m feeling a bit irresponsible) but I try my best to take note of my income/expense for the day in a notepad.
3. Do not compare.
Comparison will kill you. Seeing your college friends eat out every Friday night at Nihonbashitei may tempt you to spend beyond your means. Resist it. Stick to your plan. If your officemates are also dining out or getting delivery while you are stuck with a packed meal from home, DO NOT BE INSECURE.
4. Delight in the good stuff every now and then.
Yet, do not completely cut yourself off from everything pleasant in the world. Treat yourself every now and then. Save up for the stuff that you like that you might not be able to afford in a single month. I remember taking 6 precious months to purchase my own 2,000-peso cheap guitar. It felt good once I had it :) This will also save you from impulse buys you may have while browsing Lazada after you’ve had a bad day.
5. Dream on!
Set big goals for the future! This will encourage you to stick to the plan by having something to look forward to. Up to now, I still have my 4 goals from back in 2014 listed on my yearly budget sheet–a trip to Japan, a trip to Australia, a trip to the US, and paying for a home that we actually own.
I get encouraged to be financially responsible whenever I see those items, especially the amount I need to have to make them come true.
6. Discover new ways to save.
My sister seems to be getting good at this. Instead of spending 60 pesos everyday to go to the office, she wakes up 30 minutes earlier in the morning to hitch with my uncle on the way to Ortigas. There are so many expenses you can still scrimp on, only if you’d look. Really need a postpaid plan when you only text twice a day and have access to Wi-fi almost the entire day?
7. Discover new ways to earn.
Once you’ve gotten used to saving and following a budget, it’s time to maybe earn a bit more! :) Take on side projects, if your time allows you to. If you have a hobby or a special skill, it may be something you can earn extra from. You can sell clothes or bags, tutor some HS or college kids, organize birthday parties, teach arts and crafts, and many more! You can also eventually take a step further and “make your money work for you” (as they say) by investing in mutual funds, stocks, businesses and other opportunities. That’s something we can talk about more in the future ;)
(via Daily Prompt: Create)