Simple tips on how to manage your finances

I’d like to be honest and say that I love money but I hate numbers. Yes. I do.

For someone who’s not really into financial management, I’ve learned a thing or two on how to properly manage my finances.

Here’s an easy way to manage your finances, some things to remember:

1. Know exactly how much you are making

The common mistake of any employee or business person is knowing exactly how much s/he earns. That is, you have to lay out all the cards, meaning all your source of income and all your expenses.

The Formula:

Accumulated income-accumulated outcome= ACTUAL EARNING

Say your net salary or earning for the month is P50,000, deduct your tax (which would be around 10%), fixed expense such as gas/commute/parking allowance  food allowance.

It is important to know exactly how much fixed expense you have for a week or for a month so that you can budget your money properly.

2. Assess your income vs your outcome

I think anyone with common sense would know that you better not spend more than you can earn, once you know how much you take home, it is easy to know where your money goes.

Know what outcome is your priority.

Common outcomes are: house mortgage, car mortgage, water bill, electricity bill, phone bill, food and grocery.

If you’re paying for all these priority outcome, I suggest even before your next paycheck comes , save and allot the money for these expenses. Remember that these outcomes are not FIXED, it may vary depending on your usage and consumption so learn to estimate.

The Formula:

Actual earning-monthly expense= FREE MONEY

3. Minimize non-necessities

One of the common mistakes people tend to overlook is their spending on their non-necessities. They seem to mix up the necessities with the non-necessities.

Here are some of them:

• Cellphone usage- although it has become part of our lifestyle, assess if your cellphone usage really is a necessity, with the variety of usage there is so much to do and with that comes extra expense. To save, maximize your cellphone plan find the one that really fits your lifestyle. If you’re on a prepaid plan, try to budget. If you need to talk to someone, use a landline or the internet to chat with them instead.

• Unplanned expense- Yes, as spontaneous as it sounds this can add pretty much 5% to 10% of your outcome. Some of the unplanned expense may include; coffee out with friends, shopping, eating out, other activities that need spending.

• Use of credit card- This is very tricky. Many have experience credit card debt . All those few hundreds worth of purchase when sum up can really blow your socks off. Be sure if you’re a credit card user to have exactly the money to pay for it. Tip: If you want to use your credit card merely because of point rewards or freebies, right after purchase attach the money for payment on the credit card slip and collect them for the end month credit card payment. Another tip, if you’re really on a tight budget but have a credit card, don’t use it for it may be the start of a dreading credit card debt. Only buy if you have enough cash on your wallet, that’ll give you a breather.

Whether you do this as often as once a week, there is n o doubt that you will spend at least P100. So if you total the unplanned expense it can actually sum up to P500-P2,000/month.

4. Save up for a rainy day

It never hurts to save up for a rainy day. This saying could actually earn you the money to buy whatever luxury you want. If all expenses are deducted from your monthly salary/ earning, we now go on to saving. It is very important to save no matter how little or less money you have, it will actually help you pay for those unplanned expenses.

The Formula:

Free money- at least 10% for saving= MONEY YOU CAN ACTUALLY SPEND HOWEVER YOU WANT

Say your free money is around P10,ooo, put in your savings account at least P1,000 (10%)  The more money you put into saving, the more confident and secure you can feel. But don’t forget to reward yourself, use the MONEY YOU CAN ACTUALLY SPEND HOWEVER YOU WANT and use it for your unplanned expense (but this time you can confidently plan it!) or save it all up and  go on a trip or buy a luxury item that you’ve been eyeing for.

remember "a million is not a million if it lacks a cent, therefore every cent counts"

Here are some tips in handling your money/expenses:

• Buy on sale. If you’re eyeing for that cute bag or shoes, ask the staff of the store for their next sale.Hard as it may be, but ut can save you as much to buy another pair of shoes or bag. If it’s something you have lived by before seeing and knowing it exists, then a few weeks of waiting won’t hurt.

• Pack your food. If you think you can save a lot on your meals then it is practically to pack your food for lunch, the big advantage is you can eat healthy and use the moolah to have coffee with friends instead.

• Walk your way. Going to the office? If your way to the office is pedestrian friendly then you’re lucky. Walk on your way to or from the office instead of riding a jeep, tricycle or FX. P20 saved a day multiply by 5 days (P100) in 4 weeks is equals to P400.

• Grocery shop only when you have a full stomach. I have noticed that whenever I go to buy my groceries, I end up buying more than I actually need. The reason= HUNGER. Being hungry can really put you into a grocery shopping frenzy! So make sure you”re tummy has some food in it so that your mind and stomach can stick only to what you really need to buy.

• Watch out for promos. Yes, promos can actually help you save up. Whether it be on clothing, dinning or entertainment, establishments nowadays constantly have promos be it for the season, occasion or plainly just because they want to. So do anticipate and ask for promos (mostly tie-ups between a credit card and an establishment) don’t be shy, ask around.

I hope this article has helped you somehow. Feel free to share your own tips when it comes to money & handling your financials.

Who says you have to be a financial expert to be financially secure? 🙂