MONEY TIPS FOR 2017
9:12:00 PM
One of the common goals for the New Year is something
related to money. It could be saving more, spending less, paying out debts or
investing. In most families, mine included, it’s the mommies/wifeys who handle
financial matters. I have learned a few things along the way and I thought I
would share it with you. This is mostly applicable if you are starting out or
needs a little bit of help to improve your finances. The tips maybe “old school” but
please read through as you may find new ways to apply these in your life.
BUDGET
You may have seen this in most, if not all personal financing
essays and it’s because there’s no way you can handle finances without knowing
how to budget. Have you ever experience checking your bank accounts and
wondering why you money all gone? I may not be able to answer that but one things for sure, the money was spent! That is the nature of money, it always
gets spent. The common mistake we all make is letting our money go without our
control. It is our responsibility to tell our money where it should go and we
do that with the budget. Budget is about assigning our money on where it should
be spent: food, rent, utilities, savings and others. This way you allocate your
money and you know your limit for each spending. Also this lets you know when you can
afford to do extra shopping. When making a budget, remember to create a buffer. Do not
squeeze the necessity just to make room for leisure. Be realistic
and prioritize needs over wants. Most importantly, set aside savings first before allocating your money to expenses.
ENVELOPE SYSTEM
Now that the budget is in place, it’s time to live with it.
What good is a budget if we do not follow it, right? Here’s a hack on how to stick to
your budget, the Envelope system. This means assigning an envelope to a
particular budget item like food, groceries and utilities and putting the
allocated money on it. Yes, this means withdrawing everything in the ATM and
using physical cash. I understand, I know most of the things can be paid through the ATM and it's more convenient and safe. But hear me, the main reason we went out of control
with our spending is because of those plastic cards called ATM card, Debit card and Credit card. When I still use my cards, I am unaware of my remaining balances
and always wonder where my money goes whenever I checked online. But when I switched to cash only payment, not
only that I’m aware of how much I spend, I think twice before buying anything
because it is more emotionally painful to see the hard earned cash departs
from the wallet. Try it! When you see the money in the envelopes gets
spent, you tend to spend it mindfully forcing you to live within your means. This system works so much for us. This is an
oldie but goodie trick!
EMERGENCY FUND
If you have it
already, good for you. If not, read on. Let me tell you, one of the most budget
wrecker is emergency and no matter how much you prepared for it or avoid it,
emergency just come your way. Something broke down, someone got sick,
emergency! That is why it is important to establish emergency fund first and
foremost. What is Emergency fund by the way? It is an equivalent of three to six months of spending,
set aside as purely cash and available for use anytime. But what if you have
debts and having a hard time making both ends meet? Then it is all the more important to
build the emergency fund. The more you have a negative financial balance, the
more emergency will lead you to further debts. So build this first. In this
case, David Ramsey suggests building Starter Emergency Fund equivalent to USD
1,000 as fast as you can. To be able to do this, you may want to get a part
time job, or sell some of your stuffs that you no longer use, or took more
overtime work. Whatever it is, do something to build the emergency fund.
I hope these money tips can help you. Do let me
know in the comments if you have questions or if you have other money tips that
you can share to the fellow internet friends. See you in my next post.
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