Tuesday, March 28, 2017

Budgeting Tips: Your Guide to Managing Finances

If you are keen on managing your finances, you know that giving in to your desires is not healthy for your pocket. Having a budget plan ensures that you have enough to spend say, for example, a week.

However, this is not the reality. Right after you receive your salary, bills and expenses will come knocking on your door. Moreover, temptations are everywhere. For instance, when you are taking classes in an IELTS review center in Baguio, low prices of commodities are so enticing that you are easily encouraged to buy. Purchasing one or two items may be tolerable, but when you buy in bulk, that is when the problem arises.

ielts baguio

Baguio is famous for second-hand clothes sold in the market for a lower price. Imagine walking your way to the IELTS review center in Baguio, and you saw a sweater that fits your size for only 10 pesos. Then you saw another one… and then another… until it became a habit to pass by the market every day. If before you can save at least PHP50 a day, now you no longer have anything to keep, and you are struggling for the next two weeks because you have spent even your meal allowance. How can you survive the coming days in the IELTS review Philippines?

Tips on to budget finances wisely

The goal of budgeting is to help you spend on the more important things by spending less than what you make. Here are some tips to manage your financial resources wisely:

1.    Save first. Rather than saving what is left after the cutoff, save first and spend the rest. Deposit at least 20% of your salary to your savings account so that you have an emergency fund.

Another tip is to follow the 50/20/30 plan. Elizabeth Warren popularized this budgeting approach in her book, All Your Worth.
  • 50% of income goes to necessities
  • 20% goes to long-term savings
  • 30% goes to lifestyle choices

2.    Track your spending. This does not mean tracking every dime you take out of your wallet. Simply, monitor your spending and see if you have already exceeded the budget allotted for the day. Creating a budget plan can help you track your money.

Another key to controlling your expenses is by using the three-category budget. If you do not want to monitor every penny, identify the three categories you would like to control. For example, if you found out that you have spent most of your money on clothes, shoes and new gadgets, keep an eye on how much you spend for each of this category. Keep your limits by allotting specific amount for each category.

3.    Use cash instead of a card. When you have a debit or credit card, the tendency is to not look at the price of the commodity and just purchase everything you want. As what people say, the sky's the limit when you use your card.

If you pay in cash, you will be more conscious of how much you are spending for each commodity. Furthermore, you can easily track where your money goes. This will also develop a mindset that your cash is all you have, and you have to spend it on valuable things, such as food and transportation.

4.    Quit your vices. Cigarettes and alcohol are undoubtedly expensive. Instead of allotting money for your vices, you can add it to your savings instead. The plus side is, you will not have to worry about medications in the long run if you stop your bad habits now.

5.    Be flexible. Try as much to cut down your expenses. For instance, walking instead of taking a cab on the way to the IELTS review Philippines. You can use the money for other purposes, such as for meal allowance or unexpected expenses.

If your salary is not enough for all your expenses, you can try looking for a part-time job. You can also start businesses that interest you. You can try selling clothes online or putting up a small restaurant. Be flexible. Find ways to make your money grow.

Stash your money for retirement. Focus on the more important things, stay out of debt and spend your money wisely.

  • Berger, Rob. "7 Tips For Effective And Stress-Free Budgeting." Forbes. January 06, 2016. Accessed February 1, 2017. http://www.forbes.com/sites/robertberger/2015/07/26/7-tips-for-effective-and-stress-free-budgeting/#799fe5ea2a87.
  • "10 Tips for Staying on Budget." HowStuffWorks. August 05, 2008. Accessed February 1, 2017. http://money.howstuffworks.com/personal-finance/budgeting/10-tips-for-staying-on-budget.htm.
  • "Beginner's guide to managing your money." Money Advice Service. Accessed February 1, 2017. https://www.moneyadviceservice.org.uk/en/articles/beginners-guide-to-managing-your-money.
  •  “10 Budgeting Tips For College Students.” CollegeInColorado.org. Accessed February 1, 2017. http://www.cicmoney101.org/Articles/Paying-For-College-10-Budgeting-Tips.aspx.

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