Budget Your Money

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1 year ago

June 2, 2022

Hi guys, good morning I am little bit sleepy now but I want to make an article right now that is why I decided to make thid for my sleepiness to sudside and hoping that it will wipe away my sleepiness. Haha. Lol.

This is my first article in June, I did not able to make one yesterday since I am busy in my fieldwork.


Have you heard about "The 50/30/20 Rule" in finance? If you are a business administration student or graduate or if you have a bit interest when it comes to finances then maybe you have heard about this.

What is 50/30/20 Rule?

The 50/30/20 rule is the proper allocation of your money. If you add 50,30 and 20, the sum is 100, it is talking about the whole of your money.

What is the 50%?

The 50% is for our needs.

Needs which are the regular living expenses like groceries, housing (if renting or planning to have a house if still living with the parents), health insurance, utilities such as electricity and water. And anything which you know that you should have in order to live.

What is the 30%

The 30% is for our wants, some examples are listed below:

Shopping

Lots of people are addicted to shopping most particularly with online shopping like Shopee and Lazada. I admit it, I was once a person who buys things online that are not really necessary but still chooses to buy just because I want it. Now, I am no longer the person who buys things that I want online because I have this mindset that I will only spend money on necessary things.

Eating outside

Though we considered food as basic necessity, we can not deny the fact that eating in a restaurant is pricey compared when you are the one who prepares your meal at home. Though sometimes, it is easier to buy or eat outside compared to preparing and cooking your food because it may be tiring, it is still best when you are the one preparing your food.

Owning a car

Having your own car is very convenient because you can go wherever and whenever you want. It is very convenient but it is really pricey.

If your job requires you to have your own service, then having your own car is a need but most of the time, lots of people can live even without having their own cars because there are a lot of public transportation where you can just commute. Commuting nowadays is the best thing a person who owns a car can do due to what's happening in our country where the price of gasoline and deisel keeps on going up.

Yes, it is okay to have shopping sometimes, eating outside as long as you do not usually do this in a regular basis because this might be the reason if you will end up having no savings at all. And it is okay to have all the wants that you have if you have an extra money for it.

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Difference between NEEDS and WANTS

Needs are the things that we must have in order to survive / something that we can not literally live without.

Wants are the things that is something we desire but we can live without. In other words, they are not necesarry things because without it, we can still live.


What is the 20%

The 20% consist of savings and paying off debts

Emergency funds

Emergency funds are considered savings. Emergency funds must consist of 6 months to 12 months of living expenses.

Emergency fund is computed as monthly living expense multiply by 6 to 12 months.

Paying off debts

Paying debts slowly and having no debts at all is an achivement. Start paying off your debts first before starting to save or you may start from both of them.

*When it comes to expenses, the best formula will be, expenses = net income less savings and savings is not supposed to be, savings = net income less expenses.

We should discipline ourselves to atleast save only a little bit of your money every payday because saving is really important in our lives.

Saving little by little as long as you are consistent will give you a very good result. Little steps are okay as long as you are careful than having a bigger steps from the start but keeps on falling / failing because of wrong decisions.


From now on, let's start educating ourselves on how to save, budget our money well in order to be financially free. And someday you will be proud of yourself because you start saving early.

Savings are important because you will never know what will happen in the future just like what happened to us last 2020 where lots of people lost their job because of Covid19.

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1 year ago

Comments

Such a great article for the people who wants to learn budgeting. I read some books about finance, one of it is the book written by Chinkee Tan. It's a great book to learn basic financial literacy:)

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1 year ago

I have some loans that I am still paying up to this time so, majority of my salary is allocated for loan payment and other mandatory deductions and tax. So I need to budget what is left for my family's daily needs. Good thing I have other sources and that's where I get the amount I am saving.

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1 year ago

I have tried this rule in the past but since lately that I am unemployed, I couldn't apply it. Well, I just put all my earnings here as savings and emergency and some extra cash goes out to my needs.

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1 year ago

This is a good financial advise sis but for me parang di kasya ang 50% lang sa needs especially when you are renting. Siguro yang 30% sa wants nasa needs na namin yan hehehe. I agree that we need to save, kung walang saving siguro nahirapan kaming magsurvive during lockdowns last 2020

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1 year ago