Money comes, and money goes… But you always wonder where does it go? You receive your salary monthly, but it just passes our hand. It is credited in our payroll account, then suddenly it’s gone!
This may have something to do with our spending habits. We spend like there will never be tomorrow. We love to be a one-day millionaire. We’re so much into new gadgets, unlimited vacation trips, eat-all-you can foodtrips, and so on and so forth. Yes, this is our way to pay ourselves for our hardwork and stress, but everything must be in moderation…
Me and my wife, are a couple financial advisors. We are following this spending program that help us a lot in managing our income and expenses. We hope that by sharing this with you, we could also help you, in some way, to handle your finances.
A spending program is a LIST OF PLAN on how to smart-spend your money. Here are some steps and guiding principles that we follow:
- List of monthly income and expenses.
What you cannot list, you cannot manage. The objective of listing is to know if we are still within our budget or already overspending. Listing of expenses can make you allot a budget and have control over your cash.
By looking at the list of expenses, you can immediately determine, first, which items can be lessen- such as cell phone load, grocery items, etc. Second, delay spending and redirect it to other important things such as buying a new laptop, which you need badly for your work, rather than buying tickets to Hongkong, when you’ve already been to Singapore last month. And third, to see items that can be deleted like buying a new signature bag since you already have 5 of them.
- Check whether income is greater than expenses (Income – Expenses = Net Savings).
This may mean that you are well within your budget and means. Ideally, this must give you a positive net savings. If not, then the objective is to increase your net savings that you can use for saving and investing for you long term goals.
Let’s say you are left with a P3,000 net savings every month, do you think you can achieve your goal of owning a house and lot in 5 years? If your answer is no, then you should do something about it. You should consider increasing your source of income by either doing a part time job or starting a small business.
If expenses are greater than income (negative Net Savings), then that only means you are overspending. Your objective must make the negative amount into positive. Again, one way is to increase your income, but one easier and faster way is to manage your listed expenses. Identify which can be reduced, delayed or even deleted.
- It is now time to list down your goals and prioritize them according to their importance.
Every goal should be specific and measurable. Each should include a timeframe on when you want to achieve them. This should serve as your motivation on managing your income and expenses, making the result favorable in achieving your goals faster. Note that you should not stop from here, you’ve just done the planning part.
- Achieving your goal.
Next is the execution phase. Start to learn on how you can achieve these goals. There are multiple investment vehicles out there in the market on how you can grow your Net Savings. You just need to explore.
These steps are very easy to follow. Make that change and act now. Be responsible for your financial future!
For any inquiries or for Free Financial Planning, kindly leave your comment here or send me a private message thru my fb page www.facebook.com/mannypascualpagaduan