Payday is always an exciting time of the month. It’s a time when you feel like your hard work is finally paying off – literally. But between bills, groceries, and other living expenses (including occasional treats), it may sometimes feel like your long-awaited sweldo is “napadaan lang.” Instead of always counting down the days until the next cutoff, Filipinos can practice budgeting, which the Bangko Sentral ng Pilipinas (BSP) encourages. This habit can help you focus on important financial goals, recognize warning signs of potential money troubles, and prepare in advance.
What is a budget?
In its financial literacy module, the Department of Treasury defines a budget as a plan for how you will allocate your income over a specific period. It helps you track where your money comes from and where it goes. Creating a budget is also a good exercise to learn how to live within your means, be prepared for both expected and unexpected expenses, and understand your spending habits.
How to create your personal budget
Here is a simple guide that the BSP shared on how you can get started on creating your own budget:
Organize your income sources and expenses. List everything down for you to have an accurate view of the comings and goings of your money to maximize utilization.
Prioritize your financial goals. Before allotting money for your wants, put your financial goals first and include them in your budget. This can be for short-term purposes or longer-term plans.
The central bank also recommends keeping the following reminders in mind once you have already created your budget:
Focus on budget implementation. After finalizing the numbers, the crucial next step is to follow your budget. Make an effort to stick to your budget until it becomes second nature to you.
Monitor changes in financial status and goals. Your finances may evolve as time passes, such as with new jobs, updates to your sources of income, and even due to financial downturns. Be mindful of these changes and how they may affect your budget.
Revise your budget and financial plan. Budgets need not be set in stone. When you experience or even foresee changes in your financial standing, update your budget so it best reflects your current financial standing.
Simple budgeting methods to try
Just like how there are many ways to customize your budget to fit your needs, there are also different methods to track your spending. Try out some of these popular methods to see if there is an option that fits your needs.
- The 50-30-20 rule – It’s a popular budgeting tactic that splits your monthly income into three simple categories with a recommended percentage: 50% for needs, 30% for wants, and 20% for savings and debt repayments. This makes it easier to divvy up your money without overcomplicating the computation. You can then choose to spread the amount across different savings accounts for easier management.
- Budgeting app usage – Using a mobile app makes updating your budget and logging your spending more effortless and in real time, helping you stay on top of your budget. Simply input your income and spending data, and the app does the rest for you. Check out apps like Monarch Money, You Need a Budget, and Quicken Simplifi to compare their features and decide which suits you best.
- Cash envelope stuffing technique – If you prefer a simpler way to manage your income, cash stuffing may work for you. This method involves dividing cash into categories such as groceries, dining out, utilities, and personal expenses. Set a spending limit for each category, then place the allotted amount in separate envelopes. Once the money in an envelope runs out, you stop spending on that category until the next budget cycle.
Budgeting is a simple yet effective way to take control of your finances. By becoming more intentional about where your money goes, you can make your salary last longer, build your savings, and avoid the dreaded petsa de peligro. Small, consistent steps toward better money management can go a long way in helping you achieve your financial goals.
