Growing up with a mother who doesn’t do budgeting didn’t stop me from setting a budget to manage my finances. I started early. When I was in college I need to plan and budget my daily allowance to survive a day in the university. I have to make P100 enough to cover transportation to/from house/university, lunch and snacks, photocopy and other expenses. So when I started working, I’m so used to budgeting, but this time, I have a lot of items to consider such as tithes, tax, insurance, expenses and savings.
You can make a budget in any way you are comfortable, you can just simply write your budget in a notebook, record in an excel file or used budget apps. As for me, beginning of the year, I prepare a budget plan in an excel file. And every month, since expenses and income may vary, I write down monthly budget in a notebook. I also have Wally App in my phone to record miscellaneous expense which are usually eating up my savings budget. Whichever works for you, that’s fine! The important thing is, you stick to your budget and it helps you bring closer to your financial goals.
Here’s how I do monthly budgeting:
- I write down my personal income. Since I’m a full-time employee, this includes my gross salary pay, allowances and other sources such as extra income from sidelines, etc.
- Next I write down my deductions, withholding tax (32% of gross), SSS, Pag-ibig, Philhealth (1.9% of net).
- Then my tithes, which is 10% of my gross income. Tithes, is giving 10% off the top of your income to your church, might be tough to work into a budget. But since, I believe that God owns everything and He is my ultimate source of income, I prioritize this! So, definitely don’t make it the last thing, because if it’s last, you’ll spend all your money before you get to it. If you choose to tithe in your household, make sure to do it off the top. I put value on tithing, as this is the best way for me to honor God with my finances, Malachi 3:10 says “Bring the full tithe into the storehouse, that there may be food in my house. And thereby put me to the test, says the Lord of hosts, if I will not open the windows of heaven for you and pour down for you a blessing until there is no more need.”
- I also have generosity fund wherein I allot 3% of my net income to help relatives, and charities, etc.
- Then my savings & investments here I allot 35% of my net income diversified to Emergency Fund (Savings Account), UITF, Variable Life Insurance and Stock Market. I put savings & investment before expenses because I’m applying the principle of Income – Savings/Investments = Living Expenses
- Then my loans/debts, these are short-terms loans existing SSS or Pag-ibig loans, credit card debts, salary loans, etc.
- Write down housing expense (17%), as for me since I’m the breadwinner in the family, these are Mother’s allowance
(which covers our food, water), bills (cable, phone wifi and electricity).
- Then a big chunk goes to transportation expense (13%), which includes car insurance, registration, preventive maintenance, fare, fuel, toll fees, parking.
- I also set budget for Miscellaneous Expense (7.3%) which includes, spa and salon treatments, dining-out, gifts and medicines.
- Then lastly a fund for my passion (6%), which is somehow a reward for me, these are money I allocate every month for my lust to travel and to shop.
Your budget may be way different from mine, depending on your priorities. It’s up to you! You just have to remember, your budget must help you achieve your financial goals. Whatever it would be, maybe you’re planning to purchase a car or house or planning to splurge in your dream vacation. Or maybe something long-term, you want to build emergency fund, start an investment or start a business. Your financial goals must dictate your budget.
As per Dave Ramsey, he suggest below budget guide,which you may want to follow:
- Saving 5%
- Housing 25%
- Utilities 5%
- Food 5%
- Transpo 10%
- Clothing 2%
- Medicines 10%
- Personal 5%
- Recreation 5%
Need a guide to budgeting? Download this free e-book from Dave Ramsey.