NU6 by RBF1Improving My Spending Habits

Hi sir:

Below is my first assignment for NU6, I changed the title "New spending habits/routine" to this one. Please see below. Thanks.

Kind regards,

Rose B. F.

Improving My Spending Habits

Ever since I received my first salary I was an impulsive buyer. Since I was not able to monitor my expenses and my earnings I realized that I bought a lot of things which filled up my cabinets. I loved to buy DVDs which I rarely watch (in fact I've only watched ¼ of it) and clothes, shoes and slippers during mall sales which some of them I've never used and can no longer use since I gained almost 10 kilograms when I got pregnant. I was not able to recover my once slim and sexy body (hehe). I also bought figurines which I don't really enjoy displaying and other useless objects. These things were kept in boxes that filled a vacant room in my apartment but when I had a kid I have to dispose of all these things and kept a few useful objects so that the yaya can use the spare room.

Two years ago, my husband and I discussed our spending habits and since we already have a baby, we also thought of our family's future. We got the idea of budget planning from one of the seminars that we attended so we came up with our own budget plan.  We agreed to assign a percentage of our earnings to six different accounts listed below.Here are some tips which you can also use.

1. 50% - necessities account

This includes food, rents, car/transportation, bills which includes payment for yaya, utilities and phone bills and baby expenses such as vaccines. You can save on necessities if you bring packed lunch or have dinner at home rather than eating in fast foods or expensive restaurants.

2. 10 % - give account

This includes tithes, donations to foundations and other people in need. Give account is never lower than 10% but sometimes it is higher since there are unexpected solicitations or donations but this could be balanced by the play account.

3. 10 % - education account

This includes buying books, attending trainings, payment for tuition fees. Since tuition fee in AGSB is expensive, education account can reach up to 15 - 20% but this is only temporary because after graduation it will go back to normal. To save a bit, you can borrow old books from friends.

4. 7.5 % - leisure or long term spending savings account     

This includes going to the beach with family, travel abroad or other destinations. This is also known as long term spending savings account since you don't have to do this every month but you can do it twice or thrice a year so you have to save for this spending. It is always better to enjoy this kind of luxury which you enjoy with your family or friends rather than having it become a mindless habit.

5. 7.5 % - play account

            This includes going to movies, eating out with friends and family, going to malls with your kid, etc. You can save a bit if you can spend your day with your family at home and play with them, cook good food together, watch DVD together rather than go to a movie house. If you don't want to stay at home then you can go to the grocery together or visit relatives and friends.

6. 15% - savings account/ financial freedom account

            You have to set aside at least 15% of your earnings which you can invest in stocks, mutual funds, etc. This savings account is also called financial freedom account because you are assured that you have money saved for the future.

We started with 10% for our financial freedom account since our joint salaries cannot cope with our necessities.  But as our salaries increased, we decided to make it 15%. Our savings in previous years were invested in real estate and my husband invested in stocks and we also invested in mutual funds. I also invested in our cooperative which gives 10% interest on savings.

I still use a credit card (my husband uses the supplementary card) which I use in groceries and other purchases but I made sure that I pay everything before the payment due date. My credit card company do not charge annual fees when you reach a certain annual total purchases so I don't pay annual fees.

Monitoring the Earnings and Expenses

In order to monitor our earnings and expenses I did a simple excel program to track how much we've spent for the month. In the spreadsheet you have to put the date of expense, amount, details (what it is), category (whether it is food, bills, etc.) and type of account. A summary of these can be seen in another spreadsheet so that you can see the percentage of expenses per classification and savings monthly and the total. In this program all earnings and expenses are also recorded (which is an advantage for me since I had the opportunity to know all earnings of my husband. Haha).

At the start it was difficult to record all these but it became a habit and then it was much easier and enjoyable too.  At the end of the year you could evaluate how much you've spent and allocated for every account. You can also compare your earnings and expenses from the previous year.

With this I have improved my spending habits because I was able to analyze and adjust our finances based on our needs and make sure that we stayed on track with our budget plans. It also made me think twice before buying things for myself whether I really need it or not.

RBF (R100125)