NU12 #4

"New spending habits"

Have you noticed that when you earn more you tend to spend more? I have known a lot of Supervisors and Managers who spend their salaries the moment they received it. They spend first before they save. There are a lot executives who are surprisingly, have no savings and investments at all, and worst, drowning in their credit card debts. This is because of lack of discipline and self-control.

There are a lot of financial gurus who have been lecturing the best financial practices so we could spend less and save more. The ultimate formula that I have learned is: Save first before you spend and always set aside the 20% of what you earn for savings and investment.

Budgeting is also very important so you could monitor your income inflow and outflow. It's good if you track all your expenses, even the P10 quek-quek that you always buy from Aling Nena's Bbq stand. By tracking all your expenses, and review your monthly expenditure, you will analyze your habitual spending on unnecessary things. If ever there comes a time that you got short of budget, or an emergency situation occurs, you will know which item to forego. 

I also believe that we should "live within our means". If we only have P2,000 until the next pay day, we should live with the P2000 and budget it for the remaining days. We should also learn how to say no in unplanned gimmicks, peer pressure, unnecessary purchases and sales in the mall. The sales events in the malls are really tempting especially if the items are on sale. But these are all traps. If you always buy things that are not needs, and most of the times are wants, it will ruin your budget. We really have to master the art of self control and discipline.

Saving doesn't mean that you are depriving yourself on buying the things that you want. Saving and investing will give you more money in the long run, which in effect will give you more income to spend on the things that you want. Always bear in mind that the ultimate formula is Income – savings and investment = money to spend and splurge.

By mastering this, you can save religiously and avoid being "bankrupt".