Create a Budget, Devise a Smart Financial Plan – That Works!

Feb 18, 2022

There is no one-size-fits-all when it comes to budgeting. Individuals vary in the way they budget and manage their finances. What works for one may not work for another. Some people become a slave to their finances for a lifetime, whereas others who grow up seeing good money management or useful insights tend to be able to improve their financial life, with the help of a budget plan.

In his book, “The Root Budgeting System: Discover the Key to Cultivating True Financial Freedom,” author Tim Jordan shared he loves spending money. Realizing he needed to get his act together before marrying, he used to create mock budgets for combined incomes and tried not to overspend. The early phase of his marriage made him realize that there ought to be a better way of budgeting money than the typical, restrictive self-sacrificing manner of sticking to a monthly budgeting plan.  While having a weekly or monthly budget plan can be helpful for many, Jordan noted, what most individuals overlook is that a budget should propel, rather than limit.

The takeaway message is that one needs to devise a household or personal budget that is flexible and works best for one’s requirements or to make and manage a budget according to the unique characteristics and needs of the one doing it. A common Pinoy family budget example that has a typical breadwinner juggling multiple jobs, whom younger jobless family members and extended relatives rely on may toil for years, will most likely not build up savings. Other people may be quick to judge and point out the flaws and shortcomings of such financial budget resting heavily on a sole person. Yet that is how the wheel turns for most Filipino households – the breadwinner scrimps and saves to provide for the day-to-day food, shelter and education of family members, but without a passive income that can generate steady, meaningful returns – and it can range from home rental to peer-to-peer lending, the cycle of dependency and daily grind borne by the head of family will just continue.

Even the oft-repeated advice dished out by money experts to have an emergency fund equivalent to three months (or more) of one’s income may not be workable for most Filipinos. The trick is to adopt techniques and discover how to make a budget one’s own.  A simple budget plan can lay the groundwork for financial freedom. A budget plan can serve many purposes, foremost of which is to allow people to track where their money is going, and how certain expenses or payments are getting a huge chunk of their budget. Budgeting and saving, therefore, go hand in hand. Here are some tips shared by expert budgeters that can eliminate much of the guesswork and lead to far less anxiety when it comes to money management.

  • Budgeting basics begin with calculating your monthly income. Collect the paperwork, including billing statements, and with your income (individual or household) in mind, choose a budgeting method, and use tools that may range from a budgeting notebook to digital apps for monitoring your progress. Again, choose the tool that you are comfortable using and that will work best for you.
  • Budget creation maybe through using the 50/30/20 rule. Some people use a spreadsheet to clearly see how 50 percent of income can be allocated for basic expenses or needs, 30 percent set aside for wants; and the remaining 20 percent committed to savings and debt payments.
  • Factor in not just fixed expenses and debt expenses or repayments, but also unexpected personal expenses, like medical bills, additional education costs, additional food supplies, car breakdown expenses/repairs, and so on. When those unexpected expenses soar, you also need to have a go-to quick cash lender that offers flexible payment terms. Into this mold falls pioneering peer-to-peer funding platform BlendPH.
  • Tweak your financial budget plan as the need arises. Priorities and needs change, so figure out where you can create an extra room or make modifications, keeping in mind that your budget plan needs to work for you, not you being enslaved by it.

For those who just cannot stretch their salaries to cover all their expenses, a more comprehensive budget plan may be in order.  A better money mindset, or discipline that comes from within, will be helpful so that when the urge to splurge on non-essential items comes, they will not be inclined to throw their money budget out the window.  Take the time to ponder on the question, how can you spend your income wisely in a way that will not make you keep falling behind with your monthly budgeting plan? Second, set up a savings & investment plan, rather than perpetually taking out cash advances using your credit cards, a move that accumulates interest and leads to huge debt. Ask a trusted peer-to-peer funding platform like BlendPH, which guarantees transparency and protection to investors, for greater clarity on making money grow and maintaining a healthy wallet. A smart financial or budget plan will not happen overnight, but it can be worked out.