Effectively hitting your personal budget

“You can be Streetsmart”—Empowering through financial literacy

Living the urban life can be very difficult at times. We are faced with constantly increasing prices, fast-changing lifestyles and pressures to continually uplift our living standards. These not only take a toll on us but also on our financial budgets. For the ordinary working middle-class people like you and me, this day-in and day-out financial management battle can be every tiring. Because no matter how we try, no matter how we adjust, it seems like what we earn can never be enough to make ends meet finding ourselves flat broke all the time.

Hitting your personal financial budget is the first step against poverty. And from experience, managing your budget is a hard thing to do. We are always tempted to swipe our credit cards, buy that fancy new dress, spend on expensive beauty products and splurge on that new handy gadget we see on the mall. I am not saying that we totally avoid these self-fulfilling activities. But putting these things ahead of what is really essential in our lives will only bring us back into a vicious cycle of being habitually broke very month.

Like ordinary folk, spending more than what you earn is the easiest way to miss your monthly budget. I guarantee you that it is such an awful feeling waking up in the morning spending half of your pay on a worthless pay day gimmick only to find out that you have piles of bills to pay and next 29 days of financial misery.

Having said all these, here are my recommendations on how to effectively manage your budget.

Know yourself

This is ironically the first important step to effect budget management. Find out your spending habits. Throughout a month test yourself and track your individual or household spending. Don’t worry about going overboard this once! Because this will help you to figure out by how much you can really stretch your wallet. Record every peso spent and try to provide an extra allowance for emergency spending purposes.

Set you priorities

After facing the reality that you are spending to much, take some time to reflect and set your priorities right. Because we are all faced with limited resources, I suggest you spend first on things that give value to your lives. Put off that new cell-phone upgrade, that fancy new dress, limit your night out with the boys, wake up earlier and take that early morning stroll to work.

By setting your priorities, you will be surprised to find out that your seemingly small salary will be more than enough in a month.

Hold the right amount of cash

This is a practice that I like to do so often. Just before the weekend, just leave P500 in your wallet. And as the weekend goes by try everything in your power to limit your weekend spending within those P500. Try it! This may work wonders for you.

Avoid spending traps!

Like in weight management, the easiest way to overspend is when you’re bored. Temptation comes to us when we are weak! So when you are bored avoid hanging out in a coffee shop or going to the mall cause more than likely that P500 weekend budget is sure to go.

Save your ‘Dreams’

Aside from budget management, start saving up for the future. Start with your loose change. Dump those extra coins in a bucket and set up a contingency fund to cover for unexpected circumstances like storms, floods or even losing a job. The rule of thumb is creating a contingency fund that will support you for six times your monthly salary. The earlier you start the more you can accumulate.

Be disciplined and stick to the plan

Like I said above, effective budget management is not an easy thing to do. Achieving financial success cannot happen overnight. It requires years of patience and it is lifelong commitment not only for your but for your family, as well. Saving and spending is a balancing act that everyone has to do. For some people this may not be as hard but sooner or later we will all have to look at ourselves in the mirror and face reality.

Urban living can be difficult but if equipped with the right financial planning tools, proper budget management can turn our lives into worthwhile experience. The tips that I’ve mentioned above are just basics that ordinary folks like security guards, OFW families, and minimum wage earners can use to slowly get ahead in life. Always remember that financial planning is specifically unique to anyone. Your financial plan will definitely be different from you brother or your neighbor because we all are different people wanting and needing different things. So follow the tips above and see what works for you. For more complex situations I suggest you hire a financial planner to customize a plan for you. I assure you with persistence and the right attitude this mountain of hardship can be overcome. –JR Maniego / Personal Finance, Businessmirror

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