Money Management

“It’s not how much you earn, it’s what you do with your money.”

I came across this interesting quote while doing my usual work online. It strikes me how accurate this is. Most of us always complain about the balance between our low income and high expenses, and how our income cannot match the demand of our daily expenses. We work so hard to match our income with our expenses, when all we need to do is the other way around – we should match our expenses with our income.

It’s not so much as having so little, it’s all about spending beyond our capacity. Most of the time our wants are greater than our needs, this will lead us to spending for things we don’t necessarily need. Living extravagant lives will only makes matters worse. Frequent buying of new clothes, dining out, going out with friends and family, and even the cost of transportation (no matter how small, say Php 8.00 for a tricycle fare) will really cut out a big chunk on your finances.

No matter how we feel that the cost of living is too high, or we have so many bills to pay, too many things to buy, there is still a big chance that we can set aside even a very small amount for our savings. Small amounts saved regularly will add up over a period of time. It may be a bit difficult at the start, but as your savings grow little by little, saving becomes easier, it becomes a habit; it becomes a pleasure. Remember as you add more to your savings you will also be receiving interest that will definitely make your savings grow even more.

It’s hard to fight the urge to spend what we have, but think of the greater good that will come out if you spend less. Learn to say no to spending and start saving now. You can even open a time deposit so you will not be tempted to withdraw those funds.

The formula I used in saving is this:

INCOME – SAVINGS = EXPENSES

Each month I take about 30% of my monthly income for my savings. I don’t compute for my expenses first, I compute for the amount I’m going to save. It’s been working well for me and I’m quite pleased with the interest I’m earning. Most people spend first then save what is left of their money. This might not be very effective. You don’t want to ask at the end of the day “where did my money go?” This question frequently comes up after spending on a day-to-day basis without having a budget plan.

What is really needed is to change the way of thinking to a “save now and buy later” approach. So what are you waiting for? Save now!