Why is it important to track your expenses?
Basically if you don't do it some unnecessary expenses my accumulate getting you in trouble while waiting for the next payday. This is one reason; another is and I think the most important is setting aside something in your bank account, and investment vehicle to grow your earning that you can use for future needs.
If you're an employee like me. It's too difficult to live when your pocket money for next payroll period is short; your now tightening your budget, make a little spending for self and for worst borrowing from other co-employees or friends just to meet another payday. I've been a victim of the common habits of a typical employee who spend unconsciously on things that you don't really need.
I'm still experiencing those from time to time during emergency time. Yet I still have few friend who borrow just pay for their wants. Well think twice again if you wanted to get out in your situation.
Honestly it's very tempting once na sayo na buong sweldo mo, marami kang maiisip bilhin, sasabayan pa ng mga kaibigan mahilig sa gimik or manganganchaw pa sayo. It's your personal decision when it comes to your money. But remember when the winter comes be sure na para kang langam na nakapagimpok ng pagkain nung tag-init. Be like an ant who works summer and has no problems about food during winter season. Life works the same. Preparation is one good strategy.
PRIORITY
Many of my colleague and friends mentioning that I am "Kuripot" just because I don't pay for cell phone load too often or buying new things like gadget etc. no way! I had a monthly internet bill.
It's just a matter of prioritizing what matters. The last time I bought an expensive thing is a Tablet. I bought it for some business and communication purposes. I won't bother buying it if I don't have good purposes.
Buying car and motor bike needs proper planning.
For example: You get a worth 50K Motor cycle with a down payment of 3K will give you a monthly negative Cashflow of 3.9K for 1 year until it's totally paid. I know everyone wants to have their own car or house it's just prioritizing WHEN is the RIGHT TIME to have one. If you're using a vehicle to cut transpo expenses better have one. But consider that there are monthly maintenance and cost on maintaining it. Better get advice on reputable car/ motor sales representative on it's specs to cut additional expenses and save from it.
CASHFLOW IDEA
What does awareness of Cashflow will give you?
If you're aware of your own Cashflow you have a better idea on your monthly expenses and it will give you an idea how much really you can set aside for future use and emergency needs.
Let me site you a Cashflow of an average employee who has minimal responsibility:
In this figure the average monthly Cashflow of the employee is PHP 4,500. If he earns around PHP 15K monthly and has an expenses of PHP 10.5K monthly. Just to give an illustration of what cashflow is all about.
Being a single has no big responsibility unless you're a bread winner that almost of your family member rely on you! You need to budget everything for them to survive and eventually stand on their own especially to brother or sister who still needs to study. Parents who still rely on their child for them to survive.
WHAT TO DO WITH SPARE CASH?
So what can you do if you have Cashflow of PHP 4,500 monthly
Ask me. Better start study on financial matters. Investment and businesses any place where your hard earn money could grows and multiply. Dont be afraid to commit mistake because that where you learn. Before you do it read and learn first because it is your hard earned money. I'll be tackling those on other article.
Buy assets. Things that makes cash flows to you like, investing on stocks, apartment, business. Just learn what will fits for you.
BUDGETING YOUR NEEDS
So what if I am married w/ child? It's a different story
Here are some list to consider on:
1. Monthly payables - Utility bills like Meralco, Internet if you have one, and Water bills is the most common) you don't wanna have home that is so dim at night and no appliances running when you need it most or water to take a bath daily. Rental payments if you don't have a own house and etc.
2. Food and Transportation - Now if you're employed you won't earn if you don't set aside budget for your food and transpo whether you have ride or just a commuter. And family food budget. You don't wanna starve your family don't you and considering also there daily "baon" in school or work.
3. Allowance for kids - In this one you should be reasonable in giving a right allowance for your kid. Not too much not too less. You don't wanna raise a kid that in time to expensive. Considering there are lots of vices around like computer and so on.
4. Mortgage - If you're paying your own house
5. Insurance - If you know it's importance to your love one.
6. HMO or Health card - Regarding health issues. Usually corporate people has this benefits. An additional protection for your family when got sick aside from coverage and discount from Phil Health.
These are the basic things you need to set a budget for. There are lots of expenses you'll be listed there but it depends on your lifestyle.
SUMMARY
In summary of our topic Here are the bottom line why is it important to track your expenses.
1. To build a good Portfolio Investment - You ask me why? The main reason is you won't work forever to earn money. And not all of your whole life is that you're in good health and time will come you lose some of those strength in order to work. So the earlier you come up with a good habit of saving and investing while maintaining your expenses low you have a good chance of retiring early.
2. You'll save a lot when you tract and wise on your spending. Many high income earner today save less because number one is that they have all the money they have to spend and enjoy right away. Immediate need may not arise early but soon they will come. And the time they arise you're not prepared or you did not settle a budget for it. We don't wanna experience going to relatives and friends to borrow money don't you or selling lot title, car or gadget that you bought on those days your pretty blessed financially.
These are just the common problem of Filipinos when it comes to spending habits.There are so many financial problems nowadays because of miss managing those financial decision in life. Getting to bad debt due to impulsive decision caused by emotion and feeling are things you might want to address.
One key solution is to become financially educated on investing and money managing. Better start buying books and read articles that is very informative and helpful to your life. Cut reading non sense negatives news and rumors but focus on being literate. Be careful on where you get advices from specially for people who themselves has no control of their own finances or investment. If you really want to retire early and start doing your own things try thinking about it again. I know you have dream also.
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Importance of saving today and investing
How to invest online in stock market
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