How I Budget our Money

When 2016 started, I was looking forward to be able to save more. I was planning to build our emergency fund so I could tick that off of our goals and proceed to the next priority. I haven't been this organize in my entire life in terms of finances and I never ever budget my salary back then. I spend my salary and would come up to the last thousand more than a week before my next salary. I lived paycheck to paycheck and would even come up short two days before the next salary. I have been a good spender really and that's one of the things that I regret. I started working in 2008 and never had the chance to save even a thousand. Could you imagine that?

Anyway, last month as I turned 26, I realized a lot of things in terms of finances. I have been reading financial books since last year and wasn't able to apply it in reality. I almost give up until I realized the culprit on why I wasn't able to save - I failed to budget our money. I was wondering why I can't build our fund faster (my plan was to put Php1000 per month only!). Anyhow, after kong matauhan, I was so inspired in building the fund and even having a target up until the end of the year to complete at least 3 months worth (ideally 6 months worth of salary). Since hindi ko na mahahabol pa to the end of this year the ideal amount, I would take just the half for a starter.

So how do I budget our money?

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I am using the technique that I read in one of the books that I bought. It was the Kaya mo Pinoy! 12 Steps to Build Wealth on Any Income by Alvin Tabañag. He has shown a very simple way in budgeting an income which works for me so far. I have been using it for almost 2 months and the outcome is so far positive. Believe me, I bought and read the book last year but it was just now that I used it to my advantage. Now here's how I do it.

Budget should be divided into sections that is important to you and your family.

Section I. Active Income

According to the book, this is where I'll put my Salary. Any money that I received that requires my effort will be placed in here. I also include here the amount that I earn from baking. Passive Income should also have it's own section but since I don't have one, I skipped that part.

Section II. Savings 

I always remember the saying Income - Savings = Expenses and this is what I am doing at the moment. Before I proceed with the bills, I have savings to deduct from my salary to make sure that I get it to safety before digging into other things. At the moment, I am saving 20% of my salary which I am quite happy. In September, I am increasing it to 25% to achieve the goal I have set for Emergency Fund. By next year, I hope I could increase it to 30% and so on to achieve my goals sooner.

Section III. House Expenses

This is where our monthly rent goes along with electricity and water bill plus our drinking water. Our drinking water was the same water we use to make Jami's milk so I really have to allot some amount for it.

Section IV. Consumer Loan

One of the next important thing for me was to pay off my loans and money owe from friends and relatives. I listed down all of them and paid them one by one in order where I could delay some of them like those from a friend that I asked to pay a little later or made it installment so I could pay more than one every 2 weeks. I started this technique on 3rd week of June and looking forward to complete all of them by September. One of the things that I learned from financial books was to pay your debt so you could sleep comfortably at night and free up the money you're using to pay for savings eventually. Having a budget allows me to figure out how much money I have to allocate in paying our debts. I am so happy to see the amount going down as the weeks go by. I also keep track of them to make sure that I won't left something behind.

Section V. Other General Expenses

I have my last section tagged as General Expenses but it is divisible by a lot of other things. I kept them in a single section since these are the things that I could cut down on in case our budget is tight. I am just so happy that at some point or two there were unexpected money that Daryl could shell out too to cover for some necessities.

Groceries - I only buy those that we need the most and can be used for the next 2 weeks. I buy my detergent and fabric conditioner etc. in the mall and get fresh produce in the local supermarket. I prefer to buy them on the same day that I'll cook them rather than buying them ahead of time. I also bring pack lunch in the office so I won't have to spend more.

Transportation - I am lucky that Daryl's Mom shoulders the cost of gas for their car so I can get to work. I only have to spend Php7 for jeepney from Pasay to Magallanes. I also allot money for our tollgate.

Work Allowance - This is for some money I use in buying snacks in the office.

Entertainment - Last month until August, I placed our entertainment budget on hold to give way in paying some debts. Our entertainment fund goes to our dining out, movies, going out, travel etc. I am looking forward to get them back up in August for some fun time. :)

Unexpected Expenses - More often than not, there were times that an unexpected expense comes up so I make sure to protect the budget by allocating some amount into it as well.

Babe's Budget - I am allocating a budget for Daryl that he could use in looking for a job. Since we're having trouble with time management (he's in charge of baby sitting), he can't spend his whole day of weekdays applying for a job because I go to work and no one else would look after Jami. 

I am using an excel sheet to keep track of my budget and print it out during paydays so I could tick off those that are paid. From time to time, I am updating the budget according to our situation but I always make sure that I follow these sections accordingly. I have yet to learn so many things about budgeting and one of them was the shortage I had two weeks ago. My budget says I was short of this amount. Instead of me adjusting the budget to make it zero or positive, I kept it on negative thinking that I'll be able to create another cash flow to cover it. But I didn't so I struggle on that for a bit. Moving forward, I make sure that if the budget says negative, I have to make sure that I'll adjust those that are listed down to make it Zero or even positive or we have to work double time to increase our cash flow.

I hope that this will be beneficial for you too as it was to me. I am keeping this until forever as it's very important to budget the money that we worked hard for. =)