Nothing beats the feeling of receiving your salary at the end of the month, especially after a month of hard work. However, the last thing you will want to do is to splurge—and end up without any savings—without caring about the consequences. The importance of budgeting goes beyond having enough money to use today, it’s also to ensure you have enough money for tomorrow and beyond. Ultimately, your spending habit and budget tracking will be the deciding factors. Here are some friendly budgeting tips we have especially compiled for you.
1. Set a realistic budget
One of the misconceptions of budgeting is to spend the least amount possible on your food, and to stay away from entertainment. However, not spending any money at all on leisure or entertainment may result in a build-up of tension and frustration that could lead you to go on a spending spree.
Therefore, it’s always important to be realistic, and being realistic in budgeting means allocating enough money to pay for your everyday necessities such as food and groceries, while allocating an additional, healthy amount for miscellaneous expenses such as entertainment. Another way to approach this is to decide on a healthy amount of money you would like to save every month; 10% of your gross salary is a good starting point. Once you have that in place, setting a monthly budget becomes easier.
2. Categorise your expenses
Grouping your expenses into categories makes everything more convenient to track. As young adults, we can’t run away from varying commitments such as rent, utilities, life insurance, and phone bills. Outside of fixed responsibilities, it’s also common for young adults to spend on miscellaneous entertainment and transportation.
A simple way to categorise your expenses is to break it into ‘essential expenses’ and ‘non-essential expenses’. Alternatively, you may break it into more detailed categories such as commitments, weekend expenses, weekday food money, etc.
3. Track your spending habits daily
Tracking your spending habits daily is not as difficult as it sounds, especially with the prevalence of budget tracking apps. Budgeting apps make tracking easier, as you can effortlessly enter the amount spent, immediately after spending it. Not just that, it also gives you the option to state your budget for the month, making everything automated and hassle-free. There are also additional features such as reminders when you’re approaching the limit, a number of available expenses categories for you to choose from and more. We carry our smartphone with us everywhere, so staying on track is always possible.
4. Remind yourself of your long-term goals
When in doubt, always ask yourself, why did you create a budget to begin with? More often than not, we set monthly budgets in order to save money for the future, or to achieve our long-term goals. Big purchases like a car and a house require not only monthly commitments, but also a large amount of money upfront. Furthermore, it’s also advisable to always have emergency funds ready for rainy days. Therefore, the importance of budgeting goes beyond today’s needs.
Ultimately, you should aim to live comfortably and happily, despite being on a budget. When it comes to financial management, you can count on Singlife. At Singlife, we embrace technology to help Filipinos be confident and in control of their finances. Learn more about our available products now.
