Last January 12, on the day of my birthday, I proposed to my girlfriend. She said “yes” and it made me very happy. We’re planning to get married next year on the same date, January 12. It will be a simple celebration with just family and friends. But we want it special, so we’ll have to spend a considerable amount of money on it as well.
So yeah, we needed money.
And I have no doubt that we can get that money on time for when we already need to pay the suppliers. It’s just that we need to save consistently hard to do so.
We need a budget
And we don’t need a budget just for the wedding too. Soon, we’ll going to need a budget for the car, the house, the utility bills, and of course, food when we move in together. After that, we’re going to need a budget for the baby (if we’re going to be blessed with one). We’ll have to save for diapers, milk, other baby stuff, and eventually, the child’s education.
It’s going to be an endless cycle of budgeting. That’s just how life works. A household needs its budget.
I sincerely believe that a family (or even an individual) that fails to have a budget also fails in their finances. Again, even if you’re single, no matter how much you earn, you need to budget your money so that you can achieve all of your financial goals.
Budgeting is a sexy thing to do
For the men, well, budgeting is a macho thing to do.
All of us need to have a budget.
But first, what is a budget?
A quick Google and we get the definition of a budget from Investopedia as:
A budget is an estimation of the revenue and expenses over a specified future period of time and is compiled and re-evaluated on a periodic basis.
If you don’t understand, here’s my definition of a budget:
A budget is a record of all the money going in and going out of your life. It has projections too of how much you’re willing to spend on a particular expense. You update it every time, and you use it to plan all of your future financial goals.
Yeah, I do a pretty bad job of simplifying that definition. But it works for me, so I’ll stick with it.
Nevertheless, all I want you to realize here is that you have to record all of your financial transactions so that you can guide your future spending, and make better decisions on where you want to put your money. That’s all there is to it. And how you record your budget is up to you. But if you have basic knowledge about spreadsheets, then, it’s a no-brainer that you need to use this tool.
Spreadsheets are your friends
Gosh, I can still remember the first time I tried spreadsheets. We were taught how to use spreadsheets when I was in grade school. It’s not yet MS Excel by that time (yup, I’m that old), and I just found using it very daunting. It’s not user-friendly at all and I completely forgot all the lessons I learned that time just because I don’t think I’ll even use such silly, ugly spreadsheets in the future. Heck, I even forgot the name of the program we’re using.
Fast forward to now, almost all of my documents at work and at home are composed of spreadsheets.
I’m an engineer, and I work with a lot of data. I can’t even imagine how I can do my work without the aid of spreadsheets. I do almost all of my computations on spreadsheets, I make graphs and equations on spreadsheets, and I even do almost all of my reports on spreadsheets. For some reason, most of my engineering counterparts want to look at numbers as well. Engineers are nuts!
It’s just crazy how spreadsheets changed the world.
And I want you to use them for your budgeting as well
You don’t have to over-complicate your budgets too. Sometimes, all you have to do is to record all of your income and expenses on a spreadsheet and calculate. That’s all there is to it.
Of course, this is assuming that you already know how to calculate using spreadsheets. If you don’t, then I might suggest you Google or YouTube tutorials on simple calculations to get started. Nowadays, it’s just that easy to teach yourself anything.
Anyway, once you get the hang of recording all of your income and expenses on a spreadsheet tab, then it might be a good time for you to make projections as well. This is because you’re going to need the initial data of your spending to give you a rough idea on how much money you’ll have to allocate to a particular area of spending.
Let me give you a simple scenario
For example, let’s say that you spend about 5,000 pesos on food for the month. With that, you also spent 1,000 pesos on internet and phone service, 2,000 pesos on your water and electricity bills, and 1,000 pesos for your daily commute to and from work. Oh, and you’re paying for your debts too, and that’s about 5,000 pesos monthly. All of these amount to a grand total of 14,000 pesos of spending each and every month.
You look at your wallet and your bank account, and all you can see is the 1,000 pesos left staring at you.
You’re earning 20,000 pesos per month after taxes. How can this happen? Everything doesn’t add up, right?
Well, you probably didn’t account for the binge purchases that you did. You bought a shirt on sale for 250 pesos last time, and treated yourself to a movie worth another 250. Sometimes, you buy fancy coffee to relieve the stress you get from work, and bought pastries as well to go with it. You didn’t account for the times you went out drinking and partying with your friends too.
I’m not saying that these are bad things to spend your money on
All I’m pointing out is that all of the small things add up to put you out of your budget.
This is why I want you to record everything on a spreadsheet. Monitor your budget and make strict rules so that you stick with it. Look out for the small spending activities because mostly, they are the ones that will kill your budget.
Your spreadsheet will help you.
And eventually, I want you to add another tab that says “Investments” too.
Grow the money that you save out of your budget.
Here’s to your success!
P.S. If you want to learn how to invest in the stock market, you can join the Truly Rich Club Quick Start PLUS+ Implementation Seminar happening at the Summit Hall E in PICC this coming January 22, February 5, and February 26, 2017. This seminar will only cost you a measly 200 pesos investment. Click this link to learn more.