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Sunday, February 5, 2012

A Simple Budget Strategy

You may have your reasons why you think there's an absolute need to earn more, that your monthly paycheck is not enough. You wish fervently that tomorrow you will be given a raise (or you will find a better paying job… or you will finally hit the lotto jackpot, etc.. etc..) in order to live comfortably.

Chances are you will not get that substantial raise soon. Most likely you may not find a better paying job soon. As for most of us, you will never ever win the lotto.

Reality is you have no choice but to start with the "meager" paycheck that comes in every month.

You need to work with what you have. (Thank God you have something to work with!)

BUDGET.

Budgeting your current salary every month need not to be a pain or as complicated as you think. There's a simpler strategy that I learned from Bo Sanchez:

Magnify your 10 percent

Give back 10% of your income wholeheartedly to God. This is through tithing.

The Bible records numerous accounts of man tithing to God. God is the creator of everything that exists. He owns everything and we are simply stewards of what we have been entrusted with. The tithe principle is this; "He gives unto us, we give back to Him one-tenth of all that He has blessed us with." – read more about tithing.

Whatever you are comfortable, it is up to you if you give the entire 10% to the church or through performing acts of charity.

Multiply your 20 percent

People think that income equals wealth. The more you earn, the more wealthy you are. This is a dangerously limiting thought as it convinces people that they can never be wealthy because they don't earn that much.

Truth is, it is not how much you earn but how much you keep from what you earn in order to invest.

Plant in the spring.

Most Filipinos save a portion of their income for big expenses like buying a house, buying a car, getting married, etc. But always forget to save up for the biggest expense of all… that is retirement.


Plant in the spring

While you are still physically able to earn, plant in the spring. Set aside 20% of your income, but don't just park it in a savings account... grow it.

Manage your 70 percent

This is the challenge. Learn to live with only 70% of your income.

There are only two money strategies out there. Money strategy of the poor and money strategy of the rich.

Money strategy of the poor uses the formula: income - expenses = investments + tithe.

Almost always there will be nothing left for investments and tithe. As most of us have experienced, lifestyle increases proportionally with income. You will always find something to spend on. And you can always use the excuse that with the stress of work, you "need" retail therapy immediately after getting your paycheck.

Money strategy of the rich on the other hand uses the formula: income - (tithe + investments) = expenses.

Pay yourself first by setting aside for your future. That is the best way to spend your hard-earned money, don't you think?

To put it simply, Bo Sanchez recommends this budget strategy:
Invest 10% to your eternity. Invest 20% to your maturity. Invest 70% to your family.

Not that hard to remember, right? But of course, I agree 100% with you it's difficult to practice. But we need to start somewhere...

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