I need to plan for my future income and expenditures that I can use as guideline for spending and saving. We all do! We all know that we need to, but the majority of Filipinos routinely spend more than they can afford. I have proven that the key to spending within your means is to know your expenses and spend less than you make.
1. Sum it all up!
First, you need to determine how much income you have. On a worksheet, list your relevant sources of income and a peso figure next to each. Make sure you include all sources of income such as salaries, interests, pension and any other income – including your spouse’s income if you’re married.
If you get a salary, be sure to indicate your take-home pay rather than your gross pay. Taxes are usually taken out automatically, but if they’re not, remember to include them as another expense. If you receive money from somewhere not listed, enter the source along with the amount under “other income.”
2. Estimate it!
The best way to do this is to keep track of how much you spend for one month. On your worksheet, divide spending into fixed and flexible expenses. Fixed expenses are those that generally do not change from month to month, such as rent and insurance payments, or your monthly reimbursements to your family back home. Flexible expenses are those that do change from month to month, such as food or entertainment. If some of your expenses for one or more categories change significantly each month, take a three-month average for your total.
3. Figure it out!
Once you’ve totaled up your monthly income and your monthly expenses, subtract the expense total from the income total to get the difference. A positive number indicates that you’re spending less than you earn.
A negative number indicates that your expenses are greater than your income. This means you will need to trim your expenses in order to begin living within your means.
Well done! You’ve created a budget. The next step is to track your budgeting over time to make sure you’re sticking to it. If you find you aren’t able to follow your budget successfully, it may mean that your plan isn’t flexible enough. It can take revisiting your budget a few times to find the balance that works for you.