Are you one of those people who always run out of cash before the next payday? If yes, this article is for you.
In the Philippines, when you usually run out of cash before the 15th or 30th (the typical payday setup), you are under the “Petsa de Peligro” radar.
The term “Petsa de Peligro” (which translates to day of danger) not only happens to the low or middle-class earner but even to the people earning six digits per month.
If there are times that you can no longer sleep thinking on how to cope up, or borrowing money, and pawning your gadgets and pieces of jewelry already becomes your option, don’t worry because we are here to help.
Read on, and see how these five tips can guide you.
1. Create a Budget
A budget is a simple estimate of how you can allocate your income to your daily needs, such as savings and expenses. Here’s what you can do:
- Divide your income using a logical partition method.
- List down all your fixed expenses. Fixed expenses are expenses that do not change over a period of time. This includes your postpaid plans, rental fees, internet connections (with fixed monthly rate), insurance and others.
After determining your fixed expenses, start identifying your variable expenses or those that vary from time to time. This includes the food, utilities (water and electricity), and others. You can also refer to your previous bills.
Let’s take an example.
Considering you are earning 50, 000 pesos a month or 25,000.00 pesos per cut-off, below can be a sample budget.
|Monthly Fixed Expenses|
|TOTAL FIXED EXPENSES||P15,000.00|
|Monthly Variable Expenses|
|TOTAL VARIABLE EXPENSES||P25,500.00|
By simply documenting your budget, you will be having a clear and best estimate on how much you should set aside every payday.
2. Track Your Spending
Next, try to track your spending. If you are not used to it, what you can do is literally write down what you have spent every single day in a notebook/pad for at least thirty days. You can also use mobile applications that are free or try using Microsoft Excel.
After thirty days, assess where your money goes aside from your fixed and variable expenses. The goal is to check what you can probably let go of, and allot them on the third tip, instead!
3. Learn How to Save and Invest
Now that you have your best expense estimate and you already evaluated your spending, it’s now time to save.
Considering our example on Tip # 1, where you have 50, 000 pesos salary and a total expense of 40, 000 pesos, you still have a 10, 000 peso excess.
If in any case, you have figured out that there’s something wrong with your spending habits, you can also add that to your savings.
Open a savings account and create a system. For example, every 15th, deposit 2, 500 pesos and forget about it, while the remaining 2,500 can be kept on a separate envelope at your home.
After several months, you can start investing in other financial instruments to grow them once you have enough funds.
4. Stick to Your Budget
Sticking to your budget is the execution stage of the first three tips.
You need to follow your budget strictly, or else you will be having a hard time managing your salary, fulfilling your expenses, and failing to save for the future.
Remember that the execution stage is the heart of budgeting. Without it, budgeting is just merely a plan.
5. Assess Your Financial Strategy
Lastly, assess your financial strategy. At this stage, you should already know yourself and your financial habits.
After three to six months, sit down and review your output. Ask yourself if the budget, savings, or investment are properly executed. Check at which point you experience hardships and ask yourself why it happened.
Do it regularly, and you will see a huge difference.
Bonus tip: You can also follow Financial Gurus online to keep you reminded of what’s good or not.
“Petsa de Peligro” can be one of the most struggling situations you can have. It can fill you with worries, desperation, and the feeling of being trapped in a cycle of paycheck to paycheck.
While this really happens to most of us, always remember that it’s never too late. Improve your habits, document them, and assess. Soon, you’ll never notice that you are no longer in the “Petsa de Peligro” zone.