Plan Your Finances With This Month-By-Month Money Guide
Manage your finances better by tweaking one thing, one month at a time. These tips may be simple, but by the end of the year, you’ll be able to transform the way you think and act about money
Talking about money makes most Filipinos uncomfortable, but it’s a conversation that needs to happen, especially in households. More often than not, it’s the moms who hold the purse strings, taking on the massive task of handling the household budget, so knowing how to handle money wisely is important.
Starting on the road to financial freedom looks daunting when you have to make drastic lifestyle changes, all in one go. With any journey, taking things one step at a time—or in this case, one month at a time— will make the journey less scary, more doable. Here’s how to go about it.
Create a realistic budget (and make budget cuts!). If your finances are still reeling over the damage that the holiday spending brought in, it’s time to face reality and set up a plan—a realistic household budget, to be exact. If you need to tighten up your belts, re-examine if you can still do some budget cuts. Wondering what to cut out? Limit or remove the lifestyle expenses for a couple of months, such as travel and eating out, first.
Think about tuition. It’s usually at the end of the school year when parents start thinking about the next school year, and how much it’s going to cost them. Joe Ferreria, President of MoneyDoctors, Inc., says that the amount you spend on your child’s tuition fee should be within 15% of your net income every year. He adds, “Signing promissory notes is an embarrassing and stressful event. It’s better to stay within what you can reasonably afford.” If you’re all set for the next school year, this month would be a great time to assess your education policies, or if you don’t have one yet, to start shopping around for one. Another option would be to open up an account solely for your children’s education, where you’ll put in a certain amount per month for a couple of years.
Bring out your child’s entrepreneurial spirit. Rose Fres Fausto, FQ Mom and Behavioral Economist, suggests making summer an earning opportunity. She says, “The kids are restless and now you’re thinking of enrolling them in all sorts of summer classes. Yes, it’s okay to do that, but why don’t you challenge them to an earning activity this summer? What are your kids good at? Can they teach this skill for a fee? Can they sell some of their creations to earn this summer?”
Go on a money-friendly vacation. Summer season means going on vacation with the family, but it doesn’t need to cost an arm and a leg to go on one. Remember: It’s the memories and experiences you’ll have that you should treasure when you head off to a vacation, not the expensive lodgings or locations. “Start by deciding how much you will spend per individual, plus lodging, travel, food, and activities you intend to do with the family,” Joe says. “It will save you a lot of grief when you get back home.”
Do a mid-year review. It’s the middle of the year already! Review your budget and finances to see if you’re on the right track. Take notice of any points where you were in the red, and how you can adjust the budget for the rest of the year so that you can end the year on a positive note, maybe even with extra money!
Pay off bad debts. Paying off debts is never fun, but it’s something that needs to be done. Nannette Ferreria, Managing Director of MoneyDoctors Inc., suggests writing down all the debts and loans you have, and put a deadline for all of them. She adds, “Begin with the smallest loan. It repairs your damaged self-esteem if you are able to pay it quickly. Move on to the next and the next, and you’ll feel lighter and your head will be clearer.”
Teach your kids to invest. Rose says that after learning how to save regularly, your kids might be ready to invest. “For as low as P5,000, they can start their investment journey. Introduce to them age-appropriate investment lessons. Check out online options to buy mutual funds. Go with the automatic features of investing so that this will continue to happen without the burden of counting on their discipline to remember regular investing.” If you’re not yet savvy with investing in stocks, ask your preferred financial institution if they have any free seminars that you can attend to learn more about it.
Plan for holiday expenses. The first “ber” month makes Filipinos think of Christmas, and Rose advises to create your Christmas list as early as now. “Be more systematic in your Christmas shopping by starting early. Categorize your gift recipients. Are there gifts that you yourself can make to save on cost and to also personalize and consequently make the gifts more meaningful?”
Teach your kids to not be materialistic. Nannette says that giving in to your child’s love for material things will not be good for them in the long run. Since the kids are home for the semestral break, it would be a good time to start the routine of letting them help around the house. She says, “Giving them too much money or material things will weaken them. Teach them instead to love work by allowing them to do household chores. Transfer your money values by teaching them how to save.”
Resist the sales. Pre-holiday sales are aplenty this season, with stores looking to unload old stocks to make way for their holiday collections. Joe advises to follow the “buy one and walk away” rule when it comes to sales. He says, “Rather than spending only an amount equal to one pair of shoes, you spend more because you buy two or more pairs when items are on sale. Learn to buy just one and walk away—it will keep you healthy, wealthy, and wise.”
Reach out to others. The holiday season makes people feel more giving and helpful, and Joe seconds the motion. He says, “Giving money and material things away teaches selflessness and detachment from the things of the world. It teaches a person that working hard is not only about providing for one’s needs, but motivates you to work harder for the needs of the community as well.”
This article was originally published in Working Mom February-March 2017 issue.