I guess with the rising cost of living everywhere around the world, we are all looking for some ways to reduce our expenses. Ever heard people talking about the 80/20 rule of saving and spending or whatever they tell you about financial jibber-jabber?
I have, and many variations of it. Have you ever told someone to start saving, because you are sick of them loaning some money from you or just always being in a pinch? I have!
Well, to be honest, I was also one of those people who was in a pinch despite having quite a decent paid job. I was always paying bills late and even spending till the last cent I had every month even though I had very little financial responsibilities. My journey to understand my finances was not easy, and I had a lot of ups and downs and even tough decisions to make. I still do have problems now with financials, but for me, slowly understanding where I can curb my spending and also budgeting helps a lot with planning my paychecks.
To each their own way of dealing with financial situations. I'm here to share mine.
What I do now to manage my finances,
1. Plan ahead my monthly expenses and savings
2. Stick to the plan as much as possible.
3. Have your end goal on how much to save by the end of the year.
So with that principle I have in mind about my paycheck, I can honestly tell you that my monthly take home amount will be about SGD650 or less, this is based on just my staple income as a part time barista.
My budgeting plan will look somewhat like this
Expenses and Token
1. Parents $300
2. Bills $60
3. Transport $100
You will want to allocate the amount or estimate that you would be spending monthly into this expenses and token column as these are fixed variables that might not change very often. You could include things like mortgage, CC loans, education loans, utility bills, groceries etc into this column to see how much you are spending and allocating for each of the necessary expenses.
Savings
1. min $100
There is no fixed amount that you should be allocating to savings, but as long as it is a sum that you are comfortable and determined to allocate for savings. It should not be something difficult for you to do each month and dread saving. There are various ways for you to start saving this, you could use your sheer will power not to use the sum you have allocated be it by manual withdrawal or just an accumulative sum in the bank account, or by forced savings plans which will put aside the amount for you monthly and generate more interests for you with a short/long term savings plan using an insurance company. I used to have forced savings when I was in my early 20s but I couldn't keep up with it since I was out of money and job for awhile, I had to do an early termination which cost me a fair sum of money forfeited. So do what you feel comfortable in, I would do both and would totally do a fixed savings when I can afford it.
After some simple calculations, it leaves me with a balance of $90 to spend on food and drinks and other knicknacks which I would like to splurge on myself. If you think about it, it isn't a lot of money to spend on food and drinks and other stuff, but I will often weigh my decision on a certain item I would like to spend on to see if I really need or want the item. Often times, I don't need that item for work or anytime soon so I will raincheck to see if I still need the item next time.
I also recently did my yearly external expenses which includes insurances that I have to allocate my savings to. This is to ensure that I am prepared for the expenditure without worrying about my day to day living costs.
I'm totally blessed to be living under the roof with my parents still and having shelter daily without worry about anything. Can I say I'm not worried about what my financial future holds? No. I am worried. Even though money will never be enough, it's about how you make it work to your advantage that matters most.
I hope you guys get to see how much you can live without and save more. It's never too late to start, and it's never too late to learn from your past mistakes.
Till next time!
XOXO