Money Management 101

Until you show you can handle what you've got you won't get any more!

The habit of managing your money is more important than the amount!

So how do you manage your money? 

I never did until recently when i got immersed into personal finance blogs. 

Today, i save 22% of my income and have yet to reach my goal of saving 30%.

In achieving 22%, i enrolled myself in my company's stock purchase program and employee cooperative. 

In the stock purchase program, my company allows its employees to purchase its stocks at 15% discount every end of June and December. Simple rule, the maximum deduction an employee can allot for the stock purchase is 10%. Since i enrolled in 2009, i easily achieved that 10% since the money is already deducted from my payroll. I don't get it so i don't manage it. I think it is a good program. Too bad i only understood it four years after joining the company.

I consider it a good program for the 15% discount. 15% may be small to some people but this is way lot higher than the deposit interest rates. 

The next 12% was achieved by joining cooperatives. I joined our company cooperative as well as my sister's friends' cooperative. Last year, i contributed a total of P10,000 in my sister's friends' cooperative and got back P12,500 in December. In simple computation, that gives me 25% (2,500 interest divided by the principal of 10,000). For the math nerds out there, this should be higher since i pay P1,000 at the end of the first ten months. Now, I'm still waiting for the dividends information on our company cooperative to see how much rate of return i got.

So what?

Well, from my most recently read book, it is suggested that we manage our income and allotting them into various categories such as long term savings, emergency fund etc. I am still trying to understand the logic so i decided to create a money management plan of my own. Starting today, whatever income that i will receive will be allocated into the following

50% for Necessities

10% for Spending Account 

10% for Financial Freedom

10% for Give Account

10% for Education Account

10% for Investments

Necessities Account -  This account will be used to get me going. Purchases such as food, home rental, car maintenance and other day to day spending. In Abraham Maslow's hierarchy of needs, this account will be used to answer all the needs at the bottom of the pyramid.

Spending Account - This money will be used for leisure, travel and shopping. This will include purchases of wants such as new gadgets, new shoes, new clothes. I'm sticking to 10% and may add up higher percentage as long as I'm getting the money from the 50% necessities fund. (Yeah, i designated 50% for necessities but i think i can still bring it down. For sure, brewed coffee is a necessity today but i know i'll learn how to let go of that habit)

Financial Freedom - This money is only to be used for investments and buying or creating passive income streams. For this year, i'll make good use of this money to earn more.

Give Account - Rich people has always told me to tithe as the bible says. Unfortunately, i haven't been tithing regularly and not within the percentage as written in the book of life. This year, i'll save 10% of my income for tithing. 

Education Account - for Theo, Lianne and my education.

Investment Account - I'm getting better as an investor, be it in mutual fund, stocks or reselling stuff. This year, I'll make a good return of this 10% account.

So there you go. That's my plan for the year. How about you?

Character is the result of two things: mental attitude and the way we spend our time.

You'll be surprised to know how far you can go from the point where you thought it was the end.

If the grass is greener on the other side, maybe that's because YOU are not taking care of your grass

Knowing is not enough; we must apply. Wishing is not enough; we must do. -Johann Von Goethe

2010 My Year End Review (Personal Entry)

I've been following The Personal Excellence Blog since September 2010 and i decided it would be good to do my own personal year end review for myself.

According to Celestine, doing year end review is important for the following reasons

1. Draw lessons from the year
2. Wrap up what you've done this year
3. Regain focus
4. Start the next year on a high note

If you want to do your own personal review, here are the questions to ask yourself

1. What are your biggest accomplishments this year? (Accomplishments here refer to any results you are proud of)
2. What are the biggest lessons you've learned this year?
3. On a scale of 1-10, how satisfied are you with how you spent the year? (Or if you prefer giving grades, what grade would you give yourself for how this year turned out, between F- to A+?) Why?
4. What do you want to accomplish next year, such that it's your best year ever?
5. What are your immediate next steps to achieve these goals?

So I did my review and here are the biggest accomplishments i have for 2010

• using MS Access - I got a 3 units of MS Access back in 3rd year college with introductions on primary key and secondary key. I don't really have a working knowledge on it but i just thought it will be a useful tool in one of the tasks we monitor in our office. I opened the help file and created a sample tracking database. My boss was supportive enough to try it and i thought it worked well in consolidating the tracking of our work. I still have a lot to learn and to fix the rough edges but i am happy i did something useful.

• reactivating my blog - I've been writing for quite sometime but was not able to post regularly. Last year, i have decided to make my blog public and add new entries. I consider this as an accomplishment because this blog helps me become a better writer. For 2011, i have bigger goals. I want my blog to help others too and not only myself. Right now, i have few hits every now and then but i want my blog help others do things such as invest in stocks or spend money wisely

• completing my strama paper - Another step in getting my MBA Degree. This year, i managed to complete all the required courses and pass the paper. After years of trying to find time for school and work, i'm almost done except for the Oral Comprehensive Exam. 

Biggest Lessons I've Learned This Year

• Passion is the key - Any tasks or job is not cumbersome or tiring if i am passionate in doing it. 
• I should focus on what i can do and not on what i have
• Avoid negative people - They transfer negative thoughts and energy. 
• Be more friendly - Everyone has a story to tell. I need to listen and learn. I gain nothing in speaking.
• Make myself proud - I should quit thinking how people will think of me but guide my actions by thinking "will i be proud of myself if i do this?" 

My Grade?

I'll give my 2010 a B+. Not that great. A lot of room for improvement but still a passing grade.

Next Steps

2011 will be a great year for me. I have plans laid out for the year. I just need to break it down into doable steps and actions. 

Right now, I'm not yet comfortable in sharing my goals but my 2011 goals are written. I see it everyday. I guess doing the 30DLBL was really a big help. If you want to have focus in your life, i suggest try doing the it too. Materials are here in this link.