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?
