When I read @smaeunabs’ blog about her budget principles, I have thought that I should also make mine. I had a budget principle but was totally different from hers. Yet, I’ve got a lot of learnings from it.
In respond to her challenge to make a budget plan and my desire to apply what I’ve learned from her, I will show to you my past and my current budget plan. Spoiler! I have so many liabilities. Maybe you have some too. So, try to check this out!
My Past Budget Principle
I wasn’t really good in budgeting before. My principle was, as much as the liabilities are already paid then I wouldn’t mind any longer how to spend the remaining. I had no proper allocations to specific needs or investments.
I made a visual basic application form in Microsoft Excel for me to track my remaining finances. The program shows the money I have in my banks and even in my wallet and cabinets. I always update it every evening before bed time. Please bear with me to just hide the actual money I have. It’s not too big as what some of you may be thinking right now. Hahaha.
Realizing that I’d been so foolish in handling my income properly, I have decided to make a proper financial budgeting plan. And here it is.
Present Budget Principle
Before I discuss the allocations of my income, I would like to show you first the chart that shows the sources of it. About ¾ of my gross income is from my full-time job being a review instructor and the rest are from other sidelines and businesses.
Let me repeat it. This is gross income. Before subtracting tax, SSS, Philhealth, and Pag-Ibig deduction. It is because for me, tithe must not be the 10th of the net income. Israelites didn’t give part to the government before they gave the tenth of the remaining, did they?
Tithe is very important. I consider it not really a need of God. Come on, God owns everything. He created the universe and tithe is too small for Him. But, He asks this from us to support His church for spreading the gospel of His Son.
We must give it to Him not because we are just compelled but because we love Him. We love Him because He first loved us (1 John 4:19).
This is how I calculate my tithe algebraically:
X = Gross Income
Y = My Tax + Deductions
My net pay is NP = X – Y
But tithe is X/10, not (X – Y)/10.
Thus, my net pay minus tithe is X – Y – X/10 = 0.90X – Y
Net Income Allocations
As I've said, I wasn’t good in handling my finances, so I want to be honest with you. Due to the confidence of having enough salary, I unwisely spent most of it to expensive foods and things I’d loved. That financially illiterate state led me to have liabilities and cost me to struggle in paying monthly mortgages as of today. Auto loan, house loan, personal computer installment, property investments, etc.
The chart shows how I distribute my net income to my liabilities, insurance, personal needs and family responsibilities. I will not just show the exact figures but just percentages. Lol.
I asked for a loan from my boss to reconstruct our old house about three years ago. This made me have the current monthly amortization that is good for 4 years. Good thing is, the reconstruction included six income generating rooms up to P9,000 per month.
I took this 2 years ago. For me, a car is not just a bad liability but a good asset as long as it generates additional income.
Anti-distracted driving act violator.
I’m now paying for the equity of this property. Looking forward to having good income after its turnover. If it’s ready by then, I will just text you: “Punta ka ditto, dala ka foods!”.
Monthly internet bills, etc. no internet, no porn. hahaha. kidding. Internet is really a good source of active and passive income. Specially Steemit! Yeah!
Variable Life Insurance Plan
I applied for a VUL Policy that includes an Accelerated Critical Illness benefit way back March 2016. This serves as my financial freedom account that could be redeemed and fully enjoyed in an early retirement.
Variable budget is the amount I allocate to my personal and family necessities, professional budget allocations, long term savings, and personal rewards.
Family Needs and Supplies
This amount is on top of the family income from the rooms for rent I mentioned above. This helps my family to keep doing the business they’ve always wanted like Halo-halo, fishball, etc. See my past post about this by clicking here
This includes food and room supplies. I’ve noticed that this allocation has decreased not the same the expenses I did before. Is it because I am single now? Hahaha. As I’ve mentioned in my past post also, I’m already a health advocate. Now I am learning to eat cheaper but healthy foods.
Fuel and Maintenance
This is a necessity for me to keep moving on with my work and my businesses. Oh, have I told you my businesses? I can’t disclose to you all my businesses. Baka hindi ako yayaman if may ka kompetensya na ako. Lol. But let me just mention one, book selling.
I get commissions by selling Sir Gillesania’s books and reviewers. I’ve been doing this since college days. From time to time, my college teachers and classmates, who are now teaching, keep on ordering dozens of books and I deliver them with the help of my service. You want to order? Just PM me and I will give you discounts. Hahaha.
Preventive maintenance checkup is important for a car that must not be compromised. Including this in the budget could really lighten the burden of the bulk maintenance cost.
Professional Budget Allocations
The Professional Regulation Commission (PRC) requires Continuing Professional Development (CPD) units from professionals for PRC ID card renewals. This can only be collected by attending trainings, seminars and conventions. So, allocating a budget for those events are necessary.
Long term savings
You may have noticed that I have many bank accounts. This is for me to separate different funds to different accounts. Example, I use Chinabank saving account for my auto loan and bdo account for my VUL auto debit payment.
I place my long-term savings to my Metrobank passbook and maintains not to withdraw any amount from it. For what purpose? For me to have enough fund in the future that may be used for any necessities, like house and lot or additional properties.
This amount maybe for the things I like or the travels I desire. I always want to reward myself for the hard works I have done. Allocating this would make me more excited to work and do the business. But I would spend it every after three months, not every month.
This serves as part of pocket money, emergency needs or any unexpected expenditures. I will use this to treat my siblings or any friends to whom I will say “tara! Usapay tayo!”. Kidding! This will also be the source of my recreations with my friends to play bowling, billiards or basketball.
Is this plan attainable?
The full-time job salary I calculated is based from the advanced schedule we have in our work place. While I based the businesses incomes from the incomes I got as of today. This income will probably increase before the month ends. So, I could say it is attainable.
There’s a quote that has been staying in my mind after realizing my mistakes in handling my finances. It is:
” Financially literate person is not the one who has great wealth but the one who may just have a little but still knows how to spend it wisely.”
So, from now on, I’ve got to discipline myself in handling this thing that is a blessing from above.
And to you my friend, I proclaim this:
And my God will meet all your needs according to the riches of his glory in Christ Jesus.