A Millennial Guide to Budgeting

Welcome to adulthood. Gone are the days when we get “baon” (allowance) from our parents and money isn’t our problem. We have a roof over our head without having to worry about getting kicked out, get to eat delicious home cooked food and all the stuff (gadgets, clothes etc) that our parents buy for us are luxury we can only reminisce now. We are now young adults with huge responsibilities we must fulfill ourselves. Piled up bills to pay, rent, groceries and loans are now our new reality and “petsa de peligro” is a battle we have to win every month. Let’s admit it, adult life is hard, most especially when it comes to handling our finances. I, myself have gone through different financial struggles and as I go through adulthood, I have learned some tips & tricks on how I can manage my finances. Here are what I’ve learned so far.

Know your finances

The first thing you’d need to know before budgeting is to know how much you earn and how frequent you get paid (daily, weekly, monthly or bi-monthly) so you can better match the timing of your income with your bills.. By learning about your finances you will be able to create a budget plan that will suit you. 

Set goals

Goals are really important when it comes to handling finances. Set out the things you wish to achieve or buy. Are you saving up for a house? A car? Or perhaps you are saving to go to your dream destination? Whatever it may be, having these goals will help motivate you into saving up to achieve them.

Plan

Now that you know your finances and set out your goals, it’s time to start creating a budget plan. When creating a budget plan, focus on reducing your spending to fit your income. The way I do this is to list out all the expenses I have within the month and then set aside a big portion of my income for utility bills, rent and groceries since these are the most important. Try to determine which expenses you can afford to cut off or at least trim down. In my case, I try to avoid impulsive buying and try to stay at home during the weekends to avoid more expenses. One important thing to know is that budget planning is also a family matter. Plan and talk with family members to help try reduce electricity, water consumption or any other expenses

Set aside budget for your weekly expenses such as transportation and food. Compute how much you usually spend in a week and try as much as possible to not go over that amount. I’ve learned that having only a week’s worth of allowance keeps me to stay within the budget. Having too much cash on hand makes me spend more. If you’re too scared to not have enough money in case of an unpredictable situation, add a buffer on your spending allowance. If you end up not using the buffer then put it into your savings.

Live within your means.

The most important rule in budgeting is to live within your means. How much you spend each month should be less than or at least equal to the money you earn. It’s a lot easier said than done especially in today’s society, with all the social media pressure coming our way. You may feel a little jealous of that friend who bought the latest iPhone 11 or the one who has been traveling to different destinations, and that’s okay. Resist the pressure to have the same material things as the people around you. Do not spend your hard earned cash hastily just to show off or fake wealth. You might find yourself buried in debt one day. Instead, turn them into motivation to work harder and save up more. 

Do not spend your hard earned cash hastily just to show off or fake wealth. You might find yourself buried in debt one day.

Think before you buy

Shopping is pretty convenient now with the use of shopping apps like Lazada and Shopee. It saves us time, very accessible and gives various options of different products and brands. With its ease and benefits, it is now a popular occurrence that we millennials do our shopping online. However, the down side of it all is that we are prone to impulse buying. Who among us didn’t end up buying unnecessary things when online shopping especially when there is a sale? I’m quite sure we’re all guilty of this at some point. To avoid impulsive buying, think before you buy. Ask yourself a couple of times if you really “need” or just “want” it. Give it a day or two to think about it. You might find out that it’s just impulse that makes you want to buy. But if after giving it a lot of thought and you still think that you need it, then go ahead.

Still, try to be as wise as possible in making any purchases. When buying, don’t forget to take advantage of promos. Online shops usually have big sales every month or give away vouchers for you to use. This way you can save more money than buying things on its original price. 

Set up an emergency fund

Having savings that is dedicated to emergencies will help you avoid being in debt. This money should never be touched unless it’s really needed. A lot of unexpected things can occur, so it’s best to be prepared. For example if you or any of your family member gets sick, you have money to use on hospital bills and medications.

Getting your expenses under control is one of the most important things you need to do to achieve financial stability. That, and a whole lot of discipline and commitment. You will be amazed at how much money you can save and how quickly you can achieve your goals if you start being smart with your money today.