Budgeting 101: A Simple Guide

Welcome to my new blog series focused on helping fellow kababayans take control of their finances! I’m Je-anne, a mother of two and financial advisor passionate about empowering others to achieve their money goals through education.

Let’s start with one of the most fundamental financial principles – budgeting. Having and following a budget is key to effectively managing your hard-earned pesos. Simply put, a budget is a plan for how much you earn and spend over a set period of time, usually monthly.

When you first start budgeting, begin by listing all of your regular income sources and amounts. This may include your salary, spouse’s income, rental income, interest earned, etc. Be sure to use your net income after taxes and other deductions.

Next, tally up your recurring monthly expenses. fixed costs like rent/mortgage, utilities, cell phone bill, groceries, transportation and any loan payments or insurance premiums. Don’t forget irregular expenses that you pay quarterly, annually or sporadically such as car registration, annual insurance premiums, school fees, etc.

Once you have your income and expenses laid out, subtract your total expenses from total income. Hopefully this leaves you with a surplus, but if expenses exceed income, you’ll need to cut back in certain areas. Look for any non-essential spending to trim.

The goal is to end each month with money left over that you can put towards savings goals, investing, paying extra on debt, or other priorities. Having this surplus built into your budget is crucial.

Sticking to your budget takes some discipline, which gets easier with practice. I recommend tracking all spending closely for the first 1-2 months either using an app, spreadsheet or written ledger. This spending awareness helps reinforce your budget.

Over time, refine your budget by adjusting expense amounts up or down based on actual spending patterns. Budgeting is an ongoing process! Be sure to budget for periodic or unexpected expenses by saving a little each month.

I hope these budgeting basics provide a helpful foundation as you start your personal finance journey! Let me know if you have any other money questions – I’m here to help every step of the way. Next time, we’ll dive into building that all-important emergency fund. Keep striving for your dreams!