Bigger Salary First Before You Can Budget and Save?

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What is budgeting? Budgeting is the act of preparing a budget. Sorry guys it’s that simple.

Do you guys make a budget from your salaries? Perhaps some of you will say no and the majority will say yes. I for one am doing a budget from my salary. I allocate my salary to my savings, bills, remittances and household expenses. Having a budget helps me organize my finances and gives me a sense of security on where my money is being spent. Basically I have financial goals and in order to achieve that, I’ve got to have a plan. Planning involves the creation of budget. For example, if I want to have 1 million Peso of savings, then I need to budget my salary and follow the allocation of funds therein. Obviously it requires a lot of discipline to stick with my budget but it’s the only way to do it if you want to achieve your goals.

Bigger Salary First Before I Can Save

I knew some of you would say that if only you have a larger salary, then saving won’t be a quandary. You’ve got kids who need diapers, milk, and clothes. Their well being is more important you might say. Aside from that, you need to pay rent, provide food, remit money for your love ones back in the Philippines, and pay the bills. At the end of the day, there is no more left to save for your future.

I have a friend whose salary is twice as I have. He is already a manager of his department and reports directly to the president. However, every now and then he will call me if I have some extra money to lend. Anything extra, he would say. It has become a habit that I’m already expecting his call once the 3^rd week of the month approaches. He’ll borrow money and pay it once the salary comes in. I can easily charge him with an interest but since he is a friend, I’m just lending him interest free.

My friend has bigger income than me and yet he doesn’t have any savings at all. I don’t know where the money is going, but one thing I’m sure though is that he needs a fix on his finances. One day I asked him, “Why you are always short on money?” His succinct reply was “I have a lot of expenses here in Dubai and in the Philippines”.

I never asked him again about his finances because I do not want to be viewed as busybody. The only way for him to talk about it is through example and perhaps through my blog.

Saving is not about money. It’s about attitude and discipline. You’ve got to find a way to make your budget work.

Differentiate Needs from Wants

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Maybe, you are spending beyond your means. Buying branded clothes is not a necessity but a wants. There is big difference between wants and needs. You can live without wants but needs are necessary.

Having an Iphone is cool but if it will destroy your budget, it will ‘burn’ you. Perhaps after you’ve got a sizable savings then you can reward yourself and Iphone might be the perfect gift. 

However while you are still building your fortune, it will be desirable if you stay away from it. My mobile phone is worth 100AED. That is around 1,100 Php. It’s the cheapest phone available here. My purpose in having a mobile phone is to call and text my loved ones. I don’t have the need to worry about what others will say about me when I hold my useful mobile phone. It’s none of their business. If I have lots of money, or have achieved my financial goals then I can turn to that Iphone anytime.

Limit your wants as much as possible and focus more on your needs (savings is a need for your future).

Entertainment Fund

Obviously, you don’t need to be harsh on yourself. You can include an entertainment fund in your budget. If you love to watch movies, go and watch your favorite movies. A little play here and there to shake out the stress of the week will go a long way in improving your well-being.

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I love going to park with my family. It refreshes me. The time spent with them is holy. Chasing my daughter along the green grasses or guiding her through the walkways of the playground is a great feeling. Chatting with my wife and discuss about anything under the sun, showbiz gossips included, her favorites. These are the moments I treasure and will keep forever in my heart.  

The fee for this relaxing moment is 5 AED per person. Can you imagine that? 5 AED for a quality time with your loved ones under the shade of a lovely tree, or over a barbecue stick. It doesn’t get any better than that! Having an amazing and meaningful life doesn’t have to be expensive.

You just have to be grateful.

Please read this previous article I wrote way back in year 2011.