How To Budget Your Money Wisely

A budget is a preview of your future expenses. It's like being able to watch a teaser or a trailer of a movie before you actually watch the movie. That way, you can say if the movie will be good or bad. It's the same with budgeting your money. In this article, I hope that I can help you on how to budget your money wisely.

Let's look at the following items, I set a percentage amount for each item and I will break it down to further explain why I allocated that much.

Budget Chart

Savings for Emergency and Future Needs - 10%
Savings for Future Investments - 10%

In one of the seminars I attended, one of the most important lessons I learned is the effective allocation of savings. At least twenty percent must be allocated to savings and must be split to two. You need to have savings for future needs and emergencies because you cannot really say what will happen in life, and savings for future investments like stocks, mutual funds, or maybe a business. It should be savings first before anything else!

Budget for Expenses - 55%

Now, a big portion must be allocated for our expenses like food, electricity bills, water, and rent. In most cases, 55% fits just fine.


Education - 5%


Next, we allocate 5% for education like books, seminars and internet (which I consider a source of education). It is important that we educate ourselves in things like personal finance, business and investment. You might also want to pick up some books on computers in case you want to improve your computer literacy or books that are food for the soul like motivational or self help books.


Fun - 10%

There is no need to deprive ourselves of some fun. According to the seminar I attended, you need to have fun or "self" will rebel. The 10% budget I allocate is usually  good for me and my wife to watch a movie twice a month and dine on a fine (i.e. cheap) restaurant. Have fun but no too much fun!


Note: The previous two items can be done interchangeably. Which means you can have 5% for fun and 10% for education. Whichever fits your taste.


Charity/Giving Forward - 10%

We still have 10% left... Now, it is important that we learn how to give back. Honestly, I would rather call this "giving forward". According to wikipedia, "A gift or a present is the transfer of something without the expectation of receiving something in return". Giving attracts positive energy.

Now we have 100% of our budget plan. Remember that a budget is a written plan. It is important that you stick with the plan and stay within the boundaries of your budget. You might want to further break this down and translate into more readable figures. Below is a spreadsheet I use every month for every payday to "preview" my month's budget.

How To Budget Spreadsheet

Budget Spreadsheet

REMEMBER! This only serves as a guideline. There's no guarantee that this will work for you as it did for me. I actually got this template from a friend and made a few adjustments. You may have to make your own adjustments too.

4 comments on "How To Budget Your Money Wisely"
Jonha @ Happiness said...

I wonder why more money was alloted on charity?

I think more money should be alloted on education(in younger years) so that by the time a child grows older, you will have lesser budget for that area. Why? Because that's when scholarships will come, as a result of his good foundation. Just sayin, haha.

Thanks so much for visiting my blog and leaving some really nice comments. I appreciate you following my blog too! :)

Tim said...

Hi Jonha

I just based that on the Christian teaching that 10% must be allotted to your tithes. Not to go so much about that but that's a requirement that Christians often overlook. I guess education, charity and fun can all be interchanged depending on your lifestyle and belief.

No problem, I visit a lot of other blogs and leave comment and follow when I feel "engaged" on the topic. :)

Jonha Ducayag Revesencio said...

Hi Tim,

I believe in giving back a portion of your interest/income to God and I pay my tithing every month :) I couldn't afford a good life if I won't pay it.

Nag email nga pala ako kasi gusto ko sanang mag exchange links tayo. I sent you the details na at na add na rin kita sa "Suggested Readings" ko because I know my readers would really find value in what you write :)

Anonymous said...

I guess if you don't plan to own a car this works.... hahah what bs JUST GET CREDIT CARDS AND ON 20 diff payment plans and your living RICH

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