Tag Archives: budgeting

5 Easy Ways to Become Frugal

frugal-moneyFrugal living means living better for less. You dont have to spend all your money to live a better life but sometimes learning how to budget your money, understanding its value, knowing your needs from your wants or by simply cutting on buying a coffee can do a lot in your quality of life.

Many of our actions and forces around us affect people and how we live. Frugal living ideas can be difficult to ponder up. In this article, learn 5 frugal living ideas that can help you start living a frugal life.

1. Stop wasting your money by budgeting your money.

The first step in stopping wasting money is learning how to budget. List down your expenses to see which ones you can cut off. If you spend too much on gas then maybe you can opt to take public transportation. If you don’t have a budget list then you should start making one. Having a budget will help you prioritize the things that you need to buy and track where your money is going.

For example do you have a gym membership that you pay xxx amount per month that you never use? Then you should cancel it ASAP! Do you spend PHP500 per week on eating out? Why not start cooking your meals at home instead. Start budgeting your money and stick with your budget so you can stop wasting your money!

2. Know the difference between WANTS and NEEDS.

Do you spend your money on things that are not even important to you? Do you buy the latest gadgets displayed on the store or the latest fashion fad? Consider spending your money on things that really matter instead. Know your priorities and know the different of wants from needs.

To simply put it: “Needs” are what we need to live while “Wants” include everything else we might like to have, but we don’t need to survive.

3. Surround yourself with people who are also frugal.

If you wish to become frugal then it would be easier for you if there are people who understand you. People or friends who are also frugal can your support group in living frugally.

You do not have to leave your current friends either but it will be probably wise to have at least one frugal friend or set of people who can understand you, give you advise and or join you in living a frugal life. Who knows some of your friends might be thinking of living a frugal life too or you might influence your friends to be more frugal as well.

4. Think about money in terms of real cost.

A minimum wage worker here in Manila usually makes around Php450 to Php500 a day. Just imagine if he loves to drink a popular brand of coffee every day? A large SB coffee usually costs around Php150. That’s already around 30% of his daily salary. Php150 multiply it by 20 working days in a month is equivalent to Php3000. In 10 months that person spends around Php30k for coffee alone.

In 10 years he spends Php360k for coffee alone! You can already buy a decent second hand car if he opted to just use regular coffee, 3 in 1 coffee or make his own coffee? Just imagine how much money he will be able to make if he invest that Php150/day in stocks or mutual fund.

Sometimes we should see things in bigger picture to realize the true cost of things that we buy. Just by making your own coffee or not buying your favorite SB coffee can already give you Php360K saving. So how much money do you have in your high yield savings today? Do you want to add Php360K to your savings account? If your answer is yes, then stop buying coffee and start mixing your own coffee starting today!

5. Don’t wait until the last minute to become frugal start today!

The longer you wait the harder for you to start. Waiting also until the last minute will almost always costs you more money. The easiest way to become frugal is by starting to plan ahead. Plan ahead and go to the grocery store with coupons or having a list of the things that you need to buy.

You can also save a lot of money if you plan ahead for birthdays or holidays as well. Sometimes buying stuff like a Halloween costume until October 30th will surely cost you more money than buying a costume online today but it will be best if you can make your own costume from already available resources in your home.

Try these 5 ways to be more frugal and you might be surprised by how much money you save and remember that being frugal does not mean that you spend your money wisely!

Liza's budgeting envelope

Budgeting With The Help of An Orange Envelope

I’m sure. you’ve met my Shisha – my cool, mouth-zipped, orange piggy bank. Now, you get to meet my friendly orange envelope which is the keeper of my monthly expenses in credit cards and household bills. She doesn’t have a name though. 😛

Liza's budgeting envelope

This envelope is relatively small and almost the size of a long letter envelope in length but it’s expandable and a little larger in height. It’s handy and requires little storage. The lock is just a string.

liza envelopes

I labeled each area with the types of bills to manage them properly. This is where I put the receipts and money that I allotted for each bill. I also have a notebook where I always update my credit card purchases. I used to have 5 credit cards (which I trimmed down to two now – Visa and Mastercard) and these notes are helping me in managing my expenses. Writing down notes maybe be time consuming but it’s definitely beneficial in tracking your budget that involves using credit cards.

credit card receipts

Above is some of the credit card receipts and money attached to it with my notebook in the background (please don’t use stapler, BSP don’t like it =P). So I won’t be over with my monthly budget, I normally buy things I was planned to buy but instead of paying with cash, I use credit card to get points and rebates (which will be another topic) and attached the cash then pile it in my orange envelope. This is what I always do unless I purchased some installment items and have some emergency needs. With installments, my notebook keeps me up to date for the next months due and tells me the best time to buy new installments again.

I know that this does not apply to everybody but I’m hoping that upon sharing this with you, I will be able to help you get started. I’d like to share with you things that works for me. I’ve developed this simple strategy when I started building my house to ensure that I won’t miss any bills which would freak me out in the coming months. Sometimes, I get a change from these payments which I now deposit to Shisha.

hot coffee

Setting Up a Financial Goal and Following a Budget

hot coffeeFor the past years I have been reading a lot of resources about personal finance and how to reach financial freedom. One common advice that I frequently read from finance gurus and advisors is to start by setting up your financial goals and sticking with your budget plans.

No matter how much you earn if you don’t have a goal or you are not following any budget plans then you are doomed to spend every peso of your salary to unimportant things. I know how hard it is to live paycheck to paycheck and I am the type of person that doesn’t want to borrow money from friends or relatives. I know how hard to stick to your budget and to not succumb to “temptations” (as what I call activities that needs money spending) surrounding you.

So last year, I started to create my financial goal and that is to save (30%) part of my salary to savings and spend the remaining to paying bills, leisure, food and transportation allowance and etc. You don’t have to allot 30% of your salary immediately you can start at 5% then gradually increase it. The reason I can allot 30% of my salary to saving is because I don’t have my own family yet and this time I really want to start the habit of not spending all my money and living paycheck to paycheck.

When creating a budget you need to assess your spending habits and list down activities that you think that you can let go. For example, if you buy a large coffee every day in one of the most popular coffee shop here in the Philippines it will cost you around Php150 a day. That’s Php750 per week or Php3000 per month. If you don’t buy coffee from Starbucks you can save Php36000 a year! In five years you can earn as much as Php180000 (excluding interest), enough to buy a good second hand car. I know that you need that coffee booze every day so you can work but imagine how much you can save if you opt to reduce or not to buy coffee in coffee shops or just create your own coffee. What we do today will surely affect what we are in the future. So, the earlier the you place your money banks with the best high interest savings, mutual fund or other investment avenues then more money you will have in the future.

Setting up your financial goal like following a budget will allow you to take control of your financial future. Setting up a budget can help you know where you are spending your money and can help you make changes to stop overspending.

Here are other some finance goals that you can follow. You can apply one or all of them or create your own budgeting style from the following goals. The following are just guidelines to help you start accomplishing your financial goals or avoid the hurdles that are stopping you to start saving money.

Setting up your Financial Goals

  1. List down your financial goals. You can categorize your goals according to your time frame for each goal. You can create an excel record of your financial goal to make easier for you.
  • Short-Term Goal – for projects that can be finished under six months.
  • Medium-Term Goals – for projects that can be finished in six months to a year under.
  • Long-Term Goals – for projects that will take more than a year to finish.
  1. How much money will it take to reach each goal? Estimate the cost of your goal and write it down as one of your category.
  2. Set a target date for each of your goals on your list, and use this as your deadline that you need to meet or beat.
  3. Determine how much you need to save in order for you to reach your goal. You can divide the estimated cost of your goal by the number of weeks or month until your target date to know how much money you need to save each week or month to meet your goal. Place it under the “Amount to save weekly or monthly” column of your file.
  4. Budget for your goals. Rework your budget to include the money that you need to finish your goals. If you still don’t have enough money after adjusting your budget to include your financial goals then think of other ways on how to make extra money to fund your goals.
  5. Put your plan into action and execute and no matter what happen do not stop until you reach those financial goals.

Here are some tips so you can accomplish your financial goals:

  1. Be TRUE to yourself.
  2. Be REALISTIC on the amount of time and money you need to finish your goal. You can set a higher estimate to cover any adjustments.
  3. Be MOTIVATED. If you are losing hope congratulate yourself on how much you already save and not how much you still need to save to reach your goal. You can also keep a progress report for yourself to see how much you already progress when you were just starting.
  4. Do not give up and just continue to reach your financial goals. It’s expected that you will encounter setbacks but do not stop. You can set or adjust your target date but do not stop in reaching your financial goals.
  5. If you need to accomplish several goals pick which one is the most important and make it your priority. After you reach your priority goals you can now move on to the next.