Many of my friends and family members think I'm loaded because I frequently travel, both locally and abroad. I'm not. My secret is that I just manage my money well.
I guess this whole post is not really limited to how to save for a trip, but rather on how to save money in general. Take note that I will not go into ways on how to actually grow your money. That should be a whole new post in itself. I will just be talking about how I save money for my own trips.
Bad Debts and Credit Cards
First things first. Before you even think of going on a trip, make sure you don't have any bad debts, especially in your credit card. Bad debts will never go away if you just keep paying the minimum amount and the interest piles up. Besides, you can't truly save if you have debts.
My technique is to only use my credit card for convenience, not necessity. I never buy anything with my card that I can't already cover with the money I have.
Online Banking Facility
When payday comes, I login to my online banking facility to view my payroll sheet. Most banks have an online banking facility that lets you do a wide range of stuff from the comfort of your home, like balance inquiry, paying utility and credit card bills, opening new accounts and investing in the stock market. This service is free. You need only to call the bank to ask how to enroll into this service.
By using the online banking facility, I know exactly how much money went into my account, down to the last centavo. I suppose I could also check my payslip but our company is delayed in releasing them.
Salary Breakdown
Next, I divide my pay as follows:
50% - Necessities. Covers everything from utilities, to clothes, to food and daily transportation.
20% - Investments. Mostly for stocks and mutual funds.
10% - Give. I set this amount for gifts, office blowouts or when my family needs it
10% - Luxury. This is usually my travel fund. Or other stuff I want but don't need. Mostly electronics or toys.
10% - Random. The above breakdown is sometimes not enough and there will be an area that will be lacking in funds. Usually by December, I put an additional 10% in the Give portion. Or if I suddenly find myself in a shopping spree, then the 10% goes to necessities. This is really up to you.
Since travelling for me happens only a few times a year, the luxury area grows until I have more than enough for my next trip. I also don't buy electronic gadgets frequently so I don't dip into the funds often. My largest portion, as expected, is the investment area. I never touch it so it just grows. But following it is the luxury portion.
I know that this system doesn't work for everyone. Basically, it entails living on only about 60-70% of your income. I know I have a hard time getting my boyfriend to follow the same system. Do you see how it has no room for debt? If you have debt, you will need to pay it before doing the breakdown. Or, pay the debt from necessities or the random 10%.
I also practice a "borrowing" system. If say, for example, you need more money for the Give area, then that area will "borrow" from some other area, like luxury or necessities. You just have to remember to "return" the "borrowed" money to the right area.
AnMoney (Free) - Android Application
I use a very handy Android application on my mobile to keep track of this. It's called AnMoney. I just use the free edition although there's also the PRO version. I suggest creating two books.
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| AnMoney Screenshot |
The second book will contain the 5 areas above: Necessities, Investments, Give, Luxury and Random. When you receive your salary, enter the breakdown accounts into their respective areas.
The total amount of the first and second books should be equal. If you withdraw money from your bank account, deduct the amount from book one, and also deduct the amount from the correct area in book two. The two books should always be updated together.
The second book will let you know just how much is left from each of the areas. If that's too confusing, let me give an example:
| Book 1 | |
| Savings Account | Php5,000 |
| Payroll Account | Php5,000 |
| Total | Php10,000 |
| Book 2 | |
| Necessities | Php5,000 |
| Investments | Php2,000 |
| Luxury | Php1,000 |
| Give | Php1,000 |
| Random | Php1,000 |
| Total | Php10,000 |
The first book will contain exactly how much money you have stored away while the second book shows your spending limits.
Personal Experience
Before I followed this system, I used to just group all my money in a single bank account. Of course, as time went on and my money reached a certain amount, I would think that "Hey, I'm saving a lot of money. Where should I spend it on?"
However, seeing it broken down into areas helped me focus on my limit for spending.
Discipline
Still, just like any system, this method requires discipline. There are a lot of compulsive buyers out there and if your Luxury fund increases, you may get itchy fingers to just spend it all. But, look on the bright side, at least you'll just be spending your luxury fund and not all the others. You'd still have your investments and necessities.
Also, this system requires you to constantly update the application. At the very least, you have to update it twice a month when you receive your salary. More if you constantly withdraw money.
How about for those who actually withdraw ALL their salary?
Well, ask yourself this. Are you living above your means? Why do you actually NEED to withdraw everything? Do you have more bills than you can handle?
Maybe the lifestyle that you're living in now is above what you can truly afford. If you got a salary increase this year, does that mean you can't live on the salary you got before?
Final Thoughts
If this system helped you, let me know! I'd be glad to know that it was beneficial to someone other than me. Lol!
1 comments:
true, boring na pag lagpas 3d2n stay. hehe
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