I don’t think I’m good with money. My husband seems to be, as he has an amazing power of restraint, much like my father. Me? I’m a sucker. I lap up deals and I respond to the word “sale” faster than you can say Visa or Mastercard. While I don’t buy luxury, I do keep my eyes open for deals and steals that are worth it, like a nice pair of Italian leather boots marked down three times (and in my hard-to-find shoe size!) or buy one take one deals on virgin olive oil.
I have certain rules on spending, though. Any woman needs rules about money, I think, especially people like me who are easily tempted to snag impulse buys and such. Now that I have a family to take into account every time I shop, I have to be responsible about my money and things that I value.
1. Don’t spend more than you make. I know our combined incomes, my husband and I. We have to pay for the monthly rent and utilities, pay for the house help, and set aside savings. What we have leftover after all those deductions either goes into our investment fund or is spent on extras. My dad taught me to think about buying in a very simple manner: If you can’t afford to buy it and still maintain your standard of living, you can’t afford it. Simple. Spending what you don’t have is financial suicide.
2. As much as possible, pay in cash. My dad taught this to me early on, when I got my first credit card. Credit cards are more like transaction tools, he said. Lots of people spend on credit, falling behind on their payments and failing to pay even the minimum amount on their monthly statements. We experienced this on the first few months of marriage when we were just building up our momentum paying the rent, buying house stuff and making up our new home. Thankfully, we were able to pay off credit card debts before Christmas of that year, before the bills had the potential to get really unmanageable.
3. If you don’t need it, think twice before buying it. I’ve become better and better at this, I think! When I was single, I didn’t really care about how much I spent on shoes, clothes and bath & body loot (my secret addiction, hehe.) Since I was living with my parents and had my dad’s extension card, I pretty much would buy what I wanted. But when you’re a married woman and real life begins, you have to be wiser! Now, I don’t buy something unless I’ve mulled over it and eliminate all the negatives of buying that new pair of shoes or those new earrings.
4. Have different funds for different expenses. I have four different funds for my expenses. They are:
- Payroll: My payroll is my “bread and butter” money. It’s sole purpose is to fund our way of life, specifically our food and anything related to the house. Since a regular amount comes in every month (I get salaried from abroad), I am able to allocate those funds to particular expenses such as the groceries, the weekly vegetable delivery, and the maid’s salary.
- Personal account: This is where I deposit all my checks from local freelance jobs. From here I take a portion for my savings and for “luho” (or what I call “heart’s desires,” haha). From this fund, I’ve been able to buy a chest of drawers, a sofa, various pretty things for my kitchen and entertaining ware stock, and just yesterday, a new dining table. I also get my budget for clothes and “me” stuff here.
- PayPal account: I need my PayPal account to receive payments from foreign clients. These are my sidelines, which I do to fund my frivolity. This is my “guilt-free” cash fund. I use it for online expenses (such as deal sites, when buying from online shops, etc), or I withdraw funds here to my personal account and use it for my own pleasure (read: shopping money, eat-out money, silly things for Vito money, etc).
- Mutual fund: My husband and I opened up a mutual fund this year. I learned in recent years to think of savings and investments as an expense, a lesson which my dad taught me. Our investments in the mutual fund will indeed grow and help us secure future financial stability. Every time we add to our mutual fund, we’re saying “yes” to our dream home, our child’s future education, even our retirement.
5. If you have extra money, divide it between savings and “guiltless” expenses. When a bonus comes in from work or I get a little extra from doing sidelines, my husband and I put aside a portion for savings and then spend the rest on something that pleases us both, like a movie date or lunch at a new restaurant, or maybe a new pair of shoes for Vito. I don’t believe in being stingy and just saving up that little bit of extra cash, especially if we’ve already set aside our regular savings and planned our budgets. We deserve to enjoy little extras, don’t we?
A wise word on savings! Francis Colayco of the Colayco Foundation says that savings are expenses you stock up on for future use. When you get your monthly salary, you should first deduct savings from there, then pay your monthly expenses and dues. Whatever you have leftover is what you can spend on those wants and desires.
So there, those are my rules on money, my money anyway. They’re not rocket science or anything breakthrough, but that’s my financial philosophy in a nutshell.
How about you? What’s your view on spending? How do you manage your money? Leave a comment and let’s exchange notes; I’d love to learn more about it.