Friday, December 30, 2016

Personal Budget Planning 2017

Purpose

a. Do you have financial goals this year? Then you must have a plan. Without it, it will be impossible to keep track and achieve your financial goals. Failing to plan is planning to fail!

b. Do you have problems with overspending or not knowing where to find money for things that you want to buy? The key is in allocation. If you have a set limit for your expenditures, you don’t have to worry about overspending. Likewise, you also need not deprive yourself too much when you know you have a set budget even for the things that you want.


1. Basic Needs – 50%


Live below your means! The goal is to keep your allowance for basic necessities to not more than 50% of your net income. If 50% is too low, then you can adjust it to up to 60%. If 60% is still not enough, then we have a problem. It’s either your net income is too low or your lifestyle is too high. You need to adjust both. Find ways to increase your income while decreasing your expenses.

Tip: List down all your expenses and then apply the ERIC Strategy which was inspired by the ERRC Grid in Blue Ocean Strategy, my most favorite business book of all time.

ERIC stands for Eliminate, Reduce, Increase and Create. Are there expenses that you can eliminate and reduce? Are there new expenses this year that you need to increase or create in order to design a more realistic budget plan?

Below are the things included in my Basic Needs list this year.

a. Electricity
b. Water
c. Internet
d. Telecommunications
e. House Help
f. Groceries
g. Grooming and Haircut
h. Food
i. Transportation
j. Fitness

If there will be excesses arising from your Basic Needs fund, congratulations in advance! You can do several things with that excess fund.

a. Add it up to your Emergency Fund. (See the last fund below.)
b. Open a new account for excess funds and then use it for anything that you want
c. Use it for others needs such as clothes, accessories, perfumes and etc.
d. Add it up for your next month’s fund


2. Tithes – 10%


As a Bible-believing Christian, I know that at least 10% of my income belongs to God. This amount is given willingly and not by force for God loves a cheerful giver (2 Corinthians 9:7).

If you have a different belief system, you can still use this fund for giving, charity, parents support, relatives support and etc.


3. Investment – 10%


By now, you should know that it’s not enough to save your money in banks alone. It yields very little interest plus it’s very prone to being easily withdrawn by you. The key is in investing it in great investment vehicles.

I personally recommend Pru Life UK’s Prulink Assurance Account Plus for the following reasons:


a. It is a long-term continuous saving plan which allows me to save until my retirement years.

Tip: While you are earning, you should keep on saving and investing. Why stop saving and investing when you can still earn? It’s a lifetime activity really. With Pru Life UK, you can start saving for as low as P1,500 per month. This is one of the reasons why I chose this investment vehicle.


b. It includes whole insurance until 99 years old.

When I turn 100, they will surrender the whole sum assured (usually worth P1M depending on your preference and budget) to me plus the fund value during that time. That’s a lot of money! Of course how fat are the chances that I’ll reach 100 but this is still much better than what other insurance companies offer.

Also, a whole life insurance paid for only a few years for as low as P1,500 per month then the rest of the money will go to my mutual funds? No other investment product can match that!

c. Disability insurance is a core benefit and not an add-on.

Since it is not an add-on, I don’t have to pay extra for it when I want it attached in my policy.


d. Add-on insurances for critical illnesses and hospitalization may be attached.

Who would not want insurances for critical illness and hospitalization? These are insurances that I can’t just avail anytime I want. The time is now when I am still young and healthy!


e. Pru Life UK’s Equity Fund is the best in the Philippines.

Industry rates are readily available online so it’s actually easy to know which company and investment vehicle can give you the highest return for your investment.

To see the latest industry rates, just click here.


f. Pru Life UK is a stable company tracing its roots in London, England way back in 1848.
Want to see a sample proposal from Pru Life UK? Send me a message at 0905 347 4455 or 0998 367 0545. Or email me at markjosephdelgado@ymail.com.

4. Hobbies – 10%


All work and no play makes Jack a dull boy! As said, the key is in allocation to avoid overspending and even self-deprivation. A budget must be set for the things that bring you joy such as movies, spa, books, clothes, gadgets, travel and others.

Now you already have a set budget for your movie weekends. Now you don’t have to condemn yourself when you buy new clothes. Now you have a funding for your dream travels that you can actually monitor and save money for. All of these are possible because of one thing – budget planning.


5. Business Capital – 10%


Thinking about finally starting a business of your own this year? Well you have a year ahead of you to save up for the business capital. You may create a traditional business, join a reputable MLM company or invest in real estate. All of these need money so you better be intentional about it.


6. Emergency Fund – 10%


Since 90% of your income is already allocated for specific purposes, 10% of it may serve as a buffer by creating a fund for emergencies.


More Tips:


a. You may tweak this budget plan to suit your own goals for 2017. You may use the ERIC Strategy by Eliminating or Creating new items. And also by Reducing or Increasing the allocation for each items.

b. You may open new bank accounts for each item for easier monitoring and to avoid mix ups when pooled in just a single bank account.

c. You may want to create online payment systems to pay your monthly recurring bills. This allows you to save time, energy and more money.

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