IF YOUR HEART DOES FLIP-FLOPS over numbers, budgeting the traditional way will be easy: Jot down every expense the moment you make it, figure out how much you really spend and where your money goes on a monthly basis, set a limit for each item and stay glued to your ideal budget.
But the numbers game is not an easy one for most and not even rising oil and food prices can turn busy parents into budget freaks.
Romelia Neri, an economist and a mother of three children, could hurdle sophisticated calculations but she finds it very hard to budget the conventional way.
Time-consuming
?They say budgeting is the foundation of good money management but I find it too time-consuming. I would rather read to my child,? Neri says.
On the contrary, Neri?s sister, who is also a mother, has mastered the art of budgeting. ?She records all her daily expenses at the end of the day in her Starbucks calendar book,? Neri says.
Higher prices of gas, food and almost everything else are hitting Filipino homes hard this year. Budgeting could stretch incomes by helping Filipinos to avoid spending on things they don?t really need, like DVDs, restaurant meals and toys.
The problem is that only very few take the time to make a budget, and fewer still stick to it. Budgeting sounds and feels painful; overdoing it can cause spending binges, says Pascual M. Garcia III, president of Philippine Savings Bank.
Spending plan
Take the pain out of budgets by calling it a ?spending plan.? After all, budgeting is not really about the drudgery of keeping records; it is about the joy of being able to afford a good vacation. It is not about walking away miserably from that flat-screen television set; it is about coming closer to financial independence. Identifying budgeting with positive things will turn it from a necessary evil into a worthwhile habit.
J.D. Roth, a former cardboard box salesperson whose blog, GetRichSlowly.org, has been chosen as one of the most inspiring personal finance blogs by Money Magazine, says a budget is a recipe for failure.
?It?s too fussy. I can?t stick to it. When I don?t stick to it, I feel guilty. When I feel guilty, I want to spend more money. Still, I?ve found it?s helpful to have some sort of written financial plan. Over the past few years I?ve developed what I call a ?spending plan,?? Roth says in his blog.
A spending plan doesn?t have the same sort of rigidity associated with a budget. That means it feels better than going to the dentist, and people don?t need to pinch themselves to do it.
Mobile phone tally
Still, there?s a need to find out how much you earn and how you spend. If you feel like money passes through your hand like water, it?s time to use your phone not just for texting and calling.
Record everything you buy for each week for four weeks in your phone?s notepad function. Latte? Write it down. Full tank of gasoline? Keep recording. When you get your paycheck, jot down your take-home pay too.
Do this for one month. By the end of that period, you?ll know what kind of spender you are. If you discover that you are a walking eater who can?t resist the way street food smell, and find out that you?re spending all your money on hotdogs-on-sticks, then don?t leave the house hungry.
You?ll know if you should cut down on taxi rides and invest instead on comfy shoes that can take you to your meetings. By the end of a month, you might find out that your mid-year bonus disappeared not on chips and snacks but medicine, which may mean, you don?t have to be too harsh on yourself.
The realizations may keep you focused on weightier matters and not on guilt trips. One month of diligent mobile phone tallying, especially with a wife or husband, may help develop buyer?s remorse. Who knows, savings from all these corrective actions could be big enough to start an emergency or even education fund.
Skim from the top
PSBank?s Garcia shared another sneaky trick to keep Filipinos saving and not binge-spending: Skim from the top. To do this, set aside money for savings, investments and other necessities like utilities and credit card payments the moment you get your paycheck. Then spend the rest on whatever strikes your fancy.
You like the strappy sandals at the bazaar? As long you still have money, why not buy them? You don?t need to quibble over every little bit of cash because you know you?ve covered your bases. Garcia said taking the pain out of budgeting allows people to stick to saving religiously.
Automating your savings
You can power up Garcia?s tip by automating savings. Most banks these days can schedule money transfers in advance. If your bank can?t do this for you, then move to another bank.
Simply give your bank instruction to transfer a set amount to a no-touch savings account. Another amount to cover utility bills and credit card payments should be transferred to an expense account. Immediately, you will know how much money you can play with and feel a sense of fulfillment because you have socked away some money for the future.
Financial planner Nanette Ferreria says setting up different bank accounts for savings/investments and expenses saves you from doing fancy accounting work. Even without clunky spreadsheets tracking your sending plan, you will know immediately if you are overspending just by looking at your balance on those different accounts.
?This is hard in the beginning but you will discover that by setting up different accounts, it will be easy to stop yourself from spending too much just by looking at your balance,? Ferreria says.
Fun money
Experts also suggest making sure fun money is included in your spending plan. Filipinos are naturally pessimistic based on results of government consumer confidence surveys.
Without fun money and reward for hard work, people will feel even worse. Setting aside funds for a brief weekend getaway, for example, allows breadwinners to stay passionate about work. The limited amount will prevent overindulging.
Credit cards vs cash
Perhaps you have already done everything?skim from the top, automated savings, set up different bank accounts and set aside fun money. Reckless use of credit cards can ruin them all.
?Credit cards give you a false sense of security. It makes you think you still have a lot of money, but you actually don?t. Plastic is good for improving cash flow and during emergencies,? Neri says.
While she admits not having a rigid budget, Neri says she copes with rising inflation by doing what most mothers are doing?being more careful with purchases.
?I buy my fish, poultry and meat now from the wet market instead of the grocery. Instead of buying different sizes of trash bags, I use grocery bags instead. I think these things translate to savings,? Neri says.
Times are hard and Filipinos are feeling the pinch. Starting on a spending plan may make all the difference between college in a good university and no education at all, or getting good doctors and no money for a hospital room. The good thing is, a spending plan doesn?t have to be painful at all.
(More tips on personal finance in MoneySmarts, an INQUIRER.net blog at http://blogs.inquirer.net/moneysmarts.)
Develop a spending plan
1. TRACK DAILY EXPENSES USING MOBILE phone?s ?Notes? function.
2. Set aside money for savings, investment and bills payment.
3. Create a new account for savings and ask your bank to automate an amount for this regularly.
4. Make sure you have ?fun money.?
5. Watch the swiping of the credit card.
