People often will say they have a budget. You say you know where your money goes and you don’t need it all written down to keep up with it? I issue you this challenge. Keep track of every peso you spend for one month and I do mean every peso. I know of a lady entrepreneur who set a budget by use of several envelopes. Everyday this lady entrepreneur at end of each business day, would set aside amount for purchasing goods from the market, daily rental, etc. Whatever is left she deposits in her bank account.
Here is a test, which she voluntarily shared with me. She called it a test to see what small items can be big savings. You will be shocked at what the itty-bitty expenses add up to. Take the total you spent on just one unnecessary item for the month, multiply it by 12 for months in a year and multiply the result by 5 to represent 5 years.
That is how much you could have saved AND drawn interest on in just five years. That, my friend, is the very reason all of us need a budget.
If we can get control of the small expenses that really don’t matter to the overall scheme of our lives, we can enjoy financial success.
The little things really do count. Cutting what you spend on lunch from 200 pesos a day to 150 pesos a day on every workday in a five-day workweek saves Php. 250 a week… Php. 1000 a month… Php. 12,000 a year… Php 60,000 in five years…. plus interest.
See what I mean… it really IS the little things and you still eat lunch everyday AND that was only one place to save money in your daily living without doing without one thing you really need. There are a lot of places to cut expenses if you look for them.
Set some specific long term and short term goals. There are no wrong answers here. If it’s important to you, then it’s important period.
If you want to be able to make a down payment on a house, start a college fund for your kids, buy a sports car, take a vacation to France… anything… then that is your goal and your reason to get a handle on your financial situation now.
There is a saying that If there is a will there is a way.
(Armando Bartolome is a business mentor to numerous micro entrepreneurs who are now themselves big names in the industry. This article was previously published on the author’s website. For questions and more information, you may contact Armando "Butz" Bartolome by email:email@example.com or on Twitter @philfranguru. His website is www.gmb.com.ph)