At the start of the month, you think you are the richest person in the world. You already have your allowance from your parents. Immediately yoy make a mental list of the things that you’re going to buy. At the department store, you buy these and you buy that. While pushing the car, you see chocolates in the stall. Yummy, right? You can’t just resist those chocolate! While passing by in a dress shop, you see a nice fashionable dress that attracted you. And you just can’t wait to wear that dress, so you buy it. After shopping, you peek your wallet and boom! Your money is only good for a couple of days. School days are about to start but half of your allowance is already spent.
Money usually burdens students. We worry, we lose temper or cry. We become miserable. But we can do away with this problem.
The money we are spending doesn’t come from our own sweat but from our parents’; budgeting then is really a must. We can’t just ask for money from our parents anytime we wish. If you come from a rich family where money isn’t a problem, I suggest that you still have to continue reading this. It might help you in the future. We don’t depend on our parents in our entire life, right?
The Department of Social Welfare and Development (DSWD) conducted an Academe Orientation of Pantawid Pamilyang Pilipino Program on October 10, 2013 in VSU. DSWD Regional office with Mr. Von Taster Horboda, Financial Analyst III graced the event.
Horboda first defined Budget Management as, “the financial analysis of the amount of money allocated for the performance of duties.” In other words it is how we manage the money we have, spending and allocating properly the right amount intended for necessary expenses.
There are two steps in creating a budget plan. These are:
Tracking Income. This means you have to identify first the source of your allowance. You have multiple sources if your allowance does not only come from your parents. You may have gigs, side-lines, or part –time jobs that also help in your academic pursuit. These sources may be permanent or seasonal, but it is important for you to identify these so that you can foresee how you spend your money.
Tracking Expenses. After you have identified the sources of your allowance, identify your expenses there are three type of expenses: the fixed, the flexible and the irregular ones. Examples of fixed expenses are those you spend for board and lodging, personal necessities and other expenses which you think are consistent. Flexible expenses are food, fare or other necessities that have no specific amount. Examples of these are expenses for food because it may differ every time. Irregular expenses are hand-outs, loads, projects, tuition fees, and others.
To be able to create an effective budget plan, here are some tips:
1. Distinguish wants vs. needs. There’s a big difference between wants and needs. Needs are the things that you should have, while wants are the things that are just the fruits of your liking. Needs can sometimes fall under fixed expenses. For example your board and lodging, personal necessities, and of course, the food you eat. Think of this: which one should you prioritize when you have limited money? Your board and lodging which is due next week, or the Jag T-shirt which you crave so badly?
2. Live within your means. This is why you have to identify your source or sources of money and expenses so that you can easily adjust and budget your money. Your objective should be, Income- expense = 0. But it would be good news if there is an excess in the end.
3. Trade-off, if not build a margin of safety. Consider this situation: you badly need a new white undershirt because your old one has turned yellow for 3 years of use. However, you need to pay your contribution for your class field trip which is due today. Of course, you’ll choose to pay your contribution rather than a new undershirt. Your undershirt is a need but it can wait. Compromising is a tool for effective budgeting. You need to understand things and be patient when you can’t get what you want or need.
Build a Margin of Safety. When you do budgeting, it’s more effective if you allocate an excess amount for a particular expense. A conservative way in anticipating and exaggerating your budget may be useful. If in the middle of the month you have unexpected expenses, you need not to worry because you have an excess money left in your hand. You can even buy the things you want or your secondary needs.
4. Develop an emergency fund. If you really want to save money, you can save, right? If you budget 50 pesos a day, it’s good if you make a mental note to spend less than 50 or only half of it. If you have that desire, you can really save a big amount for a month and save as an emergency fund or for your savings. There’s no need for you to worry if in the middle of the month you have unexpected expenses, because you have a bank to lean on. Your own piggy bank.
5. Borrow with care. In other words, utang with care. It’s normal for us students to borrow money from our friends and classmates when we run out of money, or when our allowance is delayed. When we borrow money, it automatically creates a fixed expense because when we borrow, it is understood that we return it on the particular date that we have agreed upon. We have to think that we borrow money from our fellow students too, and they also need money. So better not abuse the kindness of others.
6. Don’t try to use else’s budget plan and expect it to work for you. Each of us has different priorities. We are the sole person responsible to plan our budget for ourselves. We should not copy others’ budget plan nor depend on their suggestions. What they think is effective may not be effective when you personally apply it.
7. Keep it simple. Making a budget plan is as simple as ABC. But you have to make it in the simplest sense as possible for you to easily understand and follow it. In creating a budget plan, it is important that both ends meet. Inflow = Outflow. If you can manage to have savings, then you should congratulate yourself. But if your budget plan creates deficit, then you need to review it and identify where you got wrong. When you create a budget plan, you create records-short, simple and informative records. These records can be a big help for your future financial plans and you have to make sure that it is effective. Making this as a habit is an exceptional trait an individual should have especially that we are living in a world of uncertainties.
The tips above may or may not be applicable to you. You might have better ideas. But what is important here is you should develop a positive attitude towards effective budgeting while you are still a student. Remember, you may have a lot of money today, but for tomorrow no one knows. We should control ourselves. We should discipline our stomachs, you know what I mean. Lessen the indulgence of activities which involve spending lots of money, unless necessary. And of course, stick to the budgeting plan. When you receive your allowance, don’t think on how you spend your money, but think on how your money can last until the end of the week or month. Bear in mind that it pays to be money-wise.