I have been back in the Philippines for more than a year now and been employed here in the Philippines for almost a year. Being a former OFW, I need to adjust with mostly everything from the smaller salary, office environment, the daily news, the traffic, and the culture of people in relation to their pay every payday.
Even before it has been my habit to write my daily expenses in a small notebook. When I first started working I used my Starbucks planner that I worked hard for(yep, I work hard by drinking loads of coffee because I am not a frap fan) as my database for my daily expenses. Then I devised an Excel spreadsheet so that I can have monthly summaries of a particular expense and a graph that would tell me the trend for each type of spending. That helped me a lot to have the discipline in handling my finances. I have just a small salary back then, but I did manage to save and survive.
Now that I am back here I have a new Excel spreadsheet and keep receipts instead of writing it down. It is funny that most Pinoys don’t ask their receipts. These small pieces of documents are important. It acts as a reminder of what you just bought at the same time a possible proof in case you need to refund or if have an aching stomach after buying and eating something from a store. I remember a co-worker ask me if I am reimbursing expenses. I just told him it was just my habit to ask for receipts. Also, most cashiers don’t give the receipts and thus even customers don’t ask for it.
There was one funny instance where I was still standing waiting in the cashier. The cashier asks me if I need anything else and I told him I needed the receipt. Also, there was one time a sales lady was kinda irritated when I ask for the receipt which she didn’t print thus she has to do technical things just to give me a copy. It is important to ask for the receipt not only because establishments and businesses are required, but it acts as a control mechanism for business to declare actual sales. I bet you have experienced a supplier or seller giving you a choice of with or without receipt in which without a receipt is cheaper. For services, the official receipt is the basis of the gross receipt to which VAT is based on. That is why sellers or suppliers at times will offer you not to receipt it so that they won’t impose VAT on you thereby offering a lower price at the same time avoiding reportorial duties of the VAT.
Why do you need to make it a habit to write your expenses?
Writing it down and seeing it helps you to be aware of your spending. When you are aware of it and if you have the desire to cut down spending in order to achieve a savings fund a physical document that you can go back to will help in achieving that goal.
When you have an idea what you are spending on you are able to establish what is essential and what is not thus leading to a standard for future purchases. You will then differentiate wants and needs. You will now have a data that will tell you are overspending on wants. Such could have been saved instead, so that in a months time you will be able to add to your emergency or retirement fund the savings from not sending on wants.
Works as a tool for budgeting
When you have facts and data available you will be able to set up a budget to which you will pattern your spending. With that in mind it becomes easier when not to spend to and to say no on Friday night outs since you know you don’t want to waste your money on such wants. Or maybe instead of having an every Friday thing you might just make it a monthly thing to control such spending.
Once you have a budget, it becomes easy to look forward on how much you will save first before spending. At the back of your find you already have a figure to save even before getting your salary. With that you can apply one of the lessons taught by many financial advocates and the same lesson fund in the book The Richest Man in Babylon.
How much should you actually save?
Sorry if I keep on referencing lessons from the book. The book actually contains all the lessons that I have learned and shared. The first lesson to pay yourself first has been reiterated several times already.
But the question is how much?
Others say five thousand of your salary while others say 20 percent of your salary. In the book the simple rule is to save a tenth in your purse and the 9/10 you can use for your living expenses. For some this amount is already big while others find it small. The logic here I believe is that consistent small amounts would still be manageable rather than saving more when you get a big pay from time to time and not if you are short of budget.
If the 10% is so big already it will force you to make sacrifices on your expenses. You will do everything to really keep that 10% savings instead of touching it because you are short of funds. If on the other hand 10% is too small for you it will be good if part of the 90% allotted for your use is invested in things that will give you back returns in a given short period. You may opt to enjoy your excess or better yet help out others by donating your extra but again investing it to make more is also good thus giving you more capacity to give more.
Make it a habit
Make writing down expenses or if just like in my case now ask for the receipt a habit. This will help you a lot on how you manage your spending. This might be a small action to make but the benefits are huge enough to change your financial status.