Now let’s make this clear. It will be hard to manage on higher levels of responsibility if you cannot manage the simpler and lower forms of management. In order for you to get rich, you need to know how to manage, and It all starts with yourself. Manage yourself first! A very solid step that you can do for yourself is to have a budget structure.

A budget structure helps you allocate your money. If you do not have a personalized structure of how you allocate your money, your finances will be like a house of cards that will be ready to fall when you run into problems. You might not be able to watch your expenditures and may end up getting funds from your savings. In short, you will have a hard time saving without first budgeting.

First learn how to structure yourself with a good budget allocation. Each budget fund should have a purpose and should prevent you from getting money from funds that you have to preserve, or else you might get from your wealth-building savings if you do not allocate at all!

My personal experience was that when I was saving 20% of my salary, I was not budgeting. At that time, I was having a hard time with my allowance, and almost always ran out of money until the next pay day. Budgeting solved my problem, and helped me stretch my money further!

FIRST: DETERMINE YOUR APPROXIMATED EXPENSES

The first thing to do is determine and/or approximate your expenses. This way you will be able to track exactly how much you should spend for your daily needs.

Think of the expenses you need to track to know how much you need to spend for it and make a rough total:

Food

Water

Electricity

Clothing

Education

Telephone

House Rent

Transport

Maintenance and Repairs

Etc.

And other NECESSARY EXPENSES (that I might have not listed here)

Then total them all. These will be your expenses.

SECOND: SIMPLE ALLOCATION

The allocation part. There are about 7 savings funds you need to create for yourself. This is just my ideal percentage of allocation, but it is entirely up to you. Just remember that you need to devote a fixed amount for your financial freedom and the rest of the funds. The bigger the amount, especially FFA the better.

10% Wealth Fund

5% Emergency Fund

5% Long term

5% Education

5% Medical

10% Recreation

5% Give

55% Expense

Wealth Fund. This is the savings that you cannot touch as this is this the savings that is to be invested. This is your way to financial freedom.

Emergency Fund: This fund serves the purpose as a back up supply of money when you lose your job. This fund savings is equal to equal to 6 months worth of total net salary or expenses. Just in case you lose your job and you need to go job hunting, this is where you will need to get your supply of money. You should have a fund supply about 6 months to 1 year worth of salary. This is an emergency fund and is not to be touched. This is an excellent fallback fund when job security is volatile.

Medical Fund: The next actual need of a person aside from food, shelter, clothing, and anything you need for your existence is health. When you have a health problem, this is where you can get your expenses from. If you do not trust insurance, do yourself a favor and set this up as your personal medical insurance fund.

Long Term: This is a separate savings jar that you have in case you need to buy something. More or less, its can be your Luxury Fund, when you want to buy something. The definition of this fund account is entirely up to your use.

Education: Education itself is an investment. Or in the relatively long term, this can also serve as a personal educational insurance for your children if you are starting this early! (THAT’S MY PLAN!)

Recreation: Your fun Jar. Go to the movies or with friends! Use it occasionally or preserve if planning to go to more expensive trips. Or better, make a separate account that will serve as your “Vacation Jar.”

Give: Your money for church or when someone is in need. Do not forget to give!

Expenses: Your everyday expenses.

LET’S GIVE IT A TRY!

For example, I receive a salary, of lets say, $3000 every month. I will divide it among my savings jars. My expense is at around $2000 every month. So I am left with $1000.

Wealth Fund $200

Emergency Fund $200

Long Term Fund $200

Medical Fund $100

Education Fund $100

Recreation Fund $150

Give Fund $50

With a minimum of $3000 monthly salary, I am able to allocate to all of my savings. It is at your discretion how much you will allocate on each.

Just remember it’s not how small you save every month, but it is the commitment to start, and early, to set a part of your money for savings, for your future needs, and grow your personal wealth!

After reading this, try budgeting for yourself when the next paycheck comes and see how much you can stretch your money!

Have fun budgeting!

Next: Low income? No excuses!

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