“More people should learn to tell their dollars where to go, instead of asking them where they went” Robert Babson
Once upon a time I was an OFW. It was a dream come true to me and my family. I’m earning around 5 times of my salary as local employee here in Philippines. I thought more salary will fix and improve my finances. I was wrong.
After a year of working overseas, I looked at my passbook and saw the records how money comes in and goes out. Although I’m earning much more, my expenses also goes up and this a common problems among OFWs.
My perception about money clearly reflects on my passbook that is, the idea of “work then spend all”. It was really frightening when my 2-year contract is about to end because I can’t imagine going back to Philippines with no savings and so I asked myself “Where did my money go?”
I believe this is one of the frequently asked questions among employees – myself included. Because a lot of people failed to plan how to spend their money, 1 week (or more) before the next payday comes, the budget is already gone.
If you notice, there’s a massive campaign attracting us when the calendar is approaching the 15th or the 30th of the month. This week alone, I received phone calls from a famous casino resort and home shopping network offering their products and services. I have no idea how these people get to know my mobile phone number.
I also got an SMS offering cash loan and to my surprise my credit card was upgraded to Gold without my consent with a highlight on my new credit limit and a 5-digit advance cash feature. Wow! Similar things such as these are encouraging voices telling us “Hey c’mon, spend your money on us and enjoy!”
Just to clarify myself, I am not against these promotions. Actually these promotions are good especially for credit card; you can use it to your advantage if you just know how.
So how are you going to avoid these temptations?
Well based on my personal experience, one of the simple solution is to create a plan on how to spend your money. But before doing that, you have to know first how much is your total monthly expenses. You can do this first by tracking where your money goes.
As William Edwards Deming said “You can’t manage what you can’t measure”.
So take a small notebook and list all your expenses everyday (meals, jeepney fare, etc). The monthly regular bills like house rent, electricity, water, grocery items, tuition fees and the like are easy to quantify.
By doing this, you should be able to identify your basic needs and if your budget permits, you will also be able to allot some of your cash for your “wants” or entertainment but I suggest put your excess money in investments like mutual funds or stocks.
After 1 or 2 months of doing this, you can now create your plan on how to spend your money. Personally, I have a 12-month budget plan where all the expenses are laid out including the excess money which I am free to invest or spend on leisure or the “wants”. You can use Microsoft Excel to do this and the computation is easily done by this tool as well.
Upon completing this task, you’ll be astonished when you see all of your planned expenses for the year. This will allow you to adjust your budget easily in no time and create strategy to manage your cash.
You will get to know which month of the year you have excess cash (month when bonus is paid) and the month you are short such as enrollment month. Given this scenario, chances are small that you will be tempted to spend those excess cash when the bonus month comes in.
How will you segregate the budget?
You can do this by opening an online account where you can move your cash from your payroll. I’m using BPI Express Online banking facility to do this so all transactions are done using the internet including the bills payment.
I used to combine my expenses for utilities (electricity, water, internet, and cable) so during payday i just transfer the total amount to the other account. For other expenses, i use envelops to store the budget where my wife can easily access them for our day to day needs.
That’s it! Now the next time you receive your salary, you will not be sad when it leaves you because you spend it wisely.
So gain control of your money and never allow your money to control you!