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| Photo by Jamie Grill |
Do you have problems in saving money? Always ending up spending more than what you can afford?
How about setting aside a portion of your money to save for emergencies or your retirement, are you having problems doing those as well?
Saving money is not that hard, you just need to have a system that you will follow to help you achieve the kind of savings that you want.
I'd like to share with a system that I learned from Bro. Bo Sanchez, author of My Maid Invest In The Stock Market. In his book, he taught his maids how a simple system to follow to properly save their money so that they'll have income to put in the stock market for their retirement.
His system for budgeting was to put their money in envelopes and to label the envelope to know what they are for. In his book he taught his maids to label five envelopes (you can use more, depending on your requirement).
The five envelopes are:
- Tithe Fund
- Expense Fund
- Support Fund
- Emergency Fund
- Retirement Fund
Tithe Fund is where you put the money that you give to God. Bro. Bo explained that it is important to also give to God's work. He said that we'll grow in abundance thinking if we give beyond our family needs.
Expense Fund is where you put money for your daily expenses, like clothes, food, house, entertainment, bills, etc. This is basically where you put the money you'll use for all of your personal expenses.
Support Fund is where you put money that you send to your family in the province (or for your family here). This is the money that you'll use to support the needs of your family. His maids send money regularly to their family in the province so this is where they put the money for it.
Emergency Fund is where you put money for other expenses that are not found in your budget. This is basically for added expenses. Bro. Bo's maids use this in case a relative calls them and asks for more money because of an emergency.
Retirement Fund is where you put money that you'll use for retirement. In the case of Bro. Bo's maids, the money they put here is used for investing in the stock market.
Bro. Bo's maids have a total of P7,000 in earnings every month and here's the breakdown of their budgeting:
- Tithe Fund: P700
- Expense Fund: P1,000
- Support Fund: P2,000
- Emergency Fund: P1,000
- Retirement Fund: P2,000
- Miscellaneous: P300
The system that Bro. Bo taught is a good system to follow for monitoring and budgeting your expenses. If you follow his system, you'll be able to your money. You don't necessarily have to follow them, you can customize them that will fit your lifestyle.
I don't have a support fund, for that envelope I label it reward fund, where I put the money I used to buy stuff that I want but doesn't necessarily need like gadgets, a new shoe, etc (This is usually the last envelope that I put money in and it usually contains the least amount). My expense, on the other hand, fund is divided into three parts, (bills, entertainment and personal expenses)
It's really up to you on how you will divide your money. But the point is to monitor and properly budget your money. This will greatly contribute in your road to great wealth because you can set priorities on how you use your money.
Take control of your financial future
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