Your 30-day financial fitness plan

MANILA, Philippines – It’s summer. It’s that time of the year when you start to spruce up your workout and diet plan to get leaner before you hit the beach.

But let’s talk about money. Are your finances also in good shape?

Being in debt or worrying about expenses can cramp your style while you’re on vacation. So before flaunting your beach look, be sure that you’re financially fit, too.

Save and invest. The best way to do this is to start small and think long term. Set aside an amount and commit to it, no matter how small it is. You’ll see it grow over time.

We suggest taking this month-long money regimen to fulfill your goals.

Don’t wait. Make the best happen for you.

Day 1: Set your goals

Warm up, stretch. Get a pen and paper, a notebook, or your laptop.

Write down your financial goals. Create two lists: one for short term, another for long term.

Write down the amounts you need for each goal. For example: “Seoul Vacation: P50,000 by June.”

Figure out how much you need to put away every payday. Set a deadline as well.

Put your lists where you can see them all the time. That way, you’ll be constantly reminded of what you’re working for.

Day 2-8: Monitor your routine

Before applying any changes to your routine, create a spending diary. You can do it on paper, or try downloading an app.

Make a conscious effort to note every single peso that you shell out on a normal week. Include after-work meals, spa appointments, and drinks.

At the end of 7 days, review your spending diary and categorize your expenses into the following:

1. Necessary – daily basic expenses like food, gas or fares

2. ‘Nice to Have’ – expenses you can live without, but should indulge in sparingly so you don’t feel deprived and become prone to spending binges. Mid-week movie dates, for example, fall under this category

3. Unnecessary – expenses you can do away with, like expensive coffee everyday

Day 9-14: Cut down

Starting this week, focus on cutting down on or completely eliminating unnecessary expenses.

Try to skip the frappe and drink brewed coffee in the office instead. If you’re eating out 3 times a week, consider eating at home or bringing packed food to work. It’s also healthier.

It’s okay to keep the ‘Nice to Have’ items – but set a budget for them.

Are you going on movie dates more than twice a month? How about watching DVDs or movies on cable instead?

Seek motivation and reinforcement. Find a “budget buddy” to remind you of your financial targets, and join you in making wise spending decisions.

Day 15: Get into the habit

Before heading to your favorite store on your payday, sit down and set aside something for your savings account, and do your budget.

You may follow the standard “20-80” rule: set aside 20% of your pay for your savings, then use the remaining for your expenses.

Work with the 80%. Allocate for food, your bills, transportation, and other daily expenses. It’s normal to over- or underestimate for each item on the first try. Adjust as you go along.

If your budget falls short of your expenses, you may trim down your savings. Set aside 10% or any amount you can commit to.

The important thing is to commit. When things get better and your salary goes higher, you may boost that percentage up again and you won’t notice the difference.

Day 16-22: Have a ‘cheat’ day

Continue monitoring your spending. Tweak your budget as necessary – but the important thing is not to touch the savings you’ve set aside.

If you’re still struggling, give yourself a weekend “allowance” that is slightly bigger than your daily budget. Having a ‘cheat day’ to look forward to will lessen your compulsion to indulge mid-week. It’s also easier to control leisure spending when you have a specific amount to use.

Day 23-29: Use tools

Open a separate savings account from your payroll, if you don’t have one yet. Pick a trusted bank that will make it easy for you to monitor your savings. Ideally, it should also provide you with tools (such as automatic transfer of savings between accounts).

Your ATM and credit cards are not temptations – they’re tools to help you manage your expenses. Use your ATM card for point-of-sale transactions. It lets you spend only the cash you have to minimize debt. A credit card can help stagger payment for big-ticket items. Since transactions using both are recorded, you can pinpoint what items eat the biggest chunk of your budget.

Another trick to avoid overspending is to bring a list whenever you go shopping. It sounds like mom’s advice, but it helps you build the habit of purchasing only what you need.

Day 30: Raise the bar

If you’ve reached day 30 without touching your original savings, you can double that amount today.

Consider that as a big achievement. Was it hard? See if you can go another 30, 90, or 120 days in following the routine. Before you know it, you’ve already met your target savings goal.

Eventually, you can increase the percentage of your savings. The best time to do this is when you get a pay raise or when you find additional sources of income.

As your savings grow, consider putting some of it in investment funds. You can create an investment account for as little as P10,000. This will also have the potential to earn more in the long run.

Small, daily improvements will go a long way in shaping your future. – Rappler.com