I've never been the best in managing finances. In fact, i have been in debt. I still am (just a smidge) embarrassingly enough. The Filipino in me makes use of Bahala na  tactics that time and again have proven to be a strategy exclusively for the brave idiot. Yes, i'm not going to lie. Rewarding myself with nice vacays by the beach for a non-existent accomplishment made for great memories and credit card bills that will make any banking institution a happy kid.

But one thing i am proud of is how i managed to knock some sense into myself and sat in front of the computer to face the music. I will be forever a work in progress (aren't we all?) but here's to all of you who have not a clue on where all that hard-earned money is going paycheck after paycheck and seem to not earn enough at all. I give you - Budgeting 101 for the Financially Impaired.

1. Know how much you earn.

It could not be more simple. Write it down. If you're a freelancer and have multiple projects and/or do not have a fixed income, an estimation would do. DON'T JUST WRITE DOWN THE TOTAL. Have a breakdown of how much is coming from where and THEN SUM IT UP. This way you can easily identify how much you will earn if you're done with a project.

2. Identify your EXPENSES

This should be easy enough. Ask yourself this, "What are the things you commonly spend your money on?" I find it helpful to categorize everything. Try to do that with the help of the samples below. Once you've organized it the way you want to, map out how much you spend on each. It's always easier to start with the fixed expenses like rent, loans, etc. The more detailed you are, the easier it is for you to identify where you're spending more on and adjust your budget accordingly. 

Home 

This includes: Utility bills - electricity, phone, internet, cable, gas, rent/mortgage. Furnishing/Appliances, and Maintenance/Improvements.

Transportation

This includes: Car payments (loan), Car Insurance, Fuel, Toll (if applicable), Maintenance/Repairs, Registration/License, and Fuel.

Food

This includes: Grocery, Dine Out, Snacks, Drinks

Beauty
This includes: Clothing, Makeup, Salon/Spa Treatments & Services, Manicure/Pedicure

Entertainment

This includes: Movies, Concerts/Plays, Sports, Outdoor Recreation

Health

This includes: Health insurance, Gym membership, Doctor/Dentist Visits, Medicine/Prescription, and Life insurance

Vacation/Holiday

This includes: Transportation, Accommodation, Souvenir, and Visas/Document fees

3. Plot and Plan

Now that you're armed with how much you earn and spend, you're ready to meet ZBB. ZBB or Zero-based Budgeting is a budgeting method in which all expenses must be justified and starts from a "zero-base". Needs and costs of an organization are analyzed for which then becomes the basis in building a budget for the upcoming period - the very reason why Step 2 is important. More about this method here. 

Because of its detail-oriented nature, i find it a breeze to use as a personal way to budget money. Say you get your paycheck on a bi-monthly basis, you can set your budget period in the same way. This way, you see exactly how much money you are making and spending each period. This also allows you to be more conscious of how much money you CAN and CANNOT spend. You want to only spend what you have and nothing more. If you want to be able to save, then you spend less than what you actually earn. 

If we're all clear on this strategy, next step is to plot and monitor your financial performance. May it be a mobile app or a tedious Microsoft Excel Workbook, get into the habit of accounting for the coming and goings of every centavo you have/earn. It sounds a lot of work but if you find the right tool you'll be able to get into the habit and recording ALL of your transactions will become second nature. 

There you have it! Easy enough right? This is a start. Remember, the whole point is for you to be aware that you do need a budget. This exercise makes everything real for you. If you see how much your actual earnings are versus actual expenses you'll realize its importance. 

P.S. I've started using a custom template for 2017 which i'll share once i prove to myself its efficiency.

Hugs & Besos

-AV