home and living Friday, November 18, 2016
Achieving financial freedom is everyone's dream but for some (including yours truly) it entails a long and challenging journey. I've been working full-time for more than 16 years, yet still struggling to build a reliable savings fund. As a government employee, I am entitled social security benefits - insurance, retirement and other work-related benefits, through GSIS or Government Service Insurance System. But that is not enough, right? I am also concerned with my family's future. We have to save up for the kids' college education.
But, here we are, trying to make both ends meet. When the husband and I had a mutual decision to take a pause from being an OFW family, we are prepared to experience slight adjustment in terms of lower combined income in comparison with those times he is working overseas. As we're leaning towards the end of this year, daily life becomes more and more challenging. Our only consolation is that we don't have to deal with homesickness anymore.
A couple of days ago, I came across this article from iMoney.ph which talks about how to stop living paycheck to paycheck. Very timely... It offers a surefire solution to build a so-called "buffer" - to set aside one month's worth of paycheck. "If you're one month ahead, you'll never have to juggle bills or worry about making ends meet", according to the author. BILLS! That's one of our major concern, it eats a big chunk in our monthly budget.
Below is the step-by-step guide to build a buffer:
- Track your spending now and see where your money goes.
- Adjust your spending so that you can put some money per month towards your buffer. This may take some time, so don't worry if it takes a while.
- Upon saving up the amount close to your 1 month paycheck, create a budget based on how much is in your buffer. Allocate each peso from that amount to a specific item, such as rent, groceries or bills. You can budget some amount for recreation /leisure as long as the total does not exceed your buffer.
- Pay your present month's bills and expenses using this buffer fund.
- When your present month's paychecks come in, don't touch them - put them in your buffer, and use them to pay off the succeeding month's bills.
- In that succeeding month, put away your paycheck in the buffer to pay next months bills. Repeat this process, always using the last month's pay to cover this month's expenses.
- That's it! From now on, you'll always be one month ahead.
What are the advantages of having a buffer fund? Here are my takeaways from the article.
You can budget better.
You won't have to worry if you'll be able to pay your bills on time. Good bye Notice of Disconnection from utility companies.
You're prepared for the unexpected. Lessen the stress in case paychecks come in late, or emergencies happen.
I will diligently follow these doable tips in 2017. Also, I will continuously look for additional source of income to help build a buffer and reliable savings fund as well.
How about you, do you any tips to share?