5 Secrets For An Effective Budget Strategy

After weeks of stressful work, it’s finally time to receive that long-awaited paycheck. Spending hard-earned money is one of the most rewarding feeling for anyone who works full time. After running errands day in and day out for weeks , it feels just right to spend for a well-deserved rest and relaxation.

But spending also means less money saved.

With our inherent culture of overspending, many Filipinos end up with little to no money saved up for their retirement or long-term goals, making them overly dependent on employment and their monthly salary. Unless you want to work until you’re 60, it’s best to start working on a budget plan as soon as possible to help you save for an early retirement. You might have a budget plan right now; but if you’re not saving a sizable amount of your salary, it isn’t very effective. What can you do?Here’s five secrets to help you budget your money:

5.Create a short-term budget plan

Some people think that a long-term budget plan is enough to save money. Wrong! Long-term budget plans almost always fail. Here’s an example: you create a budget plan for three months. You plot out your expenses and see that a decent portion of your salary goes to your savings. You’re happy, your savings account is happy; everything is well and good. Two weeks later, your friends invite you to go out, but you generously decline and tell them about your budget plan. Another two weeks pass, and due to office frustrations, you end up spending a large portion of your salary. Another couple of weeks go by, and you completely forget about your budget plan. After three months, you hardly saved anything!

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Short-term budget plans are easier to manage and helps you keep focused. If you’re working, keeping a two-week budget plan might work best for you. Also, it’s easier to experiment with a short-term budget plan; you can easily tweek it according to your needs for the next few weeks.

4. Know your wants and needs

To many, this is the hardest part of money management: knowing their wants and needs. It’s easy to make an excuse that you NEED to buy a new office blouse because you’ve worn every blouse in your wardrobe and it’s embarrassing to wear them again next week. Obviously, that’s just a cover-up for your wants. Nobody actually cares if you wear the same blouse every once a week; and if they do, who are they to judge you?


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Clearly knowing your wants from your needs can help you make a budget strategy that will secure your real needs, as well as help you evaluate your wants if they can be done now or left for a later date.

3. Prepare a contingency fund

Even with a tight and well-planned budget, you’re bound to hit a bump on the road. So the best thing to do is to prepare a contingency plan. When plotting your budget plan, ask yourself what would tempt you to shell out cash: are you easily enticed by sale on clothes? Do you like spending money on food? Maybe you prefer watching a movie in the theater?

If you know what can force you to take out some cash, you can easily form a contingency fund to protect your budget; set aside some expendable cash in case you have a sudden urge to buy. I don’t advice suppressing your urge to spend for your happiness. After all, you deserve to be rewarded for the work you do.

2. Set your limit

Even though I don’t advice suppressing urges to spend, there needs to be a definite limit to it. That’s the purpose of the contingency fund: It’s cash you’re willing to spend without guilt. But once it’s all gone, that should be the end of it. Proper discipline is essential if you want to properly manage your money, and strictly following the limits you set for yourself is one way to instill that discipline.

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So when you plan your contingency fund, remind yourself that this the limit you set for the duration of the budget plan. Set your limit, and follow through with it.

1. Reward yourself adequately

It’s no surprise if you feel the need to spend a night at a hotel or buy a glamorous new outfit when you get your salary. After all, you had life sucked out of you for weeks and you just have to do something to recover. But does it need to be big and fancy? Instead of spending time in a hotel, have a nice dinner in a fairly-priced restaurant; you can save the hotel visit for more special occasions (like a promotion!)

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Rewarding yourself more than you should can lead to overspending and the feeling of spending on bigger things next time. The reward you give yourself should be equivalent to the work you rendered. If you did an excellent job, then feel free to reward yourself generously. But if you feel that you could have done better or exerted more effort In your work, maybe rewarding yourself a little less would be a good idea; it would help motivate you to exert more effort next time, too.

There you go! Five secrets you can use when making your budget strategy. Some of these may not work for you, so feel free to mix them around to see which you can use to make an effective budget plan. Are there other secrets you can share with us? We’d love to hear from you in the comments below!