How To Be Penny Wise: Smart Money Tips (Third of a series)



People without plans drift aimlessly and get nowhere.  Planners and goal setters get somewhere.  Set financial goals for yourself, and that includes your family if you’re married with children.

Finances cover a multifaceted scope where savings, budgeting, spending, investment, retirement and estate planning are counted in.  In setting goals for each financial aspect, you should have a target to aim for.  Just remember the SMART principle:







In applying the SMART principle, start with the basic 10-20-70 principle based on your present net income:

10%       –              Tithing

20%       –              Savings

70%       –              Spending

Involve the family.  If there are plans for a family vacation, encourage everyone to chip in by setting aside a certain amount for the money pot.  This makes it more exciting for everybody.  More than that, it strengthens family ties, cultivates the spirit of cooperation and teamwork, and helps develop in each family member the good habit of saving.


Live within your means.  We’ve heard that often enough and we found nothing wrong with it.  But do you know that there’s a new paradigm shift?  Live below your means.  You can exhaust your monthly pay and still be considered living within your means, but that leaves you with nothing to spare for unforeseen emergencies.  But when you live below your means, you will surely have something extra to set aside as savings for future needs.

That’s where budgeting comes in, which is an integral part of financial goal-setting.  Before we even spend or think of how much to set aside for savings, we can control our purse and manage our finances by working backwards.  Budgeting is simply listing down your essential, regular daily expenses and adding them all up to determine your monthly expenditures vis-a-vis your monthly income.  You may be surprised to learn that you are actually spending more than what you’re receiving in your paycheck.  If that is the case, it’s time to review your expenses and identify which items can be tapered or which ones can be scrapped altogether.  Once you’re settled with your acceptable monthly budget, simply break it down into a daily budget for your daily expenses.  Be conscious of your budget and stick to it.  Don’t give in to temptations that will make you overshoot your budget.

Set aside the funds to be allocated for each expense item.  Safekeep the funds in separate individual, properly-labeled pockets or envelopes or folders.  There are available envelope folders with multi-layered compartments in bookstores.

Do not juggle funds. When money allocated for a particular expense item gets depleted, avoid touching the funds set aside for something else.  This requires discipline and self-control.  Over time, you will learn to master the habit.

(Featured Image photo credits:


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