Managing Personal Finance

Simple Saving Formula

Life is really simple, but we insist on making it complicated. It's the same when it comes to saving money. It all started with a simple saving formula: INCOME - SAVINGS = EXPENSES

I started applying the formula after learning it from my college professor when I was in my 2nd year. As a self-supporting student which means I need to feed myself, pay my own rent, pay my tuition fee, and with all the other expenses, I must know how to manage my finances well. Maybe, you'll think how come there is savings left, but what I did is I identify the essentials then eliminate the rest. Eliminating the rest means prioritizing your needs over your wants. Same goes with the formula (INCOME - SAVINGS = EXPENSES), we need to get first the portion for savings before the expenses. In my case before, since I started saving without enough income because I'm a working student, I only get 10% of my income as savings then the remaining 90% is for all my expenses. e.g Monthly income|12,000 --------------|------ Savings |X 10% Monthly savings | 1,200 Multiply by | 12 mos. Yearly savings|14,400

By just getting 10% savings from your monthly income of 12,000, you'll have savings of 1,200 per month multiply by 12 months, so you'll have 14,400 savings in a year. How much more, if you're income, is greater than our example, and that you also allocate a higher percentage for your savings. Come to think of it, would you prefer to have those savings or nothing at all. Just try to compare this figure 14,400 vs 0. Again, the decision lies in your hand.

The expanded formula

When I graduated and got a good job, I started to expand my savings as well as the simple formula that I used to follow. Now the expanded formula is (GIVE.SAVE.SPEND).

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