Where Does Your Money Go Every Payday?

What do you do with your money every payday?     You could be one of those people who pay their bills and do their groceries right away. You could also be one of those who go shopping the moment they have cash, or one of those who would rather keep every bit of money that they make.     People have different spending habits, and these habits are dependent not only on a person’s different needs, but on a person’s wants as well.    More often than not however, people fail to plan for the future and only think about the now. Because of this, we see people working way past retirement age. We see people earning so much money but not having anything under their name the moment they stop working. We see people spending so much that they fall into debt and never get out of it.     To fully understand why people end up in their current financial state, it is important to understand what people usually spend on.         The Investments, the Essentials and the Non-Essentials     Not everybody has investments. But everybody has a list of essentials and non-essentials.   This is usually where a lot of people get into trouble.     They fail to understand what counts as an investment or as an essential expense, and add non-essential expenses under these categories as a result. And what happens after that?   You lose money. And you lose it fast.  
    • Investments


Let’s be clear here that when you call something as an ‘investment’, it means that there’s some profit (in any form) to be taken from it.


Capital for your own business. Stocks, bonds, or mutual funds. These are clear examples of investments.


Here’s where the problems come in.


People believe that buying a car is an investment. Here’s some news for you – it isn’t. If you buy a car that you would have to drive to and from work, that means that its value will depreciate over time.


Sure, it’s an asset. It’s something that you can use as collateral when you take out a loan. But it’s definitely not an investment, unless you plan on using it to make a living, like renting it out or upgrading it and selling it right away for a profit.


Houses can be investments in the same concept, but these are often more complicated.

    • Essentials


When you say essentials, these are the things that you just can’t live without.


Food. Electricity. Water. Tuition fees.


Sure, some people consider cellphones and the expenses that come with them as necessities. After all, it is now the best way to communicate with other people. However, the kind of phone that you buy could make all the difference.


Do you actually need the latest smartphone released, when the last one you got is still working pretty well?


If this is the case, then it automatically becomes an expensive non-essential.

    • Non-Essentials


Obviously, this is everything else that does not fall under the previous two categories.


Night outs. Trips to the mall. Going out of town with friends.

  Knowing how to safely categorize these three could be the ultimate thing you need to finally get your finances in order.   And once you understand how these work, you can start working on your savings as well.   Learning How to Prioritize   As with a lot of things, the important thing here is learning how to prioritize and learning how to adjust according to your priorities.   Before making a priority list, think about your future plans first. I’m not talking about next year.   I’m talking about the long term. 10, 20, 30 years from now, where do you want to be? I’m sure a lot of you would like to retire at the right age, if not earlier, with enough money to enjoy the rest of your days.   Nobody wants to be haunted by their past debts, so a lot of people also dream of finally being debt-free and financial independence. Based on these long-term goals, here’s how you prioritize:  
    • Draw a detailed image of how your finances look at the moment.


List down every single expense and your expected income. Make sure you take note of how often these expenses come in as well. You may be paying your utility bills on a monthly basis and your kids’ tuition fees quarterly. You may also have insurance that you’re paying for twice a year. It all depends.


Once you have everything in place, take a look at each figure and think about whether this is an expense that you can actually pull down.


Are you paying a 4000-peso electricity bill every month for a studio type apartment when your neighbor, who has a 3-bedroom home, pays pretty much the same amount? You may have every single bit of appliance turned on all at the same time, or have the A/C turned on 24/7 even if the room has become too cold for comfort.

   Financial Situation  

Are you spending too much on groceries, and then notice that you always end up throwing away so much food at the end of the day because there really isn’t anybody to finish it? You may be cooking too much food everyday.


The bottom line here is that every single expense can be adjusted accordingly – it’s all up to you on how willing you are to make a few lifestyle changes.

    • Put money into your savings and investments first.

“What? Savings and investments over everything else? But I have bills to pay!”


Yes, exactly. This is why you have to invest and save up BEFORE you even think about spending money on anything.


The moment you start spending money, you won’t be able to stop. A lot of people say, “I’ll put some money aside after I’ve paid all the bills,” only to realize later on that they have nothing left.


Make sure, of course, that your savings is something that you can afford. Don’t plan to save 5,000 pesos a month if you have a 10000-peso list of monthly expenses and are only earning 18,000 pesos each month.




Come up with a reasonable amount so that you would be able to maintain it over a longer period of time. When your income increases, then you can easily adjust your savings as well. The same rule applies for your investments.


Of course, when it comes to investments, you also have to be very careful about how much you can truly invest. I suggest saving up for it first if it proves to be a huge investment. This way, should the deal fall through or does not end up being as profitable as you want it to be, you will not be stuck paying debt caused by a huge one-time investment over the next few years of your life.


Calculate the risks well before investing so that you can make sure that all the money you put into it will be worth it.

    • Settle your essentials.

Now that you have money put aside and invested, it’s time to pay the bills.


Always make sure that your bills are up to date because this can also ruin your budget in the long run. Delaying monthly bills can add more to your expenses as disconnection fees and late payment penalties add to the equation.


Sadly, this is something that other people fail to realize. Because they keep thinking about things they want to buy and places they want to go, they tend to skip on the important bills thinking that they’ll be able to make the payments the following month anyway.




But what happens is, you would have to worry about an even bigger amount the next month, which starts a trend of delayed payments and never really being able to settle the bill.


Save the non-essential expenses for last.


ALWAYS save your non-essential expenses for last because these are things that you can live without. Yes, all the great stuff is usually found under this list. The shopping sprees. The new gadgets. The night outs. However, this is also the biggest reason why people often find themselves broke and in debt.


Manage your non-essentials accordingly. You can always buy all these things that you want when you’re more financially stable. What you don’t want to happen is finding yourself in the middle of a financial crisis, which would eventually lead to you selling all those cool stuff that you bought on a whim.

  Non-Essentials     With the right way of prioritizing your expenses, you can find yourself in a more stable position in no time. You can finally stop worrying about where your money goes every payday, and you can eventually reap the benefits of being able to buy the things that you truly want while making responsible spending decisions at the same time.


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