It's the New Year and there are so many things to plan for this year. After having a child, the reality regarding money and spending sets in. This means that as our child gets older, the more we will be spending for his needs. And the more spending we anticipate, the more we should be prepared for it.
As parents, we want the best for our children but the best doesn't mean that it has to be the most expensive. This goes for everything from his clothes to education.
Anyway, I have always been very thrifty pretty much my entire life and so is my husband. My friends even call me "kuripot" or spendthrift in the Philippines. Well, I guess it is a good thing.
Gone are the days where I dreamt of owning the most fashionable clothes, the most expensive bags and the most comfortable and expensive shoes. My mind is now set on how to help my husband provide the best life for our family. This is where I can put my financial background to test.
First, we have to evaluate our last year's spending and see where we can improve on.
Then we have to sit down and plan what we are willing to spend on this year. We have to list and know what we need and want, then prioritize our needs. Of course, Raphael comes first. Definitely, an educational plan for him. We also have to continuously set aside some money for our savings and retirement. Then if we have extra, maybe the wants can come in.
Here are our Financial Philosophies
1. Live well BELOW (not within) our means. "Below" so that we still have some to save.
Formula to follow:
Income (I) minus Savings (S) equals Expenses (E)
The savings should ALWAYS come first. Try to lessen expenses and as much as possible, debt is not an option.
2. Don't buy if we don't need it. Fight the urge to buy unnecessary things because most of them end up as clutter.
3. For retirement, Insurance and Educational plans
Formula to follow:
Investment = Principal X Rate X Time
More often than not, people tend to forget that time is essential in investing. So the earlier we save, the better yield we get.
4. Life is LONG.
Most people think that life is short so enjoy it while it lasts. I don't believe in this. With the way science is devoloping in prolonging our lives, the more I want to believe that I will live long and the more we have to be prepared for it. Remember that as we get old, our health deteriorates which means that we need to set aside money for our future medical needs. We may not feel the aches and pains now but better be prepared than sorry.
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