Have you tried doing your usual grocery shopping with your usual weekly budget? Have you come to realize that as the weeks go by, you are buying less with your money? Do your budgeting hacks still work?
That, my Pinoy breadwinner friends, is the effect of INFLATION.
With inflation, your 500-peso today cannot buy as much as you did 1 or 2 years ago.
How to cope with inflation
If you are looking for ways how we can stop inflation, this article will not give you answers. Inflation is a result of many economic factors and fiscal policies of the government.
More than ever, what I can share with you as a way to cope with inflation is effective budgeting and financial planning.
If you learn to budget and plan well, you can survive and even thrive above the bad effects of inflation.
Budgeting Hacks for Low income, heavy debt
But, how about for those breadwinners who have low income? Those who are still heavy in debt?
Is budgeting and financial planning really possible for these breadwinners with low income, heavy debt?
An easy to follow guide for budgeting is the 50/30/20 rule. According to this rule, you allocate 50% of your income to your NEEDS, 30% for your WANTS and 20% for your SAVINGS.
NEEDS include all basic necessities that help you live safely and comfortably. This includes food, utilities, insurance, transportation, education, health care, rent or house amortization, communication, among others.
WANTS include the things you would spend for your hobbies, pleasure, reacreation, movies, eat outs, gadgets, Netflix subscription, etc.
SAVINGS include a portion of your income that you set aside to grow your emergency fund, investments, VUL policies, etc.
If you are a breadwinner with low income, this budgeting hack will still work for you. Actually, anyone can budget their income regardless of income level.
This budgeting hack makes more sense for breadwinners heavy in debt. A way to tweak this 50/30/20 rule is to allocate your 20% to paying your outstanding debts.
Financial planning for breadwinners
For most Pinoy breadwinners, a more detailed financial planning is needed.
After getting the right habit of budgeting, financial planning for the long term is the next best thing to do.
The right financial plan will answer for every need you will have as a breadwinner in all life stages. If you’re looking for a financial planner who can help you, send me an email at PinoyBreadwinners (firstname.lastname@example.org).