Make Budget Planning a Habit

Posted by Fitz Villafuerte under Personal Finance on May 30, 2013

If you’re like most people, you probably receive a lot of text message spam.

You know, those SMS from unknown numbers asking if you’d like to buy a condo unit, or apply for a personal loan.

Recently, I received one that says, “Short on cash for your child’s tuition? Apply for a personal loan. No collateral. Flexible installment terms…

That text message reminded me that it’s enrollment season once more. The time that most parents dread, because it means squeezing their budget again for the ever increasing cost of education.

Some parents will scrimp on their expenses, hoping to save some extra cash. Others will find ways to earn some income, either by doing freelance jobs, or selling stuff.

While a few parents (or is it most of them?) will resort to borrowing money from friends or relatives; applying for a personal loan from banks; or worse, pawning jewelry and going into debt with “5-6” loan sharks.

loan-shark

Fortunately, at least for most people I know, the money will eventually come, and they’ll get enough cash to pay for the enrollment fees and other school requirements. Whew!

After this financial ordeal, things usually go back to “normal”, and they get some breathing space and rest from worry – but only until the next school season and everything starts all over again.

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If you find yourself experiencing this cycle, year-in and year-out, then there’s an urgent need for change in you and your household’s spending habits.

Doing something as simple as “paying yourself first” or following the often ignored formula “Expenses = Income – Savings” will greatly help. In fact, EWB CEO Tony Moncupa Jr even calls this the “formula to beat back-to-school money woes“.

Moreover, I suggest taking it one step further and, as the title of this post above says, make budget planning a habit.

Stop looking into your finances only when you have a big expense coming. Save yourself from all that stress and worry by being frugal and smart with your lifestyle all year round.

Millions of children will be back to school next week. And parents who passed the mid-term exams of the “school of life” will be rewarded with the sight of their child learning new things.

Are you one of them? If not, then the school of life starts today for you, and this is your first lesson.

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Photo credit: jesse




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4 Responses to “Make Budget Planning a Habit”


  1. newbie says:

    Hi sir fitz,
    BPI launched its new investment portfolio which is the equity index fund? Do you think it is a good product? If i am already buying stocks tru citisec online, do you think its still good to invest separately by putting money on this equity index fund? Thank you and more power!

  2. Carlos says:

    Hi newbie,

    I don;t want to per-empt Fitz’ answer, but since I’m an index-fund believer, I’d like to share my thoughts.

    If you want to passively invest in the stock market and aren’t shooting for greater than market returns, an index fund is a good vehicle. As long as you find one that is strongly correlated to the PSEi (i.e. very low Tracking Error – hopefully near zero – in the fund’s prospectus), it will perform as good as the PSEi. When stocks are up, you’re up and during bear markets, you are down too. But the advantage is you don;t suffer unnecessary losses because the fund manager decided to bet heavily (for example, on mining stocks) and lost (like what happened in 2012).

    But again, I’m an index fund believer, so take my advice with a grain of salt.

    In addition there are a lot of mutual funds that outperform index funds. For example, Philequity since it started and up to now has given better yearly average returns than an index fund. And they’ve been pretty consistent too.

    (Personally, I hear that BPI Equity Index Fund, doesn’t have that low of a tracking error yet. You may want to check for yourself.)

    If you;re question is more about investing in an equity fund when you are already investing directly in stocks… Well, that might be more of a personal choice. That equity fund might be “safer” since it is probably more diversified. But it’s up to your goals and what you are trying to achieve.

  3. Carlos says:

    btw, I almost forgot.

    I’m a firm believer in anticipating and preparing for expenses too. Right now I’m trying to get my wife to do it too. I never realized how entrenched the “we’ll cross that (money) bridge when we get there” thinking is, even when people mean well.

  4. jen says:

    Hi Sir Fitz!
    We’re having a hard time stretching out our budget now because of the kids school tuition fees. It’s our second year now sending 2 kids in preschool and grade school.
    We have prepared a small amount of money for the kids school needs and planned to settle it in a low down payment system in their school. Unfortunate, nagamit po ang savings for my father in-law’s operation 3 months before enrolment. We tried applying for bank loans pero negative na po ang record namin kaya decline palagi. Tight budgt din ang ilang relatives and friends since enrolment din ng mga kids nila.
    Now, j wasable to pay their tuition fees for 5,000 each as lw down payment but we have ‘nt pay for their modules and workbooks. Nag start na ang class nila and di makagawa ng activities ang mga anak ko since di po marelease ang modules nila.
    Sir fitz i don’t know what to do… natatakot din po ako lumapit sa accounting regarding my concern since i’ve experienced na masigawan na sa school accounting because of paying late sa summer class ng daughter ko when she was accelerated.
    We will have available budget end of july pa po next month. Should wewrite a promissory note or should we talk to someone in school? Badly needed some advice. Pls help sir…. Salamat po and have a nice day!

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