Updated: October 18, 2013
After years of “blind spending”, a friend has decided to finally track his expenses and create a monthly budget starting next month.
I’m glad and excited for him because he did not wait for 2014 to work on his “New Year Resolution” to save more money.
So, we were talking yesterday and he asked for help on how to properly allocate his income so he will have a good working budget for November.
I told him that it’s a trial-and-error process, and it will take him several months before he can come up with the right proportion that will go with his lifestyle.
However, I advised that he can start by dividing his income according to how Filipinos spend today, as presented in the Philippine Financial Literacy Advocacy Report 2013 by Sun Life Philippines.
According to that report, Filipinos spend around 37% of their income on food, which is the largest portion of the pie. Below is an infographic that shows more details.
My friend’s take-home salary is around P20,000 so he can use the illustration above as his starting point in planning his monthly budget – and you can too!
One last thing, it’s interesting to see that Pinoys put 6% of their income in the bank as savings. While it’s an indication that an average Filipino knows how to save, the percentage is too low.
My recommended savings rate is 30%, which means you should save that much of your monthly income. If you find that too difficult, you can always start with 6% and then slowly increase it each month.
So how about you? Are your spending habits the same as above? What’s the difference between your spending and the Philippine average? Please share them below as a comment and let’s discuss.