Greetings of hope, happiness, and prosperity this New Year 2014!
Minreeva launched its Household Financial Management Workshop last November and December as pilot classes. We've received quite favorable feedback from participants. The outpouring of support and interest from colleagues, friends, and also peers from the social media sphere was also quite overwhelming.
With this in mind, we are making the session from an invite-only event to a publicly-available workshop. What's more is that we are also making the resources from the workshop available on this blog because we believe that everyone should have access to financial literacy. You can still attend the workshop though - it'll be more fun. As for the support group, we're still working out the details.
So here's the workshop - in a nutshell.
1. Set three S.M.A.R.T. (or SMART-ASS) goals for your financial year and write them down.
If you need help in setting S.M.A.R.T. (A.S.S.) goals, you can read a previous posthere.
Three objectives for the year are more than enough. It's better to set a fewer goals that have your total attention during the entire year than spread yourself thin with one-too-many. A fine example of a SMART goal would be: "Pay-off outstanding debt of Php 24,000 by the end of the year."
Specific: erase 24,000 credit card debt
Measurable: pay-off (reduce to 0)
Attainable: (based on your income)
Realistic: Paying-off a Php 24,000 debt in one year is very doable
Time-Bound: By the end of the year
2. Write down your most common expenses and categorize them into Controllable and Uncontrollable Expenses. It would also be better if you have a monthly estimated value for each expense.
Controllable expenses usually fall under the 'miscellaneous' group. These expenses are the ones that are NOT necessary for a household to function (ex. gadgets, night out with friends, and fastfood). These expenses are usually unplanned, and may vary depending on the period. The noteworthy fact, however, is that you have complete control over them.
Uncontrollable expenses, on the other hand, are for necessities (ex. groceries, electricity, meal allowance at work). These expenses usually have a set monthly value. Moreover, outstanding mortgages and loans fall under this category.
Below are some examples:
-Transportation Allowance / Gas (to get to work)
-Meal Allowance (at work)
-Mortgage / Rent
-Credit Card Payments
-Monthly nights out with friends
-Weekly dates with spouse / significant other
You can download the Household Budget Template (in .xslx format) below:
4. Create actions plan to attain your Financial Objectives this year by basing it on your projections.
Now that you have an overview of what your finances would look like this year, you can now start setting targets for each controllable expense while working around your set income and controllable expenses. Always remember to use the S.M.A.R.T. format in setting your action plans.
*Figures are based on the Sample Template:
Year's Objective 1: Pay-off Php24,000 in outstanding credit card debt by the end of the year.
Year's Objective 2: Buy an iPad Mini worth Php16,000 by the end of the year.
Year's Objective 3: Save at least Php100,000 for the year
Action Plan 1: Set Php2600 as monthly payment for credit card (required minimum monthly payment is at Php1200)
Action Plan 2: Limit dates with spouse to only once a month with a Php1000 budget.
Action Plan 3: Go out with friends once a month working on a budget of Php500.
Action Plan 4: Set clothing budget for the year at Php6,000 or Php500/month.
Action Plan 5: Save Php500/month and allot Php10600 of 13th Month Pay for the iPadMini
There are three important things to make this budget template and your goals/action plans really work for you:
a) Be very honest with your expenses. You're only fooling yourself by putting in wrong numbers.
b) Track expenses real-time; on a daily basis - if possible (I personally do them weekly). Do not lose your receipts.
c) The goal is to make the DEFICIT ROW "green." Don't worry if you start out with a "Red" or with a deficit on your savings. We all start out with 'red marks'. The ultimate goal is to manage your finances well, work your way around income/expense limitations in order to eventually make your Deficit for each period "green."
Conclusion and other Workshop Points
There you go! What you want to do with your savings will be entirely up to you; but other points that will be briefly discussed in the workshop is how to 'save' your way into Financial Freedom (emergency savings, saving for investment, saving for retirement, and making your money work for you). Another point to remember is that the keys to better financial health are Consistency, Transparency, and Commitment.
Hope this helps! Enjoy, good luck, and let's work on getting that 'Green' Deficit!
If you have suggestions, comments, or would like to share your personal financial goal-setting techniques - let us know by posting a comment below.