Income Series: Income Discipline 101

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Once upon a time, there was this fresh graduate girl called FGG which mean fresh graduate girl (obviously). She immediately got a job that she likes. Sooner or later, FGG slowly earns through her 15th and 30th salary. She was so happy. Her college education is paying off. Every salary she would dine in the best restaurant in the city. FGG would buy girly things like bags, shoes, makeup and clothes. She does not worry even if she has no more money in the succeeding days. She has a steady income after all. When she no longer has money, she can just loan some because she can pay on her next payday. After years of working and toiling, FGG ends with zero savings and worst a huge amount of debt. That FGG is me.

I know this could pass as a “Maalaala Mo Kaya Kwento”. We will just have to insert a few notable elements like crying and despair and we are good to go. Kidding aside, this has been my situation for years. Imagine relying much on my salary yet exhausting it for a few days with nothing left. And worst I get so complacent knowing I would get another bunch of salary on the next payday. Little did I know, I have no income discipline at all! I was digging my own financial grave.

This week we posted a few income series on how we can be able to increase our source of income. This only means that there are already many sources where we can be able to find one. True, there are many things that would teach us how to make money. But the real question is how we can KEEP our MONEY. Most of us change our lifestyle depending on the salary we get. Hence, regardless of how big you are earning now, without the proper income discipline that money would just slip through our fingers.

Hence, let us adapt a millionaire’s mind-set when it comes to income. And this is what I did to turn and shift my finances for the better. It all boils down to DISCIPLINE! As a side note, I am still doing a single job this time.

First investment and spend the rest. 

I asked our local cooperative to get this much amount of my salary every payday. This makes me in control of my money. What is deposited in my ATM now would be my expenses money. I don’t need to worry since I know I have those savings. Hence, I was force to work and budget my expenses money. As much as possible I don’t want to touch my savings money. So I didn’t bother getting an ATM for that.

Living within my expenses money. 

As most people would say, live within your means. This is truly an eye opener for me. I notice I have been spending tons on things I can’t afford to get at the moment. I was able to purchase those items before because of the power of credit card. And the bulk of my salary is used to pay for my purchases. True, there’s always a time that you want to treat yourself to a good pair of shoes or another bag. However, if you cannot afford it at the moment, then don’t bother getting it. At this point, I realize instead of swiping my card to get those items why not save my money first. When I have enough I’ll buy it. I cut off overspending immediately and I learned how to budget.

Paid debts. 

Remember my huge debt on the story? I was motivated to pay it off immediately! Hence, I use my savings money to pay it in 3 months. After the 3rd month, I was no longer withdrawing my savings money and it compounded biweekly. If there’s something I really want to buy that is beyond my expenses money, I check out my savings money. If it is a need I see to it that there’s still money left after the purchase. If it is a want, I just let it slip.

Trim down my expenses. 

After knowing my expenses money, I need to fit my expenses there. I identified the ones that can cripple such or the items I tend to buy before that could get a big percentage from it. I simplified my expenses and seek out for cheaper alternatives. For example, I cut my postpaid plan and get a prepaid plan. Hence, instead of paying 2,000 every month for my plan, I just load 500 every month. Hence, I was able to save 1,500! I cut my credit cards from five to one so I won’t need to pay for its annual fee. Instead of having lunch outside, I eat lunch at home and many other things. Of course I still reward myself every now and then provided it is within my expenses money.

So starting today, make a conscious effort to incorporate discipline to your income. As stated, regardless of how big your income is if you don’t have discipline, you still won’t be able to save and maximize your salary. Seek for cheaper or no expense alternative of your current lifestyle. Trim down expenses, slowly pay debts so you can save and invest more in the process. The procedure may not be a walk in the park but guaranteed beneficial to you and your finances not only today but in the future too. 

P.S. To those doing the 52 Week Money Challenge and 52 Week Money Challenger Version 2, it is Week 3 already! Did you deposit the next amount yet?