What do you usually do when you get your salary? When it comes to money, there are certainly no shortage of ways to spend it. After we receive our salary, we tend to pay our bills and expenses first and whatever is left goes to savings. That is the most popular practice of Filipinos but it should be the other way around. Pay yourself first then the rest follows. We have to save enough and divide our income according to priority. In my case, I only got to fill 3 funds in this list excluding the charity and travel fund (for now). But if you earn more than I do, these should be the funds you got to fill every payday:


1. INVESTMENT FUND
Pay yourself first. This should be for your long term plans. This should be 20% of your income. You have the option to put this on a mutual fund, variable unit linked (VUL), unit investment trust fund (UITF) or stock market. The goal is to beat inflation (which happens to be ~5% yearly in the PH), so you have to find an investment that yields more than 5% rate of return yearly.

2. OPERATING EXPENSES FUND
This is often called the fixed costs. Bills and expenses that needs to be payed. However, this should not exceed 50% of your income. Just as businesses have operating expenses, so should you. This involves necessary costs for your upkeep. Things like rent, transportation, education and food. Whether to include your everyday coffee or your gym membership is your own call.


3. TRAVEL OR VACATION FUND
This one is a must for every person. I mean, we all work so hard and we should reward ourselves with at least one or two travels per year. I put all my extra money in this fund but this is not my priority right now.

4.EMERGENCY FUND
This fund is for emergencies only and should not be touched unless very important. Experts says that you should have at least 6 months of your operating expenses in this fund. This is an account used to set aside funds needed in the event of a personal financial dilemma, such as the loss of a job, a debilitating illness or a major expense. It should be kept in an easy accessible place such as savings account.

And last but not the least,

5. CHARITY FUND
This fund is giving back a portion of our earnings to the Lord. Tithes as we usually call it. Whether you give it to your parish church or to the charity of your choice, it doesn't matter as long as it is used for helping others.

So there you go guys. Till my next post..