While having a chat with a friend, he complimented me the way I manage my earnings. He said it is a brilliant idea that he wished he learned and done before... Here's what I said to my friend...
First, I created fund groupings...the NOW fund, the BUFFER fund and the INVESTMENT fund.
The NOW Fund
I set aside part of my earnings to cover up my expenses for the current period/month.
In which I further categorized into the ff.:
1. Mandatory Expenses Fund
This is for my basic-needs expenses, payments to current dues, debts, mortgages, amortizations and other necessary expenses.
2. Love Fund
This is for giving to my church, donations to my favorite charity and bonding-moments related expenses.
3. Caprice or Luho Fund
This is for those I would like to have or do. This is my way of rewarding myself.
The BUFFER Fund
This one is for my 2-year pre-funded or pre-paid "NOW" fund. For whatever reasons, I just want to be prepared for the next 2 years come what may.
And, I also set this aside for emergency reasons like calamities and sicknesses.
The INVESTMENT Fund
Yes, I also set aside some cash or money for investments so it will generate additional earnings for me. I invest in mutual funds before, however, I concentrate in T-Bills for now because of our present economic conditions. Maybe once the economy is stable again, I will go back investing in mutual funds. I place and roll T-Bills investments every 3 months so I can choose a better interest rates since rates are always fluctuating everyday and also to revert back to mutual funds investing or diversify in other higher yield generating income.
My % Distribution To Funds
Now-Buffer-Investment : 40% - 30% - 30%
Now-Buffer-Investment : 50% - 25% - 25%
Now-Buffer-Investment : 60% - 20% - 20%
I use various percentage distributions depending on how much I earned for the period and the expenses I have to cover up for the period. What's important is that I put funds to these three.
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