My Envelopes to Wealth

A Valuable Lesson From TRC

It is my honor to introduce to you today the seven helpers of my journey to my dream of financial freedom. Ladies and gentleman, please welcome envelopes WEEK 1, WEEK 2, WEEK 3, WEEK 4, WEEK 5, EMERGENCY FUND, UNSPENT EMERGENCY FUND, and the happiest envelope of all, the UNSPENT WEEKLY MONEY. Let’s give them a round of applause, haha.

I’ve heard about envelope budgeting a long time ago as a way of managing and saving money but I didn’t have the interest back then to try. I always have this negative response every time I hear the word saving which is, ‘’Kulang pa nga, ano pang masasave ko?” It was only a little while ago that I decided to do it and I’m glad I did it. I now see how it affects my financial life.

Please allow me to share with you my envelope budgeting. How do I do it?

1. Once I receive my monthly pay, I immediately separate the money that goes to my permanent monthly expenses which are;

a. my monthly ‘padala’ in the Philippines for my family’s

expenses such as utility bills, daily basic needs, students’ allowance, etc.

b. my insurance payments,

c. my COL Financial account. For those of my friends who are not yet aware of COL Financial, it is an online stock broker where I put a small amount of money monthly for my long term investment on stocks.

d. my small bank savings for emergency purposes

2. Once my permanent expenses are already taken away from my salary, the money left which is just 15% of my monthly pay will be distributed into the 6 envelopes namely; WEEK 1, WEEK 2, WEEK 3, WEEK 4, WEEK 5 and EMERGENCY FUND. Each of the WEEK envelopes corresponds to the number of weeks of each month. I always count 5 weeks. It doesn’t matter whether the month has exactly 4 weeks like in February or less than 5 weeks like the rest of the months. I do this because if I exactly count the weeks in a month, I might ran out of money in case my salary will be delayed. (It happens sometimes and it’s good to be prepared for the worst.)

3. You may ask how these envelopes guide my spending. Every week, I take the money out from the corresponding envelope and transfer it into my wallet. That’s the only money I’m going to spend on that particular week. I may use it for my groceries, eating out (I seldom do this though), and other needs that may arise on that week. Then, at the end of the week, I check my wallet if there are unspent bills and coins. This is my exciting day of the week. Because of this, I try my best to be frugal so that I will collect more unspent bills and coins every Sunday morning before having another trip to the grocery store for the next week’s needs. How about if my money for that particular week has already been spent before it ends? Well, I just need to wait for the next week. Taking money from WEEK 2 envelope before week 1 ends is a BIG NO! NO! (I’m glad this hasn’t happened yet.)

4. What happens to the unspent money collected every Sunday morning? That’s the time the 8th envelope which I named UNSPENT WEEKLY MONEY comes in. The money I collect from my wallet every Sunday morning goes straight to it. This money will be added to my Insurance payment to lessen my premiums or will be used to purchase new shoes or clothes or will be used for my vacation.

5. Let’s not forget my monthly EMERGENCY FUND envelope. If you noticed, I already separated a little amount from my salary to be deposited in the bank for emergency purposes and yet I still have an envelope for emergency. Well, for me there are two kinds of emergencies. The first kind is health related, accidents, change of employment, or worst-death. As an OFW, there are many unforeseen events that may happen to me. So, in case some of these mentioned things happen, I will be ready. That’s why saving in the bank for my first type of emergency is one of my priorities. The second kind is social obligation emergencies, haha. For example, you've been asked to be a godmother in a wedding or christening and you will of course give a nice present, right? With the small amount of money sitting in my emergency fund envelope every month, I can now buy my inaanak with a good gift without sabotaging my other envelopes or my savings. One more example is the social events at work. There are times when we need to look nice for certain events like parties, graduation and the like. So, my monthly emergency fund can be spent for a short trip to the hair saloon for a little hair fix or make up.

6. What happens also to unspent emergency fund? Just like the unspent weekly allowance, it will be transferred to the UNSPENT EMERGENCY FUND envelope at the end of the month. This unspent money will be kept and will still serve the same purpose until the year ends. If the year ends and the money is still there, I can either use it for house improvement or for rest and recreation.

There, that’s how I do my envelope budgeting. Weekly budget works best for me because I’m living on campus (I’m a teacher). And because I’m living at school 24/7, there’s nothing much to spend on in the campus. I've only got to spend my money basically on the weekend.

My envelope budgeting is not perfect. I still have a lot of things to learn to perfect it but at this moment, I can say that it helps me a lot in disciplining myself. It guides me not to lose track on my spending and push me to reach my goals for financial freedom.  DISCIPLINE and DETERMINATION for FINANCIAL FREEDOM, YEAH!!!

STOP WASTING YOUR PRODUCTIVE YEARS

SAYANG!!! This was the word I kept telling myself and my friend by the time I have stumbled on the words FINANCIAL LITERACY. You know why? If only I have met these words earlier in my life as a local employee and as an OFW and have followed the experts’ advice like Bo Sanchez of the Truly Rich Club on growing money, I should have at least a MILLION pesos now and growing (by following Strategic Averaging Method or the power of compounding) but the sad thing is...WALA PA E.

I have worked as a local elementary teacher for 4 years, then 9 years as an OFW but I am ashamed of myself and sad to tell my friends that I’m not ready to go home to be with my family yet. I’m sure you know why. Yes, I don’t have the MONEY to start a new life back home. When I meet or chat with some friends, it’s very typical of them to ask me how long have I been working overseas, and after knowing that I have been away from my family for almost a decade now and say “Ang dami mo na sigurong ipon, no?”, it is embarrassing to tell them the truth that I have none. The reason for this is I don’t know how to handle money. I deposit most of my hard earned money in my savings bank account and because I am FINANCIALLY ILLITERATE, it is only the maintaining balance that is all left in my savings account before the next pay day comes.

Living and working overseas is good especially if you have a good employer or school or company but it is also prone to temptation. When I say temptation here, I am talking about money spending temptations. There are many channels that can easily suck the money up from the ATM cards. In China, we have the very convenient and addictive online shopping popularly called as “Taobao”. I am also a gadget fan, so you can just imagine my trembling hands and drooling mouth when I see new models of phones or computers on display.

The good thing now (although it's a little too late for me) is I have tried very much to CHANGE my bad money handling habits and I am always excited to talk about my PROGRESS with my friend and now, to you as well. I thank the LORD that He poked me while going through my Facebook page and led me to a shared page that has something to do with saving and investing. On that day, NAHIMASMASAN ako from my deep day dreaming and came to the realization that I WILL NOT BE STRONG ALL MY LIFE TO WORK AND EARN FOR MY EVERYDAY LIVING, THAT BEING AN OFW IS NOT FOREVER. From that day on, I have watched some motivational speakers like Bro. Bo Sanchez and Mr. Francisco Colayco on YouTube and many others on money management and money growing. I have also joined the Truly Rich Club and I have been learning a lot from the inspirational ebooks and simple explanations of how stock market investing works.

If you are an OFW like me or an employee or a student who have an extra allowance or accumulated pamaskong handog from ninongs and ninangs on Christmas or birthdays, start saving and investing. You may also start watching and reading motivational videos and articles. Embrace financial literacy. 

Buying Our Stocks for the First Time

Investor. What a wonderful word to hear. 

I couldn't believe my friend and I have finally bought our first set of shares of stocks today from three different big companies in the country. Can you imagine the excitement we have for being a co-owner of three big and well-known companies in the Philippines? Filipinos don't need to be millionaires to invest in the stock market. See, my friend and I are just simple citizens - an OFW and a boring teacher and of course, we are not millionaires, but we managed to buy shared ownership of some of the giant companies in the country with just our little amount of money-as little as 5,000 Pesos. Yes, you read that right. Don't read it twice. It's really as little as 5,000 Pesos. To start your own investment in the stock market. I'm very sure your mobile phone, or your camera, or your computer, or even your shoes and bags cost more than that. 

Bro. Bo Sanchez story of his maids investing in the stock market is a very inspiring story. The last time I checked Bro. Bo's update, one of her maids has made more than 700,000 Pesos by just regularly investing some of her salary in the stock market. This story push my button to take action. You see, dreaming is not enough. As Andrew Matthews said, "You get motivated by doing things not by thinking about doing things. Action gets you excited and action reveals opportunity." People need to take action to turn their dreams to reality. Bro. Bo's maids are inspiration to us all, but they should not only serve as inspiration, but examples worthy of emulation.

For the next months and years to come, my friend and I will be buying more shares, then more shares and more. No more procrastination. We decided to stop spending on unnecessary things like 2 bottles of coke per day, or pamasahe sa tricycle even though our destination is just 5 meters away and other stuff that can make us save more money so we can buy more shares of our top companies of choice. Now that we are in, that we have started our first baby step to financial independence, we are more motivated to keep moving forward. As of now, our money starts earning us more money as my friend and I concentrate on our day job.

If you liked this post and want to know more about the stock market, fill in the Subscription form to get a copy of my FREE e-book, How Did I Enter Into the Philippine Stock Market or avail of  Bro. Bo Sanchez FREE book My Maid Invests in the Stock Market and Why You Should Too.