Within days after payday, a lot of employees are faced with the dreaded question – where did their salary go? Quite often, employees feel that right after their wages arrive, it gets spent without them being able to hold or enjoy it. With that in mind, let us then try to find just exactly where the money goes.
The very first place anyone should look for their money is in their credit card statements. Ideally, each person should only have two credit cards–one Mastercard and one Visa. Anything beyond that is unnecessary.
Read the Fine Print: Annual Fees and Interest Rates
Most of the basic credit cards (by basic, I mean those entry-level credit cards that are offered in most shopping centers) will waive the first year’s annual fee as an incentive for an individual to join. On the succeeding years, those fees will be applied. Now, most of them will charge an annual fee of P1,200 upwards. If you have four cards, that’s a total of at least P4,800 yearly expense which you can use for investing or other necessary expenses.
Furthermore, having many credit cards makes it very, very easy to accumulate mountains of debt.
This is because the interest rates credit card companies charge, despite the many ads that tells us otherwise, are actually quite high.
If your credit card charges you an interest rate of 1 percent, that actually stands for 1 percent a month and, if you just pay the minimum amount required every month, you will actually end up paying over 12 percent for the year. The charges are much higher if you actually miss a payment. So, always pay your credit-card bills in FULL and ON TIME.
Remember, use your credit card, do not let it use you. Take advantage of the perks they offer like rebates, freebies and reward points. This way, your card helps you save money rather than bury you in debt. Credit cards are not bad, you just have to know how they work and use them properly.
Now let’s go to the next place where you should look…
You should look for your money in what I call “ninja expenses”. By this, I mean those small purchases you make whenever you go out and but never seem to notice or keep track of.
My favorite example of a ninja expense is parking. It is an expense that is often overlooked. If you keep track of it, though, you will see that parking can also become quite significant if left unchecked.
For example, if you go to two or three different malls in one day and park in each of them, that’s an easy P120 (assuming a flat rate of P40 per mall.) If you mall hop quite regularly, as in every weekend, that P120 can quickly go up to several hundred or even over a thousand pesos every month.
Another example of a ninja expense is the meal upgrade that fast food offer. More often than not, you find yourself in a situation when you are certain of what to order then suddenly, you are offered upsize options that you can’t refuse. Worst, it comes with a dessert! Like putting more inches in our stomach, meal upgrade expense can accumulate and come out with a quite significant amount, quickly but quietly. Just like a ninja.
Having a budget is very useful in ninja situations as it will enable you to allocate funds in a rational way and not allow sudden impulses affect where your money goes. Specifically, if you allocate enough money to purchase your meal and stick to it, you can better control your “upsize” tendency. In the case of parking fees, some scheduling before each trip and the willingness to walk to some of the malls will go a great way in minimizing parking fees. (In my case, I routinely walk to Megamall and Podium from my Tektite office. Not only do I save on the fees, I get a bit of exercise as well.)
Lastly, for you to really find out where your money is – a helpful tip is to make a list of the money that goes in and out of your pocket. Keep track of your expenses, from little things such as fare, parking fees and the likes to the big ones like credit card and household bills. Now that you’ve tracked them down, it’s easier for you to decide which ones are unnecessary and use the extra cash to add to your savings and investments.
Of course, there are other things your money goes to—gimmicks, clothes, gadgets to name a few. Those things can also spiral out of control but our space has run out so I will leave that discussion for next time. (end of Part 1)
QUESTION: Where did your money go? Do you have other ways to monitor and control your expenses? Please share below.