“Live within your means.” Most of us have probably heard of this old money mantra that is essential in building the foundation of one’s financial well-being. It’s a saying we can easily agree with, but don’t or can’t always put into practice.
According to Metrobank, the key to “living within your means” are three things: knowing which expenses to prioritize, creating a personal budget, and sticking to it.
Know which expenses to prioritize
At the top of your priority list are your necessities—these are the items you need to spend on for your day-to-day, such as housing (rent or mortgage), utility bills, food, groceries, health (ex. medicines, vitamins), housekeeping expenses (ex. laundry), and any outstanding debts.
A common mistake is considering the money you have after taking care of your necessities as “disposable income” or the money that’s already available for you to spend as you want to.
Other expenses that are important for your financial well-being are forgotten, such as:
Emergency fund: This is the money you set aside in case of unforeseen events, such as accidents, major home repairs, or sudden unemployment. A good rule of thumb is to have enough funds, which is worth about three to six months of your living expenses.
Insurance: There are a wide variety of insurance products to consider, but some popular ones are the traditional life insurance and the Variable Universal Life (VUL) insurance. Traditional life insurance ensures your loved ones will receive a benefit in case of your demise, while VUL insurance is investment-linked, you not only get protection but a chance to grow your money as well.
Retirement Fund: Retirement funds, such as pension plans, Personal Equity Retirement Account or PERA, are long-term investment you can explore as you prepare for your retirement. The earlier you start it, the more time you can grow your funds.
It is only after we’ve set aside money for these important expenses that we know exactly how much we can spend for our wants.
Creating a personal budget
Now that you know which expenses to prioritize, how do you determine if you are living within your means?
There are different approaches to budgeting. You can follow the well-known 50/30/20 budgeting scheme, which encourages you to set aside 50% of your income to needs, 30% to wants, and 20% to savings. This makes it easier to see whether you are overspending on any one category.
You can also do the reverse budgeting approach called “Savings First” wherein you prioritize setting aside your savings before all other expenses. This ensures that you’re always saving and setting aside some money before you spend on your wants.
Sticking to your budget
Dieting is akin to budgeting because both require a lot of discipline. A common mistake for people who are just starting on this journey is they get into it like doing a crash diet. They make drastic changes at the start, only to end up running out of willpower halfway and going back to their old habits.
Rather than trying to change everything at once, try to create an environment that makes it easier for you to build these new habits and unlearn the old ones. This entails utilizing the right tools to enable you to follow healthy money habits.
You can start by scheduling all your financial transactions like bills payments with the help of banking apps. This ensures you don’t miss on any of your payables and you don’t incur penalties, plus you get to track your cash flow for your everyday transactions. If you’re a Metrobank client, you can easily download the Metrobank app on your mobile phone via the AppStore or PlayStore and enjoy all its features to help you get organized.
Another way to help you stick to your budget is by setting up different bank accounts for different funds like your savings, expenses, and even for your emergency fund. This helps you keep on track on achieving specific goals as you don’t get to touch on your different savings accounts.
Last, but definitely not the least, take advantage of perks and deals that banks offer. One great offer for new bank accountholders is Metrobank’s Triple Bonus Savings promo, which runs until August 31, 2025. For those opening their first Metrobank savings account during the promo period, they get to enjoy cash gifts, transaction fee rebates, and event insurance protection. Just keep on building your funds until you reach PHP50,000 within the promo period and maintain it as your Average Daily Balance (ADB) for six months to get:
PHP1,500 cash gift (credited to your account after 6 months)
1 year of InstaPay rebates (up to 10x per month)
1-year AXA accident insurance coverage worth PHP1 million
Living within your means is all about following a budget, having a disciplined spending habit, saving regularly, and taking advantage of offers to further grow your funds. By following these tips you can better take charge of your financial well-being. To learn more, head to https://earnest.metrobank.com.ph/.
