One co-worker and good friend of mine inspired me to change the way I think about the money equation.
You see, just like everyone else I know who’s gainfully employed, I used to practically live from paycheck to paycheck. And being a person with a family to support, that’s probably one of the scariest situations to be in. What if I suddenly lose my job? Or perhaps get so sick I can’t go to work?
My children can’t put off eating until I’m back on my feet again, right?
Going back to my very inspiring co-worker and friend, one day – coincidence or not is just not relevant to the equation anymore – I got to take a wide-eyed look at his payroll account. Dear me, he had six figures worth in savings, and his salary and mine were not that very different!
Okay, he was earning a bit more than I was and he had one less kid to care for. But his youngest was still a baby. And based on firsthand experience, babies’ needs are more expensive than a regular six-year old’s.
Play the money equation right
So what was he doing right that I was doing wrong? He had the right perception about money, and I didn’t. My money equation then was:
- SALARY – EXPENSES = SAVINGS
In lay man’s terms, I was saving only as an afterthought, which in truth, is almost nothing at all, except perhaps for the 5-peso and 10-peso coins I had stashed in my piggy bank. Thanks to him, my money equation has now become:
- SALARY – SAVINGS = EXPENSES
Save, then spend
So before I even care to think about the bills and other stuff I need to pay for, I make sure an amount about 10% of my salary is deposited to my savings account. Right now, I’m still in the process of building my emergency fund. I hope to get it done by the end of the year, so that come the new year, I’m ready to move on to something even better.
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