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Why having a Monthly Budget is Required for Financial Freedom

Everybody wants to achieve financial freedom – free from debt, financially secured, established a healthy relationship with finances and to live the life that you want. Do you want to achieve financial freedom but don’t know where to start? The answer actually lies with how you budget and set aside money for expected expenses or what we call Monthly Budget.

For this post Monthly Budget means Cost of Living per Month. This includes, food, rental, bills, insurance, transportation, etc. Does not include payment for debts or money you put in investments.

To easier understand the concepts below, we will assume that we have the following.

Monthly Net Income	₱30,000
Monthly Budget	₱20,000

It makes it easier to know how much money you can allot to pay your debts

If you are in debt, your second highest priority is to pay your debts.

First priority is to keep yourself alive. The monthly budget of ₱20,000 is the “Keep yourself alive amount”.

Keeping yourself alive is non-negotiable. It will be harder to work if you are hungry. It will be harder to recharge when you do not have a shelter to sleep into. In short, it will be harder to earn an income when you cannot provide for your basic need.

Then we can compute that the monthly amount that you can allot to pay your debts is ₱10,000.

Formula:

Monthly Net Income – Monthly Budget = Debt Payment Amount

₱30,000 – ₱20,000 = ₱10,000

You can however, try to negotiate with yourself to lower your monthly budget by cutting unnecessary expenses like Starbucks coffee, not eating snacks or move to a cheaper apartment. When you cut your expenses down by even the smallest amount like ₱100, it makes you a day closer to being free from debts.

It makes the target Emergency Fund amount easier to compute

An Emergency Fund is important for us who does Personal Finance. Its the fund that we will use during emergencies such as the lose of our primary income.

In Personal Finance you need to build an Emergency Fund that is around 6 months to 1 year of your monthly expenses.

How much is your 6 months of expenses? How much is 1 years worth of monthly expenses?

If you do not have a monthly budget, you will not be able to answer the above questions.

What if you have a monthly budget of ₱20,000. You can easily compute your target goals for your Emergency Fund.

Duration	Computation	Target Amount
1 month	1 * ₱20,000	₱20,000
3 months	3 * ₱20,000	₱60,000
6 months	6 * ₱20,000	₱120,000
9 months	9 * ₱20,000	₱180,000
12 months (1 year)	12 * ₱20,000	₱240,000

You will know where you are on building your Emergency Fund and you can confidently say that you are making progress in your Financial Freedom journey.

Example computation:

If you do not have debts, you can allot the excess ₱10,000 to building your Emergency Fund.

Monthly Net Income – Monthly Budget = Amount for Emergency Fund

₱30,000 – ₱20,000 = ₱10,000

If this is your first time adding funds to your Emergency Fund then you are 4% closer to achieving 1 years worth of emergency fund.

It shows the Line between Needs and Wants Clearer

What if we get an additional income like a bonus or income from side projects? Let us say net 13th month salary amounting to ₱30,000!

We quickly make a list of things that we want to buy. Before we click Add to Cart or Checkout, we ask the question “Is this a need or a want?”

If you have a monthly budget, you can say “I have paid for my apartment rental. I have budget for our daily meals. Insurance is paid for the month. Water, electricity, ~~Netflix~~ and internet are already paid for the month. My needs are already covered by the monthly budget of ₱20,000. Therefore, the things on my to buy list are wants.”

Now that we know that we can live without buying the items, we can allot the additional ₱30,000 to paying off debts or investing it. That is more than a month’s worth closer to being debt free or closer to becoming Financially Free.

It makes the Target Amount to reach Financial Freedom easier to compute

Have you heard of the 4% Rule to achieve Financial Freedom?

To explain it in simple terms, let us say that your investments earns an interest of 4% per year.

The goal is to only spend the interest, and never touch the capital so that it will continue to earn the 4% interest yearly.

If you reach a capital amount where it earns 4% per year that is equal to your yearly expenses then you will not run out of funds.

So how much should that capital be?

Formula to compute for your yearly budget

Yearly Budget = Monthly Budget * 12 months

The Yearly Budget is equivalent to 4% interest per year.

Formula to compute the Target Capital for Financial Freedom

Target Capital = Yearly Budget / 4%

In our example of having a ₱20,000 monthly budget the computation can be seen below.

Yearly Budget = ₱20,000 * 12 months

Yearly Budget = ₱240,000

Target Capital = ₱240,000 / 4%

Target Capital = ₱6,000,000

If you have ₱6,000,000 worth of investments that earns 4% interest per year then your monthly budget of ₱20,000 will be covered even if you do not work.

Since you no longer need to work to survive, anything that you earn outside of your investments is considered additional funds. You can spend it on wants or you can also add it to your investment capital so that your yearly budget can increase. This is what it means to be Financially Free.

If you do not have a monthly budget it would be hard to compute the Target Capital to achieving Financial Freedom.

Conclusion

The journey to Financial Freedom is not as easy as how people shows it to be, many times its complicated. One of the things that made it easier for me was when my wife and I decided that we will be sticking to a monthly budget. All other things became easier to imagine achieving after that.

For me, the first step to your journey to Personal Finance is creating a monthly budget for your daily needs.

Note

The truth is Monthly Budget changes thru time and circumstances. It can be affected by getting married and having children. Or something not easily noticeable such as inflation.

It is important to recheck what your Monthly Budget at least every 3 months.

There is debate whether the 4% Rule for Financial Freedom is enough. To simplify things, stick to the 4% Rule. We will write something more in depth about this on a different post and we will apply it on a Philippine setting.

If you ask yourself how much is your Monthly Budget to cover your needs, can you answer directly with a number? What are your struggles in computing your Monthly Budget? Let me know in the comments below.

Bill Shock? How to check if your Electricity Consumption increased this Summer of 2020 (Covid-19)

The summer heat has just been unbearable these days. And while the rainy season has started with outpours, we have not totally gotten off the effects of summer. Such as the case of our upcoming electricity bill. For the last few days, we’ve been waiting anxiously to receive our bill to see the heavy truth of our increased electricity consumption. Since we are very mindful of what appliances we use and for how long we use these, it’s easy to assume that our bill will blow up than the usual. So how will you know and check if your electricity consumption has increased?

As an engineer, I tend to focus more on the numbers especially the ones in our Electricity Meter. See the step-by-step instructions on how to check if your electricity consumption increased this summer of 2020.

How to check if your Electricity Consumption really increased?

We need to get 2 meter readings, preferably 7 days apart but 3 days apart might also be good enough.

1. Get the 1st Meter Reading

If you have received your May 2020 bill, we can use this as your first meter reading.

Get the Pres Rdg at the back of your bill. We will refer to this as 1st Meter Reading Value.

Note also the Meter Reading Date in the front of your bill. We will refer to this as 1st Meter Reading Date.

No-Fail Easy Champorado Recipe

It seems like summer has just started with heat wave making it difficult for all of us. But before we get comfortable with the summer heat, rainy season seems to be creeping in slowly. And we all know when rainy season arrives – Champorado for merienda! Here is a no-fail and easy Champorado recipe that you can try or use.

The secret to this recipe is the cinnamon powder which can be optional if you do not have. But if you do have cinnamon powder in your pantry – you won’t regret it!

No-Fail Easy Champorado Recipe

1 cup Glutinous Rice
5 cups Water
6 pcs Table/cocoa tablets
3/4 tsp Espresso powder or instant coffee
1/4 tsp Cinnamon powder (optional but great to add)
3/4 cup Dark Brown Sugar
Evaporated/Condensed Milk
Dried Fish or Tuyo (if you like)

How to make Filipino Champorado

Add the glutinous rice in a saucepan and wash it thoroughly with clean water to remove any dirt particles
Add 5 cups of water and bring to a boil in high heat
When it starts to boil, lower heat to low or simmer and add in the tablea or cocoa tablets.
Stir the rice mixture to dissolve the tablea or cocoa tablets.
Add in espresso powder or instant coffee, cinnamon powder and sugar.
Make sure to occasionally stir to avoid burning at the bottom of the pan. Cook time will be around 15-20 or until it is with your desired consistency.
Add in a cup of water every time – only when you feel it needs more cooking time or more liquid in your champorado
Remove from heat when desired consistency is achieved.
Serve in a bowl with evaporated/condensed milk drizzled on top.
If you like, serve with a side of dried fish or tuyo.

Bill Shock? How to check if Meralco made an error on your May 2020 Bill (Covid-19)

Shocked by your current Meralco electricity bill? Us too.

With Covid-19 outbreak, the last two previous Meralco bills (March & April 2020) we were told that it was generated based 3 month’s electricity consumption average before that billing period. This meant that March & April bills did not reflect the increased consumption of the household with everyone at home 24/7 and the effects of summer heat as well. With Meralco staff now reading the electric meters for May 2020 bill, it is expected that it will reflect the actual electricity consumption for the month of May, as well as the consumptions that were not charged for the previous two months.

Find out how you can check and compute the electricity consumption of your household and see if you’re overcharged by Meralco.

Check for Meter Reading Error
Estimating how much your May 2020 Electricity Bill
Why is the kWh consumption so high in May 2020 Bill?
Other Scenarios
Notes

Check for Meter Reading Error

If you already have your May 2020 bill, go to the back page and search for the Pres Rdg (Present Reading) under Metering Information.

Note this number. We shall refer to this as May 2020 Bill Reading.

6 Steps to Become an Online Freelancer

Working from home and becoming an online freelancer is something everyone is now looking into. The job can be a source of decent earnings and, if lucky, can be lucrative as well.

I’ve work as a digital freelancer for nearly 10 years now. I like the perks of not having to go to office and waste my time commuting. I highly encourage friends to become an online freelancer if they can. With the Covid-19 outbreak, everyone is considering online freelance, especially those who were laid off work and those still needs to go to the office.

How do you drop your traditional day job at the office and find work online and work from home? Here are four steps to help you become an online freelancer.

Find out what skills you can offer

There are a lot of jobs available on the digital landscape. There are administration, finance, marketing, management, programming, or creatives. The list can go on and can be overwhelming. The best thing to do is know what skills you have and what you can bring to the table. If you’re a graphic artist, you will most likely look for jobs that require that skill. If you’ve work as a call center agent, you can apply for client support roles. If you’re strength is into management, you can

Build your online presence and portfolio

You might hear a lot of online freelancers saying “create a portfolio” and you do not know what that means. It is basically creating your presence online so potential clients can see information about you and the kind of work that you do. You can create your own website or manage an online community in social networks if you want to land a marketing position. You can also showcase your work on online portfolios for graphic artists or videographers, if you’re into that field. You can create a professional portfolio at LinkedIn and show you previous work and history of work and a list of your skill sets.

Improve your skills

One of the difficulty of landing a job online freelance positions is having a lot of competition for a position. Not only should you need to have a well-made resume, it should also reflect how versatile you can be for the job. That means should have good set of skills to begin with. One the ways to do that is pick up online classes related to your skill set or field you want to be hired in. The are courses on how to be a star virtual assistant, classes on video editing or graphics design, or certification classes for digital and social media marketing. The list is endless. Which is why every home-from-from-home veterans will say that the “I never worked (online freelance) before” line will get you nowhere. You need to be proactive.

Learn the digital landscape

Since you’re applying for an online job position, it is expected that you know your way around the internet. You can’t expect to get hired if you don’t know how to use a spreadsheet or other basic admin software. You do not have to be the best at it, have mastered using it, or know all software to relating to the work you want. You just need to familiarize yourself with it. So if the job listing says a bunch of software it uses, look it up study what it is for and how use it.

Patience in finding your first clients

Finding clients is as hard as trying to apply for a job and getting the position. However, to make this easier at your end, what you need to do your research before hand. Find what online sites you create a profile or submit your resume or the social media groups on Facebook that shares open job positions.

You can look at those job listings and find what they are looking at and see if you are a good fit for those positions. If you find that you have some lacking skills that are listed to almost all job listings, it is a good indication that you need to study and do online courses.

Be honest and confident

Most online freelancers started from nowhere. On the job interview be honest about your skills and knowledge. It will show right through that you don’t have any experience on a certain task or software. I would always say, “I don’t know how use the softwares listed. But I did read about it and found out it’s similar to what I used before. I can easily learn more about how to use that software when given a chance to.” This not only say that you’re honest about what you can do but also being open to learn new things for the job.

Homemade Cebuano Puto Maya Recipe

Puto Maya is one of the popular Cebuano Filipino (kakanin) food. It made of sticky rice cooked in coconut milk much like the Indonesian sticky rice (except for the latter’s pandan flavour and sweet sauce). My favourite version of this is the purple puto maya from Iligan City, PH which my Mama would always buy for breakfast when we’re home. Recipe below is good for 2-3 people, depending on your appetite.

Homemade Cebuano Puto Maya Recipe:

1 c glutinous rice
1 c coconut milk
2 tbsp sugar 1/4 tsp salt 2 thumb-sized crushed ginger (large slices)

How to cook Puto Maya:

Soak glutinous rice overnight or at least an hour
In a pan mix coconut milk, sugar, salt and ginger
Add soaked glutinous rice and let boil in low-medium heat
Make sure to stir when it starts to boil and clump up
Remove from stove when rice absorbs most of the liquid and you can see slight oil formed (from coconut milk)
Place in steamer pot lined with coconut leaves or parchment paper and place rice mix on top
Steam for 20mins or until desired consistency and softness
Remove from steamer and remove ginger slices
Serve with sikwate (hot cocoa) or preferred breakfast drink.

Kusina Notes:

For coconut milk, I used Coco Mama coconut milk pack.
If you can get a hold of fresh gata, it will be richer in flavour. Also if you do not want your puto maya oily with fresh gata, you can cut the fresh gata to 2/3 and fill in 1/3 with water.
Large ginger slices will make it easier for you to remove it before serving
We don’t have a steamer pot, I used rice cooker and work pretty well
I used parchment paper to line steamer pot and did not have any problem
If you’re going to use banana leaves, steam or run leaves in fire to prevent it from tearing

Watch how you can easily cook your own Puto Maya at home:

Easy Homemade Pandesal or Filipino Bread Roll Recipe

Want to bake your own pandesal? Overwhelmed or intimidated at the thought of baking pandesal from home? Pandesal is a traditional Filipino bread roll and the most popular bread in the Philippines. It is baked in the wee hours in bakeries all over the country being a staple and typically served during breakfast in a Filipino household.

Baking your own pandesal can be overwhelming, especially for a new homebaker. Here is a simple and easy to follow Pandesal or Filipino Bread Roll.

Pandesal or Filipino Bread Roll Recipe

200 mL milk (warm to touch)
1 1/2 tsp yeast (+2 tsp sugar)
2 c flour
2 Tbsp powdered milk
1/4 c sugar
1 tsp salt
2 medium-sized egg yolks
1/4 c oil (canola/vegetable oil) Breadcrumbs for coating

How to make Filipino Pandesal:

Mix in a small bowl the warm milk, yeast & sugar and activate for 5 mins.
In a larger bowl, add the dry ingredients: flour, powdered milk, sugar and salt
Make a well in the center of the dry ingredients and add egg yolks, oil and yeast
Knead by hand for 12-15 mins. When kneading, fold the dough in half and press forward with the heel of your hands to press it flat and fold it in. Turn the dough, press forward to flatten it and fold it in. Repeat the process when kneading.
Cover & let rest for 2 hours
Uncover & knead for another 3mins
Cover & let rest for 20 mins
Cut & shape according to preferred weight and/shape
Cover with breadcrumbs and place in lined baking pan/sheet 10. Cover and final proof for 1H
Bake: 160C for 20 to 30mins (or until golden brown).
Turn the baking tray halfway the baking time for even baking.
Serve hot or warm with you preferred butter or jam and hot sikwate (chocolate drink) or your preferred breakfast drink.
Recipe makes 12-15 Pandesal, depending on bun size

Watch how you can easily bake your own Filipino Pandesal at home:

Homemade Ice Cream | 3 Ingredients Only

Summer heat is really crazy this summer amd makingbit worst because we can’t go out to travel or go to our favourite resorts to cool down. This quarantine and home isolation has got summer flying by. Since we are stocking up on food so we don’t have to constant go out – our freezer space has become limited. I decided to look up how to make homemade icecream without using an ice creamer maker.

This is a three ingredient recipe and best if you like cookies and cream. It’s very eaay to make and your family will love it!

Homemade Ice Cream | 3 Ingredients Only (Oreo Cookies & Cream)

2 pack All-Purpose Cream
1 can Condensed Milk (add according to your taste)
12-15 pcs Oreo Cookies

How to make Homemade Ice Cream

Make sure to chill the all prupose cream and condensed milk. Place it in the refrigerator (not the freezer) for at least 3H
Whip the all purpose cream until it doubles in size. It would take around 15-20mins if you’re using a handheld mixer and longer if it a wire whisk. This is an important step to aerate the cream and making lighter and fluffier.
Add the condensed milk and whip for another 5-10 mins until it is thoroughly mixed
I place this in the refrigerator for 10-15mins so the mixture will take shape and not watery
Add chopped chocolate cookies and fold it in the cream mixture. You can use any sort or cookies you like but we prefer Oreo cookies.
Place the mixture in the container and add cookie bits on top
Freeze this for at least 5H or overnight.

How Clean Produce & Grocery Items to Prevent Covid-19 from Entering Your Home

Having to stay at home adoes not guarantee us safe from Covid-19 infections. Infact there have been news of an individual contracting the disease even though she never went out of her home. Turns out a delivery guy who delivered her grocery items, fruits & vegetables was an asymptomatic carrier. Crazy, isn’t it? So how can be we prevent Covid-19 from entering our home?

A popular ingredient not only for cooking but also in homemade cleaning solutions is vinegar. It is used as a natural disinfectant because it is acidic nature. This makes a natural but also potent cleaner. But it is also the safest way to clean your fruits and vegetables without introducing any harmful chemical substances in your body.

How can we clean our fruits and vegetables after our market run in the times of this health crisis in the Philippines? Here is a simple but natural way to clean our vegetables after buying it from the local market and before cooking and serving it to our family.

How you can clean your fruits and vegetables:

For fruits and vegetables:

Clean your fruits and vegetables with running water to remove any dirt and debris
Remove any wilted part or leaves
In a kitchen basin, mix a solution of 1:6 cups ratio of vinegar and water in your basin
Dip your fruits and vegetables and let in soak for 5-10mins
After soaking these, rinse the fruits and vegetables
Drain any water and wipe with towel or thoroughly dry.

For leafy vegetables:

For green and leafy vegetables, soak in the solution for two to five minutes, then remove.
Rinse off with water in a colander or the basket of a salad spinner.
Dry it with paper towels or through a salad spinner.
It’s recommended to do this right before you eat the leafy vegetables, since any excess moisture can lead to decay in the fridge.

How you can clean your fruits and vegetables:

Remove any items inside large packaging such as cookies, pack of soaps, 3-in-1 coffee sachets.
For cans or plastic packing, you can wash it under running water and clean it with dishwashing soap.
For those wrap in paper or any packaging that might leak through, it is best to get some paper towels and spray disinfectant solution on it and wipe the packing

How To Maintain a Tidy & Clutter-Free Kitchen

Our humble little rental is a box open layout of living room, kitchen, and dining room in one. It does not have much storage and we have to make do with what we have being renters as we are.

We are not very strict about tidying up all the time but we do tidy as we go. But there will be times that both Husband & I will be too busy to tidy after cleaning so we kinda leave things around until it piles up.

Here is a home hack to make your kitchen made up without doing

1. Tidy as you go or tidy along during the week.

Remember when we leave things anywhere, the space can easily get cluttered and can take away the empty space.

Before, in the middle and after workweek, we always find time to return things back to where it belong or whenever it get too cluttered.

2. Have a place for everything

Thinking about where to store things can be stressful, time-consuming and can easily demotivate you when you are cleaning and tidying up. So always have a spot or a home for every item you have. The unused plates in the drawers, spoon & forks in a utensil holder, pots & pans inside the cabinet, etc. Having a spot for everything makes it less stressful for you to put things away because you already know where to put and store those items.

3. Don’t overdo with shopping.

And since we are challenged with storage – every home item we consider purchasing always go through series of questions that includes budget, how long we will use it and if there’s an alternative that we can use with what we have. But these two questions are important in our decision-making:

Do we really need it? (Husband’s favorite line)
Do we have a place for it? (My favorite line)