Budgeting Made Easy by 5-15-20-60 Rule

Have you been wondering how to budget your money? For years, I’ve been trying to train and teach myself on how to budget. I know that most of you struggles the same thing. Budgeting is hard when our favorite brands and products are waiving at us. Especially, if they are on sale. Our so-called budget disappears into thin air with a blink of an eye.

Where is my money? It’s gone! I still have many bills and loans to pay. Now I’m in despair. I’m now starting to worry. Where should I get money to pay for my bills and loans? You’ll then start staring at your ceiling, starting to argue and hate yourself for not being responsible enough in handling your own money. You can’t sleep. You’ll start to feel restless. You’ll pray to seek God’s help. Sometimes you cry in bed while praying for the solution. It sounds familiar, does it? I know you can relate. Once or more in your life you experience these things. Am I right?

I’ve read many articles about budgeting, but I always fail to learn it by heart. I came across an article by Vince Rapisura that teaches about this 5-15-20-60 rules.

This rule is very simple. It’s a no brainer. You need to keep 5% of your monthly income to buy for your insurance premium. 15% for savings, 20% to pay off your debts, and 60% for your living expenses.

This rule will help you prioritize your financial needs before budgeting for things that are not that important.

It is okay to spend on anything that you want if you securely have funds to pay for your insurance and accumulated savings.

Now let’s discuss each rule in detail:

5% for INSURANCE

In the late 1990’s most Filipino’s don’t see the importance of having an insurance, but as we evolve with technology, we can get any information we need on our fingertips and Financial Advisors can easily spread their message across any social media platforms. As many of us see different posts from Personal Finance Pages, we started to become curious on what insurance really is. We may find stories and testimonies from people who benefited from insurance, especially health and life insurances. Because of these, numbers of Filipinos are now aware how important and beneficial life and health insurance can be. The number of people buying for these premiums are growing as times goes by.

I know that you are also aware or have slightest idea on how important and helpful insurance can be. Keeping 5% of your monthly income to buy that insurance won’t hurt you.

15% for SAVINGS

Because of personal finance pages like USAPANG PISO, Peso Sense and more. Many Filipinos are inspired to start their own savings. As you scroll to your Facebook newsfeed, you’ll see many inspiring posts about savings challenge and how they were able to save a certain amount of money.

In this rule, it encourages us to save 15% of our monthly income to build our emergency funds, investment funds and more.

If you are planning to have an emergency funds, make sure to set aside 15% of your monthly income. Your goal here is to accumulate your 6 months’ worth of salary to build your emergency funds. It may be hard at first but as you continue and see the fruits of your labor, you’ll start to appreciate and become excited every time you set aside an amount for your savings.

20% for DEBT/LOANS

Banks, and other financing agencies are growing everywhere. Getting a loan is easier now. Thanks to technology! But beware for there are many financing agencies that exist not to help you but to burry you alive.

If you are someone who are not conscious about your financing and you haven’t discipline yourself in terms of handling and spending your money, having these easy access financial agencies can be very harmful to you. So be EXTRA CAREFUL.

However, if you are already in debt, setting aside 20% of your monthly income to pay for your debt is or will be the best decision you’ll ever make.

Is it okay to spend more if you don’t have any loans? Vince answer for that is yes and no. If you have no loans and have a passive income, then by all means… spend more. But if you have no loans and no passive income then no. You can’t afford to spend less.

If you really want to spend more money, you need to start creating a business or money-making machine that will give you a passive income.

INVESTMENTS

In 5-15-20-60 rule you can’t find any mention of investments in it because it’s part of the 15% of your savings. Yes! You don’t save just for the sake of savings. You save to invest, to make more money. If you rely on the interest of your savings, you’ll never beat inflation. Banks provide less than 1% per year, however, inflation can increase not just per year but months as well. So, we must save to invest. But remember, study the risks for each investment first before jumping into it. Furthermore, don’t invest in something that you don’t understand.

60% for EXPENSES

All of us have different expenses but we must prioritize our needs over our wants. Not because our favorite brands or products are waiving at us, we’ll need to waive back at them. Remember, to prioritize and practice delayed gratification if you don’t want to suffer the consequences of your actions. If you can’t control yourself, you’ll start staring at your ceiling again feeling restless and hopeless.

I hate those feelings! If you hate those too, then be wise on handling and spending your money.

You see how simple this 5-15-20-60 rule is. Start learning this by heart and apply this everyday in your life so you’ll never be broke again. If you find this post helpful and inspiring, please don’t forget to share this article on your Facebook and other social media accounts. Thank you.

75 Comments

  1. We stumbled over here by a different website and thought I
    should check things out. I like what I see so i am just following you.
    Look forward to going over your web page repeatedly.

  2. I really like your blog.. very nice colors & theme.
    Did you make this website yourself or did you hire someone to do it for you?
    Plz respond as I’m looking to create my own blog and
    would like to find out where u got this from. cheers

  3. Wow that was unusual. I just wrote an extremely long comment but after I
    clicked submit my comment didn’t appear. Grrrr…
    well I’m not writing all that over again. Anyway, just wanted to say fantastic blog!

  4. I really love your blog.. Pleasant colors & theme.
    Did you make this website yourself? Please reply back as I’m trying to
    create my own personal website and would like to find out where
    you got this from or just what the theme is named. Appreciate it!

  5. I like the valuable info you provide in your articles.
    I will bookmark your weblog and check again here frequently.

    I’m quite sure I will learn lots of new stuff right here!
    Best of luck for the next!

  6. whoah this weblog is wonderful i love reading your
    posts. Keep up the great work! You already know, lots of persons are looking around for
    this information, you can help them greatly.

  7. May I simply say what a relief to find someone who really understands what they are discussing online.
    You definitely understand how to bring a problem to light and make it
    important. More and more people must check this out and understand this side
    of the story. It’s surprising you are not more popular given that you definitely possess the gift.

  8. That is really fascinating, You’re an excessively professional blogger.

    I have joined your feed and stay up for in the hunt for more of your magnificent post.
    Also, I’ve shared your site in my social networks

  9. Thanks for the auspicious writeup. It in truth was a amusement account it.
    Glance complicated to more introduced agreeable from you!
    However, how could we keep in touch?

  10. Fantastic blog! Do you have any suggestions for aspiring writers? I’m planning to get started on my site soon but I’m a bit lost on everything. Can you suggest starting with a no cost platform like WordPress or choose a paid option? There are so many choices available that I’m completely confused .. Any recommendations? Thanks a whole lot!

  11. Thank you for the auspicious writeup. It the truth is was a amusement account it. Look advanced to more added agreeable from you!

  12. Thanks for a marvelous posting! I truly enjoyed reading it, you may be a great author.
    I will make certain to bookmark your blog and will eventually come back from now on. I
    want to encourage that you continue your great job, have a
    nice morning!

  13. Very nice info and straight to the point. I don’t know if this is in fact the best place to ask but do you guys have any ideea where to employ some professional writers? Thanks in advance 🙂

  14. A motivating discussion is worth comment. I do believe that you should write more about this subject, it might not be a taboo subject but typically folks don’t discuss these subjects. To the next! Best wishes!!

  15. What’s Happening i am new to this, I stumbled upon this I have found It positively helpful and it has helped me out loads. I hope to contribute & assist other users like its aided me. Good job.

  16. I don’t even know how I ended up here, but I thought this post was great. I do not know who you are but definitely you’re going to a famous blogger if you aren’t already 😉 Cheers!

  17. Thank you for some other magnificent article. Where else may just anybody get that type of information in such a perfect way of writing? I’ve a presentation next week, and I am on the look for such info.

  18. The most effective deals observed by serious individuals with the Slickdeals ExtensionFree Coupons – Get Free Coupon Online – Store Shipping Couponfree coupons

  19. Thanks for the good writeup. It if truth be told was once a enjoyment account it. Look complicated to more added agreeable from you! By the way, how can we communicate?

  20. Greetings I am so delighted I found your blog, I really found you
    by error, while I was researching on Yahoo for something else, Regardless I am here now and would just like
    to say kudos for a marvelous post and a all round enjoyable blog (I
    also love the theme/design), I don’t have time to read
    it all at the minute but I have saved it and
    also added in your RSS feeds, so when I have time I will be
    back to read a lot more, Please do keep up
    the fantastic job.

  21. A motivating discussion is definitely worth comment. I believe that you should write more about this subject, it may not be a taboo subject but usually people don’t talk about these issues. To the next! Cheers!!

Leave a Reply

Your email address will not be published.