Stop the cycle of living from paycheck to paycheck. Take control of your finances with the best budgeting strategies to help you manage your money. You can increase your savings, reduce debt and reach important financial goals.

The 50/30/20 budget

One of the most popular budgeting methods, the 50/30/20 rule outlines how much of your net income you should allocate to different spending categories:

• 50% for needs like rent, food, basic utilities, transportation, insurance payments, or any costs that support your ability to work such as fast Internet access or childcare
• 30% for wants or any expense that isn’t critical but increases your satisfaction and quality of life such as monthly subscriptions, travel or dining out
• 20% for savings and debt repayment or money used to create a financial safety net or pay off loans like mortgages or credit cards

The 80/20 budget

The 80/20 budget allocates 80% for all expenses including debt repayment, and 20% for financial goals like building an emergency fund or saving for education and retirement. It’s a little more flexible and streamlined than the 50/30/20 budget, since you just think about “what I need to pay now” and “what I can save for the future.”

Both the 50/30/20 and 80/20 budgeting strategies emphasize allocating expenses and regularly setting aside money for savings. Just pick whatever works for you, based on your spending habits and goals.

For example, if you feel that you’re overspending, the 50/30/20 rule can help you differentiate needs and wants. If you just need help with long-term financial goals, the 80/20 rule can help you start those savings funds and compute how much you can afford for insurance, investment and other financial tools.

The envelope budget system

One of the strengths of the Envelope System lies in its simple and tangible nature. You withdraw your monthly budget and then divide your cash into key spending categories like groceries, transportation, personal expenses like dining out and entertainment, etc. Each category gets its own envelope, and you can’t dip into other envelopes when your cash runs out.

Unlike other budgeting methods where you rely on sheer self-control to curb your spending, the envelope system gives you a hard stop: once you run out of cash, you can’t buy anything else. It sidesteps the temptation to use your credit card or deplete the available funds in your debit card. It also gives a visual representation of how much money you have left.

Combine the envelope system with other budgeting strategies to control expenses and build your savings.

The zero-based budget

Have you ever checked your ATM balance and thought, “Where did my money go?” You can’t remember what you bought, and you don’t have enough to cover expenses until your next payday. So, you’re forced to use your credit card – but that means you have a big balance to pay next month, which will throw off your budget.

If this happens every month, you could accumulate credit card debt or end up living from paycheck to paycheck. How do you break out of this cycle?

The zero-based budget helps you live within your means. Calculate your net income and subtract the total cost of monthly expenses and savings. The result should be zero. That means you’ve allocated every single peso to a need or financial goal.

The zero-based budget develops discipline and intentional spending. You must plan every expense by either cutting down in other areas or slowly saving for it. If you use your credit card, you rework your budget to accommodate monthly installments.

The 52-week money challenge

Do you think budgeting is boring and tedious? The 52-week money challenge turns it into a game. It’s one of the best budgeting strategies for hitting a particular financial goal like saving for a holiday trip or motivating you to stick to a budget.

You commit to adding money to a money jar or online savings account. The target amount increases each week: ₱50 for Week 1, ₱100 for Week 2, ₱150 for Week 3, etc. By the end of the challenge, you would’ve saved more than ₱60,000.

The 52-week money challenge is very popular, so you’ll find plenty of tools to make it easier or more fun. You can download calendars or checklists for tracking your progress, get money storage binders on Shopee and Lazada, or join forums on Reddit and Facebook to get tried-and-tested budgeting tips.

You can do the challenge alone or invite your partner and friends and turn it into a friendly competition. Create a “Money Pot” and give ₱50 whenever you miss a week. Whoever saves the most can keep the pot earnings.

The money diary

Is your budget realistic? Is it based on current prices or your family’s needs? Keep a money to track your actual expenses and identify small expenses you often miss, from morning coffee runs to cat treats, or the hidden costs of delivery or credit card surcharges.

Choose the diary platform that works for you: a small physical notebook, your phone’s built-in notes app, or a special financial app. You can also staple receipts into your existing planner, or scribble notes on your desk calendar. You just need to make sure that your notes are complete and consistent.

Keep a money diary for one or two months, taking note of your weekly and monthly expenses, and the “triggers” that cause you to overspend. For example, you order takeout because you’re too tired to cook after work, or you get extra items whenever you do your last-minute supermarket runs. This can help you identify your actual spending and adapt appropriate budgeting practices.

The emergency fund

Your emergency fund covers unexpected change in income or big expenses like home repairs or medical bills. It should be separate from your regular salary or spending account, but still be accessible so you can get emergency cash any time you need it. You should be able to withdraw your money through an ATM, pay with your debit card, or issue a check.

Experts generally recommend saving enough to cover three to six months of your total household expenses. However, don’t put all your savings into your emergency fund, since you may not get high interest rates or be tempted to overspend. Think of it as a “buffer” that tides you through a short-term financial crisis.

Once you’ve reached your savings target, funnel your resources to a time-deposit or other financial instruments like mutual funds or insurance with an investment component. Unlike emergency funds, these can protect you from bigger financial risks, like permanent disability or large hospital bills from critical illnesses. It can also grow in value, so you can beat inflation and achieve financial goals.

BPI AIA’s PamilyaProtect plan can protect you and your family from unexpected costs. You can get financial assistance in times of hospitalization, accidental death, dismemberment and disability coverage and life insurance coverage.

The pay-yourself-first budget

This is one of the best budgeting practices for building your savings. As soon as you get your paycheck, transfer 20% (or any pre-determined amount) to a separate bank account. You then use the remaining funds for your expenses.

The principle behind this budget strategy is that saving is a way of paying or rewarding yourself. You build wealth and protect your financial goals and security.

Pick the right budgeting strategies for your needs

• Assess your spending habits and patterns. Choose a system that can help you address specific areas of overspending or the habits that you want to change.
• Consider your income structure. Do you receive a fixed salary or have seasonal or irregular income? Choose a budgeting system that aligns with your cash flow and accommodates fluctuations.
• Evaluate time commitment. Be realistic about the time you can dedicate to budgeting. Some methods require daily tracking, while others may be more suitable for those with a busy schedule.
• Account for personal preferences. Your personality and preferences play a crucial role in sticking to a budget. If you prefer a hands-on approach, opt for detailed tracking methods. If simplicity is key, choose streamlined budgeting techniques that align with your comfort level.
• Consider your level of financial literacy. If you're new to budgeting, start with beginner-friendly methods and gradually transition to more advanced strategies as you become more comfortable.
• Be flexible. Life is unpredictable, and so are your financial circumstances. Choose budgeting strategies that offer adaptability and flexibility to accommodate changes in your income, expenses, or unexpected financial challenges. Being able to adjust your approach as needed ensures long-term success in budgeting.

It can take a few months to get used to new budgeting strategies, but like any habit, the more you do it, the easier it becomes.

BPI AIA can help you accelerate your savings plan and secure your financial future. Consult a Bancassurance sales executive at any of our 900 BPI branches. See us today!