Expenses should not go beyond your earnings.
This, according to Lauren Young, is one of the valuable lessons that her profession has taught her.
She explained, "Since my income varies per project and I receive it on different dates, and this was quite the struggle for me, so I make sure that when I get paid, I put away exactly what I need for the month and the rest goes to savings."
Her goal is to set aside more than enough money to cover her monthly bills.
The 26-year-old star continued, "If I'm lucky to land a big project, I put away money for at least 3 to 6 months of expenses, so that I'm able to relax more with my finances and not stress too much about it."
In this email interview on June 2, 2020, Lauren laid out to PEP.ph (Philippine Entertainment Portal) how she's able to stick to the monthly budget she sets aside.
1. Evaluate your expenses.
First, she reviewed the items she's been spending on and asked herself: Do I really need to buy this?
Then she resolved as she turned 25 in 2019 to live simply, spend wisely, and stop impulse shopping.
From then, she said, "I differentiate my wants from my needs by feeling it out.
"If I know I'll have a hint of guilt purchasing something, it just shows that I don't really need it at the time.
"But if I truly want it, I give it some time and save up for it, and if I still want it after that then I buy it."
2. CATEGORIZE YOUR EXPENSES
Aside from prioritizing her needs, Lauren has found it helpful to categorize her monthly expenses in two:
(1) "The one where the expense doesn't shift—like my phone bill, insurance, rent, utilities, groceries, loans, dog food, etc.
(2) "The expenses that fluctuate—grab, dining out, small purchases, and the likes."
3. LIST DOWN YOUR EXPENSES
After categorizing them, she made sure to itemize all her expenses to keep them within her set budget.
She told PEP.ph, "I list down EVERYTHING I spend. Even if it's a one-peso candy.
"I set a monthly budget of how much I pay for #1 and my monthly pocket money, which is #2.
"Because #2 shifts a lot, I keep track to see if I'm about to go overboard, if I'm still below the budget I've set for myself."
According to Lauren, the bulk of her income was going to to the monthly amortization of her condo unit, so she decided to rent it out.
Now, her own unit is paying for itself, while she has moved to a smaller space that rents reasonably within her means.
The Kapuso actress said, "The huge chunk of my expenses is my home loan, but since I have a tenant I make sure their rent payment goes straight there and I'm able to turn my money around...
"I actually found it easier for me to keep my spending controlled because most of my pocket money goes to dining out, taking Grab [rides] or beach trips—and since I'm not capable of doing any of that, nakakatipid ako."
4. monitor YOUR EXPENSES
Lauren cited an example of how she has been keeping track of her expenditures.
"If my budget for the month is PHP5,000 and by week two I've already spent PHP3,000, that means I have to adjust my spending for the last two weeks to either fit PHP2,000 or keep it below that.
"It helps to make a list of all your expenses because you then become aware of your spending habits and therefore can adjust accordingly."
5. Save more! Earn more!
Lauren was about to venture in a business to supplement her showbiz income when her plans were put on hold because of the COVID-19 pandemic.
She related, "Before the pandemic hit, I was already in the works to put up a business with some friends.
"But because of the ongoing situation, we had to adjust our expectations and goals for that.
"But we're currently in the works and, hopefully, will have something out soon!
"It will be my first time putting up a business and the whole experience has been so new to me.
"I'm learning something new every day and even if its a scary and new territory for me, I'm quite excited to tackle this new chapter in my life."
Her ultimate goal, of course, is financial security.
She added, "And also prepare for a rainy day, because reality is I don't have a steady income flow, so I always have to be prepared for times where I don't have income coming in at all."