Life Lessons Money Mindset Personal Finance

How To Budget Your Money Without Feeling Guilty

One of the hardest problem I’ve encountered when I started managing my own money is the idea of budgeting.  I’ve tried to “discipline” myself by not spending more than my budget, but I have never been able to make it work.

When buying stuffs, I would feel really guilty spending the money that I would no longer be able to enjoy what I bought.  When I don’t spend at all, however, I would feel deprived thinking what’s the point of having money if you can’t even allow yourself to buy simple things you can enjoy.

Budgeting Ineffectively

In one of my attempts at budgeting my money, I purchased a mini notebook to jot down my daily expenses, and after the 3rd day, I forgot to bring my notebook with me to the office.  The next couple of weeks, I completely forgotten all about it.  I just went on and attempted to save as much as I can on anything and everything I can get my hands into. 

I also tried to create a spreadsheet to track my expenses but it was too tedious and it always seemed more of a guessing game than anything else.  I would guess how much I spent for this and for that.  And somehow, I would always find a way to tweak the numbers just so it would look good.    

Until finally, I discovered a neat trick that has not only helped me track my expenses but it’s so easy to implement I can do it in just 5 minutes a month.  Yes, that’s per month!  It is based from the Secrets of the Millionaire Mind book by Harv Eker which
was also described quite articulately by my good friend Jay in one of his articles.

How To Budget Without Feeling Guilty

Here’s the idea.  Create 5 separate buckets (or bank accounts if you can).  Each bucket or account would receive a set percentage for all income that comes into your life. 

Here’s what the 5 accounts look like for me.

1) FFA (20%) – Financial Freedom Account  
2) LTS (35%) – Long Term Spending         
3) EXP (20%) – Expenses             
4) FUN (15%) – Fun and Personal Growth           
5) GOD (10%) – Tithes

Whenever I receive any money either through my paycheck, or a gift, or anything, I would distribute it according to the set percentage by doing fund transfers to my other accounts.  Best of all, I can do everything in only a couple of minutes through online banking.  That’s it. 

Here’s the cool part.  After allocating my money to the different accounts, whatever is left in my ATM account would be my EXP (expenses) & FUN (fun & personal growth) for the month.  This money is supposed to be spent.  This fund allows me the freedom to enjoy and not feel guilty about spending.  The funds from my other accounts, serve a different purpose.

A Closer Look On Each Account

Before I proceed, I would like to take this time to explain my budget allocation so you can have some ideas on how you can apply it to your own situation.

FFA is 20%.  This is mostly for investments which my wife and I are not expecting to use in the short term (ie. in the next than 5 years).  Since I don’t have any debts, this fund is accumulating every month until we find a good investment we can invest on.  Once it goes in, this money will only be spent to be invested for future earnings.  It will NOT be spent away for any other reason whatsoever.

LTS is 35%.  This percentage is quite high because my wife and I are preparing to purchase our own home in the next 1 to 3 years.  We know that we would need a huge amount of money to pay for it.  The amount also includes money to pay for a car in the near horizon.  Note that this is separate from our FFA or investment accounts since our home is NOT necessarily an investment vehicle that give us a monthly cashflow, unless we decide to rent it out.

EXP is 20%.  This is where my wife and I are very fortunate. Our transportation expense is practically negligible since we just walk our way from our home to the office.  Our water expense is also not that much considering it’s just the two of us using the water.  The most we use it for is in doing the laundry.  We’ve also been able to bring down our electricity cost after limiting the use of our air conditioner. It turns out, we can actually make do with just the fan at night. I know these are just little things, but when you realize that we are saving a little amount each day, it translates to a relatively significant amount at the end of the year. 

FUN is 15%.  This is where the exciting part begins.  This is the solution to the feeling guilty part.  This fund is supposed to be spent for pleasure.  Take a vacation.  Go for a spa.  Buy a good book to read.  Attend a personal growth seminar.  Buy that cool phone you’ve always wanted.  The possibility is endless. And YOU CAN have it as long as it is from this fund.  Having been accustomed to saving for quite some time, my wife and I sometimes struggle to spend the money away.  Strange I know.  But sometimes, it feels like you want to get more out of it.  It’s no longer the material product that you want, but the experience.  That’s why my wife and I have been planning more vacations lately to go to places we’ve never been to before.  Nothing too fancy or expensive. Just the thought of learning new things to keep the hunger alive.

GOD is 10%.  This is one area I am still working on.  I’d be honest.  I sometimes feel like 10% is too much.  Other times, I feel I am not giving more.  At this point, the fund is still accumulating.  This is actually one part I’ve been wanting to put some time planning on.  Maybe I’ll throw everything in in one go someday.  I need practice to give more.  Maybe I’ll just take one day at a time.  Being generous with my money is still something
I’m relatively new at.

This budgeting strategy is really simple and easy to do.  However, keep in mind that this is just a guide.  You can change the allocation to cater to your own situation.  For example, if you have some debts, you use all your FFA savings to pay for your debt.  Your freedom day would be the day you completely pay off all your debts.  If you haven’t saved for emergency fund yet, you can also use the FFA to fund it for you.  Note that it is money that should NOT be spent any other way.

If you are living on 110% of your income, try to make more money so you can save some.  Or save on things you would not necessarily need so you could at least bring your expenses down to 90% and allocate the 10% to your other accounts.  In any case, start with something.  There’s nothing stopping you to make your dreams a reality.  But you do have to take action.

That’s all for now.  Enjoy budgeting your money without feeling guilty. 🙂

Life Updates Money Mindset Passive Income Personal Finance

Rich Money Habits Gets Featured!

I’m very excited today.  Rich Money Habits just got featured at!  Here’s an excerpt of the interview.

  • What encouraged you to start Rich Money habits?

It has been said that we are creatures of habit. Some money habits make us poor, while others make us rich. The key to being rich is knowing which is which.

My money habits growing up can be described as “working hard for money”. The only way I knew how to make money then was to work hard and and get paid at the end of each month.

Being young and foolish about money, I made sure that my “hard work” was compensated by having lots of fun. I have earned and spent my money as if there’s no tomorrow, dining out with friends, buying the latest gadget, or buying home appliances all at once, EVEN if I didn’t have the money to pay for it. I only had to use my new credit card.

When my debts piled up, I realized that my money habits are eating me alive. I even had to do cash advance on my credit card just to pay for rent. That was a wake up call for me. I realized I had better take care of my own money by controlling my own money habits or I’d end up begging for money to pay for what I eat.

That proved to be a turning point in my financial life. My journey of trying to learn how the world of money works started by discovering my own “poor” money habits and forming new “rich” money habits to help me get started in taking control of my own finances.

Rich Money Habits was born out of my desire to help people take control of their own money habits. It starts with recognizing that years and years of “poor” money habits programming cannot be undone overnight. It takes constant exposure to the financial habits of the rich, making your own financial mistakes, and having the courage to take action in spite of financial failures. More importantly, Rich Money Habits was built in the hope of cultivating a community where people can learn and encourage each other to discover and strengthen the “rich man” within each one of us.

  • How does Rich Money habits differ from other financial sites?

The main focus of Rich Money Habits is in helping you develop the mindset of the rich in the hope of drawing out the “rich man” in you to help solve your own financial problems.

Some financial sites focus on being frugal. Others focus on ways of saving. While a few concentrate on the different investment vehicles, whether it be online savings accounts, mutual funds, real-estate or stocks.

Even though Rich Money Habits will occasionally feature these topics, it is mainly to highlight the money mindset behind the financial decision and examine how and why people take advantage of these financial vehicles in the first place.

  • Does personal experiences play a key part in the content of your blogs?

My personal experiences (both successes and failures) are occasionally included in some of the articles in Rich Money Habits in the hope that it might help encourage other people to explore and discover their money habits on their own.

  • Where do you get the ideas for your blogs?

Ideas are a dime a dozen. I’ve read hundreds of personal finance books, magazines, blogs, attended financial seminars and coaching, designed software solutions to major financial services companies but nothing beats jumping in and experiencing how to solve your own money problems. Listening to other people’s money problems also allows me to tune in and understand why people do what they do with their own money. My goal is to extract the valuable financial lessons from all these sources and effectively communicate those gem of money ideas to readers of Rich Money Habits.

  • What are some key concepts to keep in mind when creating a budget?

One thing I learned about a traditional budget is that it doesn’t work – at least for me anyway. I don’t keep a detailed list of all transactions that I make. What works for me is keeping an overall picture of where my money is coming from, where is it going out, and more importantly, if I’m keeping any of it at the end of each month. If I need to know where my financial life is, I can check my accounts and instantly get an idea if my money is growing or not. I’ve learned to stay flexible and treat a budget like a plan that has to be continually refined as I go.

  • What is some financial advice you could give our readers?

Keep learning. Keep dreaming. Keep building your own rich money habits.

Thanks to Lydia @ for the interview.  The original article got published @