What to Do With The Excess

In our previous post which is about basic budgeting, we were left with an excess budget. It is small since we only have a very simple budget. But then again, it is important to note that no matter how small it is, if it will be accumulated, it will become big later.

So the most logical answer on what to do with the excess would be is to grow it. You can invest it in something else.  So I listed below some ways where you can invest it.

Ways where you can invest the excess

• Self-improvement – Ex. Attend seminar, buy books. One of the best ways where you can put the excess is to invest it for self-improvement. Take note that your most important asset is yourself. If you have the capacity to do more, then you get more. If you know more things, then you can do more things. 
• Acquire assets – Ex. Buy land (depends on what you can use for business). Assets are something that can be useful in growing your business. If you have a land and you are not using it, it is not an asset at all. It only becomes an asset if you are getting income out of it. 
• Creation of passive income – Ex. Invest in websites, loans. Why not start creating passive income. This is our long-term goal, to create more sources of passive income. We will be discussing about this later.  
• Partnership business – If you already have a substantial extra, why not use it in partnership business? Having a partnership business is a good way to start generating extra income.  
• Add it in capital of a small business – Ex. Sari-sari Store. When you plan to start low, then investing it for a small business will also be good. 
• Invest in cooperatives – Ex. Paluwagan I am not sure how do you call this in your place. But cooperatives are helpful source of passive income. Contribute for capitalization, and also get a share of the income. 
• Invest in mutual funds – Ex. Sun Life Mutual funds are becoming big these days. More and more people are getting into it. The good thing is you only have to invest, and experts in investments will be the one to manage it for you. 
• Invest in stocks – Ex. COL Financial If you want a more hands-on acquisition of stocks, then look for reliable brokers who can handle it. 

Note: When investing in mutual funds and stocks, it is best to think “long-term”. 5 years is a good start. 

There may be some other ways that you can think of where you can invest that excess budget that you have. If you are just starting, make sure that your investment counts. 

How to Do Basic Budgeting

The very first thing that one must know in managing finances is budgeting. It doesn’t matter whether you are budgeting millions or just a few thousands. If you know how to budget, then not only that you will be able to save money, you will also be able to invest more little by little until it grows where you can feel it.

Know your average monthly income

The very first thing you need to know in budgeting is your average monthly income. To do this, you must list every source of income that you have as long as it is a regular source.

Think monthly. For example you only earn quarterly, then you will have to divide those earnings by three to get your average monthly income.

There are various sources of income.

Examples:

• Income from farm
• Income from services
• Income from being an employee
• Income from business
• Love Gifts – gifts given to you by way of saying “Thank you”.

The goal is, you will list whatever income you are generating. Some of you will probably see that you only have one or two sources of income. If that’s the case, then it means you will have to generate other sources later when opportunity arises.

So below is the example of income:

Note: Amount is in Philippine Peso. But if even if you live in other countries, the principles remain the same and do the same thing. List your sources of your average income. 

Example:
Income from Copra Php 2000
Income from Pigery Php 2000
Income from grass cutting Php 1000
Love Gift Php 3000
Total Php 8000

Know your average monthly expenses

Others
Tithes (not expense, non-negotiable) Php 800
Savings Php     500
Electricity Php     500
Water Php       50
Food Php   5000
House rent / maintenance Php   1000
Total Php  7850

Note: I included the Tithe here (read about Biblical Foundation on Stewardship). I always believe in God and his blessings including the giving of our ability to produce wealth. Therefore, I deemed it necessary to return to Him what is due Him in blessing me. I do not consider this as an expense but a form of worship. 

Excess Php    50

As you can see in our example, there is an excess of Php 50. It may not do much as it is. But when you save it and combined it in previous month’s excesses, it will still be big and substantial.

In our next post, we will be talking about how you can use and grow that extra.

Biblical Foundation of Stewardship

Many people these days struggles a lot when it comes to managing their own finances. There maybe some differences when you are managing huge sum of money vs your regular salary. However, the basic principles of financial management remain the same.

So my goal in writing this is not to make extensive financial management lesson. This is more on the basics. If you are already rich and has more extensive financial training, then this is NOT for you.

However, if you are struggling financially on day to day needs, then this is for you. The goal is to elevate you in your financial situation. We we will only cover the basics in this discussion. 

Basis of Being a Good Steward

The Bible teaches us a lot of things. And that includes being a good steward. The Parable of the Talents in Matthew 25 is full of lessons and principles about becoming a good steward.  But notice the last part of it:

Parable of the Talents:  Matthew 25:14-30

 29 For whoever has will be given more, and they will have an abundance. Whoever does not have, even what they have will be taken from them. 30 And throw that worthless servant outside, into the darkness, where there will be weeping and gnashing of teeth.’

Notice how the Bible warns about becoming a bad steward?  What he has will even be taken from him and he will be thrown outside into darkness where there will be weeping and gnashing of teeth.

And this remains true even today. Many people are suffering because they have been a bad steward. However, if one is a good steward, his life will be fruitful and there will be rejoicing.

The parable is all about the Kingdom of Heaven and is about being a good steward in the ministry.

However, the same principles apply on being a good steward in financial matters.