If you’re employed, you must love those Christmas and Mid-Year bonuses. Guess what, they’re among the firsts you’d miss once you retire. So, what’s extra (your bonuses or any unexpected gains or windfall) should not translate (at least fully) to extra expenses. It’s like having a whole chocolate cake, and just enjoying a slice 😊
NO, I don’t mean for you to deprive yourself of such bounty. But you see, I’ve worked many years and here’s what I’ve observed. Many spend their entire bonuses on a new TV or stereo. Or on a downpayment for a new car. Gadgets, appliances, signature bags, jewelry, etc. Aside from Christmas and Midyear bonuses, there are windfalls like performance incentives, back pays, commuted leaves, sales commissions, and the like. And for some reason, many behave like they’re compelled to spend these extras. Invariably, this behavior is rationalized by claiming that the extra income was unexpected, so they’re good for some extra expenses. Having said that, I also observed how many disappointments resulted from unrealized but much-rumored and much-gossiped extra pays. 😢
My opinion is it’s best to train ourselves to focus instead on the “regular” income and live within that. By that, I mean we draw up our budget based on what’s regular rather than what’s extra. We buy our new gadget by saving from our regular pay, NOT on the extra pay. Oh sure, you can have “a slice” of that extra for luxury items, but be sure to save a large chunk of it.
I did just that. I spent my entire salary NET of loan payments — my ” forced savings” (where loan proceeds were invested long-term and “forgotten”) — and enjoyed myself. If I wanted to buy something, I saved by setting aside a portion OUT OF MY REGULAR PAY. Except for the 13th month pay which I allocated for my Christmas extra expenses, I saved at least 3/4 of ALL extras. Through the years, these extras were invested and reinvested. In “double your money” in 5 or 7 year time deposits. Back then they were the norm. In bonds and blue chip stocks. In IPOs. Quick bucks then 😄😄😄. In foreign currency, when the $ was almighty. Even in real estate, before the property bubble burst. If you think I deprived myself and lived a frugal life, you’re wrong.
And scrap those ideas that I had big sums to begin with. My first condo unit cost me P150,000 only, including a parking slot, right within Salcedo Village. This was back in 1986. 👍👍👍 I bought my first second-hand car for only P20,000 back when I could afford a brand new car. I was content with my Seiko watch and set of pearls. I bought good “corporate” shoes, pricey too. But those 2 pairs lasted way beyond 5 years. In time, I matched them with good, pricey classy bags which I still use today. Twenty years after, they still look handsome and invite attention. 👜 When I traveled for 6 months back in 1986, I only had one jacket. Within that period, I visited a friend who gifted me with a 2nd jacket 😊😃😄. In fashion, I went for classic and practical.
So there. Frugality need not deprive you of a few luxuries, more so of life’s joys. Just be financially responsible. While you have the passion, energy and enthusiasm, be creative! As you grow older, these 3 may fade over time. Save for a good nest-egg for when you grow less tolerant of some inconveniences and discomforts. Those golden years are meant to be enjoyed….. Like a grand finale to all things good. Plan early. Save enough. Know when it’s enough. Open new doors. Have a good life.
“I’ve got a sizeable retirement nest egg. It’s an ostrich egg, and it’s going to make an omelet so big that it’ll produce enough leftovers for decades. ”
― Jarod Kintz, The Days of Yay are Here! Wake Me Up When They’re Over.