Budgeting for Broke Millennials

November 21, 2019

budgeting-for-millennialsToday we will dive deeper into the topic of budgeting for broke millennials.


I sincerely resonate with this subject matter since I can call myself a “broke millennial” once. I used to live paycheck to paycheck with no savings or investments at all.


Enriching my financial quotient helped me to break the bad habit and led me to be as passionate as I am today in sharing what I know. So, without further ado, let’s begin to learn.


Who are the so-called Millennials?


Before we go into the topic let’s first tackle who the Millennials really are.


Millennials are those between ages 22 to 37 years old, or the biggest chunk of our workforce.


I like to describe millennials as “the sandwich generation”, those who are in between helping their folks (parents, siblings) and providing for themselves. It’s always the constant struggle between aging parents whom you need to attend and supporting your own dreams and aspirations.


Millennials are also the most misunderstood, financially. There are a lot of misconceptions when it comes to how millennials spend. Many feels like millennials are entitled and selfish, spending more on travel and leisure instead of the essentials. But are they?



But why are millennials still broke?


If the statistics supports good spending habits for millennials, why are they still broke? Below are five common money mistakes millennials do and the tips to overcome them:


Reason 1. Not having a budget

We all hear how important budgeting is but sadly, only a handful do budget their money consistently. They say if you are truly serious to reach financial independence and early retirement then you need to master how budget works.


A budget is an estimate of your income and expenses over a set period of time. Normally done on a monthly basis, budgets work to:


1. Allocate your salary/income/money wisely

2. Know how much is coming in and going out in your cash flow

3. Identify the areas where you can spend less to save more


A budget is a powerful tool used to plan how every millennial should spend their money. It provides a clear guide to follow on a monthly, weekly or daily basis.


Budgeting your money may seem overwhelming at first, especially for first-timers. But, once you make it a habit you will find far more amazing benefits a budget can do to your financial life.


Here are the benefits of having an effective budget:

● Gives you better control over your finances

● Makes you aware where your money goes

● Helps you avoid unnecessary expenses

● Provides idea whether you are spending more on your needs vs. your wants.



How to fix this

No matter how busy you may be, try to still accomplish a budget before making any spending. This is important if your aim is to stop living from paycheck to paycheck.


Research for free budget templates available online whether it be in Excel or printed version. If you are digital-savvy kind of gal, there are also budget apps for free available on both Android and iOS. Just test the app and find out if it works according to how you would want it to work.


You can also do the old school pen and paper if it's something you are more comfortable of using. I personally enjoy writing things down so this method truly works for me.


Reason 2. Overspending

Unnecessary expenses, no matter how small they may seem, may harm your finances in the long run.


Most forget to prioritize their financial goals and frivolously spend on items that will only depreciate in value.


Madali din tayong madala sa kantiyaw and kwento ng iba that we end up helping too much when it comes to our friends’ and family members’ financial needs. Hindi masamang tumulong pero sana unahin mo muna magtabi para sa sarili mo.


Buying stuff, you don’t need with money you don’t have a grave sin! You are putting your finances in danger with this common money mistake.


There are also a few who regret following the trend and wasting money on the newest gadget as soon as it is released, wishing they invested the money instead. Taking a good look on how you spend your money could make a huge difference!


How to Fix This:

The best tip I can give is to learn to say no.


Say no to expensive items, say no to peer pressure. Learn to say no to yourself – when you find a new shoe, new gadgets, new makeup, etc.


Learn to say no to people around you – when you really don’t have the money and the confidence that that person will pay you in time!


Instead of spending your income on stuff, I suggest prioritize paying down your debt first (if you have any) and then slowly build your emergency fund right after. Once you have the suggested amount on your cash cushion ready you can now start investing in stocks or even pursuing your own side business idea!


When it comes to control, I find writing down a wishlist a good way for me to evaluate how much I want a certain product. If I really want to buy something I write it down first in my wishlist and wait for a month. If after a month and I still have the urge to buy that item – I buy it.


Reason 3. Lack of Financial Literacy

Financial literacy is the understanding of money and everything in between, including budget, savings, debt payment, retirement, investing and making money on the side.


A financially literate person is someone who sets goals, plans his/her actions, budgets, saves, invests in stocks and accumulate more wealth than debt.


Someone who has no problematic credit card debt or mortgages.


Has savings or an emergency fund ready.


Maintains an investment portfolio for his or her retirement needs.


And does not live on one income alone.


Sadly, many Filipinos are still seen as “financially illiterate”.


According to a statement made by Bangko Sentral ng Pilipinas, Filipino adults can only answer three out of seven financial literacy-related questions.


This poor financial literacy among Filipinos begins with poor childhood education that persists until adulthood.


Read more:


How to Fix This

There are a whole lot of concepts that one must understand before, during and after the investment period.


From the financial products to choose, amount needed to save the money that you need to have in order to retire peacefully, that can be overwhelming for beginners.


Thankfully there are far more and easier ways to gain financial knowledge today.


Others testimonials

You may be blessed with parents who have been very well in terms of their finances or just mere acquaintance that you know are good influence. You can engage in communication with them and ask for their success stories. How they manage their money and how they were able to survive the day to day living.


Financial blogs

Blogs are just the 21st century authority. Whenever I search something especially reviews and experience on a financial product I will consult other blogger’s account. I guess it adds that blogs have a personal touch.


Financial books

I started falling in love on the topic of money, finances and business because of books.


Every time I stroll in the mall I will always grab a quick visit on the bookstore and spend an hour just browsing for books in the business and investment section.


Just recently I fell in love with Rane Panaligan’s The Law of Leverage as it is an all in one book. I also manage to review books such as Kuntento Ka Na Ba sa Kaperahan Mo?, You Can Be Rich and It’s Your Money.


Financial Magazines

From Entrepreneur, MoneySense to Good Housekeeping… these magazines include financial tidbits that could help you gain financial knowledge.


If you are easily bored with long passages of books then maybe a magazine style will be better. You can just browse this when you have time and you’ll be good. This also appears to be more on the visual side.


Financial Seminars

The best way to gain financial knowledge will most probably be attending seminars.


In seminars there will be a focused topic that you’ll enjoy learning with others. You will be listening on a financial educator that can be your mentor too.


Financial seminars here in the Philippines can be mailap and even pricey but they are all worth it.


Attending talks and workshop is the best option for you can actually start applying the concepts too. I love attending seminars even if not financial related.


I also can’t help but salute and support institutions who are working hard in bridging the financial literacy gap among Filipinos.


One of this is BDO Foundation.


I got invited during the webisode taping where BDO Foundation President Mr. Mario Deriquito sat down with Ms. Ali Sotto introducing all the efforts of the foundation when it comes to financial literacy.


Mr. Deriquito mentioned the PITAKA Program which stands for Pinansyal na Talino and Kaalaman, a joint project between BDO and Banko Sentral ng Pilipinas through Overseas Workers Welfare Administration (OWWA) which aims to provide learning tools to OFW workers when it comes to proper financial management.


Stay tuned to BDO’s YouTube channel for updates on finlit related tips!


Watch this video below from Rockstar Momma Channel for the whole interview. You can also click this link.


Reason 4. Investing too late

It is a common money mistake for Pinoys to prolong their investment plans thinking it could actually wait.


But if there’s one smart move you can do today that your future self will surely thank you for is to invest – now!


What’s the difference between saving and investing?


When you save, you are putting your money at rest. Whatever money you saved will not make you rich but it will be readily available in case you need it.

When you invest, you are putting your money at work. Whatever money you invested could give you higher return compared to saving.


How to Fix This:


I know how intimidating the thought of investing your money could be. I’ve been in that situation before. But investing early is one of the best financial decisions I one can ever make.


As early as now, let your money work for you and not against you by investing on the right vehicle!


Time is crucial when it comes to growing your money. You are never too young or too old to invest your money in stocks, UITFs, bonds, etc.


Here’s a good illustration that would help you visualize the importance of investing early.


Someone who invests P 25,000 by age 25, with a 10% rate of return, will have more than P 20 million during his retirement. This is constant even if he or she stops investing after age 35. Those who waited until age 35 will have three times less money than the return of investment of the one who start early!


Now if you are reading this and you think you’re too old to invest then please stop that nonsense thoughts. Just like the famous Chinese proverb, the best time to plant a tree is 20 years ago, the next best time is today.


It is still better to invest your money at 30 instead of 40, right? It is also better to start at 45 than at 60.


It is never too late to start.


Reason 5. Living on one source of income

Here’s what I firmly believe:


Everyone needs a hobby, a side hustle or a passion for profit project to do to be able to stay balanced.


Depending on just one source of income, like a typical 9-5 job, will make you insane. You will get bored, uninterested and stressed easily. Soon that one source of income, even though pays the bill, will make you unhappy.


No matter how comfortable your current job can be, I highly recommend pursuing your passion on the side.


Having additional income just opens better opportunities on your finances. Your extra income can:

● Boost your savings

● Increase your investments

● Enough capital for a possible business venture or passion project

● Pay off debt

● Provide extra money for shopping, paying bills or vacation


How to Fix This:

1. Write down what you are passionate about. Is it taking photos? Writing online? Doing yours and others hair and makeup?

2. Find resources from web to actual people who have pursued the same passion and learn how they did it.

3. Just do it. You don’t need technical skills to start a blog. You don’t need to think a lot on what side business idea to start. Just do it. Start doing what you really enjoy.

Tips on Budgeting for Broke Millennials


Creating a budget is actually very easy…it is committing to it that’s hard.


Budget involves tough choices to make all ends meet and it is your responsibility to make one. Let’s get started.


How much is your income?

The first step in creating a budget is to know how much your income is.


If you are working on a full-time job, this is your salary less deductions. If you are earning money on the side, you can choose to combine the two income you have and budget. Or you can adopt what I do where all extra income goes in a separate account and treated as an opportunity fund.


You can also combine all cash benefits, bonuses, gifts or whatever extra money left from the previous month as part of your income. The key here is to determine what number you will be working on as you budget.


In case you are paid on an irregular basis, you can estimate the total amount making room for adjustments once the actual total income arrives.


What are your expenses?

Now that you are able to determine your income, the next step is to know your budget expenses.


Expenses are of two variants – fixed and variable


Fixed expenses, just as what we learn in school are those expected bills needed to be paid every month. Your house rent, postpaid phone bill, internet bill even your monthly savings and investments goes here.


Variable expenses, on the other hand, are the complete opposite. These are expenses that can change on a month on month basis such as transportation and food allowance.


It is also important to note that each expenses we have most certainly falls into three different buckets:

Essential Expenses

Financial Freedom

Lifestyle Fund


When we say Essential Expenses these are your necessities, the fixed items that you certainly need to pay no matter what. Example will be your house rent, transportation allowance, food/grocery and/or utilities, electric bill.


Financial Freedom are your savings and investments. These are money meant to help you towards better financial security. Count on here your debt payments, loans, savings and/or investments from different investment vehicles you own.


When we say Lifestyle Fund these are your “flexible spending” meant to pay for things that you personally need like hobbies, shopping and other miscellaneous expenses. Included in this is gym membership, clothing/shoes shopping allowance, etc.


As you write down both your fixed and variable expenses, try to determine which bucket they fall under. This is important as you start allocating your income and adjust to your desired budget. More of this in the next section.


What are your spending percentages?

If income is equal to 100%, you need to be able to know what percentage you will give to each bucket.


This is where the 50-20-30 Rule of Budgeting comes handy.


50-20-30 Budget Rule suggests that your essential expenses should be limited only to 50% of your net income. Your financial goals to 20% of your net income and your lifestyle want to 30% of your net income.


So literally envision a pie cut into three chucks, 50% for your essentials, 20% for your savings and investment and 30% for your other expenses.


What are your financial goals?

The most important ingredient for a successful budget are your financial goals.


You need to have a goal in place as you start a new year or a new quarter which you will then work with as you budget.


Goals help you prioritize what needs to get prioritized. And this is crucial when it comes to budgeting for beginners. You have to be able to allocate your limited money well and fund what matters a lot for you.


Here are examples of financial goals:

Be debt-free

Save three (3) months' worth of emergency fund

Build a travel fund


If you haven’t taken time to think about your financial goals in life, I encourage you to do so today.


Simply think about the person you want to be financially before the year ends. Do you want to be free of credit card debt? Do you aspire to have an increase in salary? Do you want a savings worth at least a double your income?


Write those down and make sure you have the list every single time you make your budget. These are the needed matters you need to resolve as you begin budgeting for beginners.


Now I’ll show you how to create a budget in five easy steps.


How to Create a Budget in 5 Easy Steps


Step 1. Choose your system

There are different ways you can make a budget. Are you more of a pen and paper kind of person or you love using budget apps? There are also printable budget templates available for you to download for free. It can actually be a combination of two systems. I enjoy using Google Calendar for a complete monthly view. I then keep everything on my bullet journal. The key here is to identify and use a system that best applies to you.


Step 2. Record your net income

This is the first thing you need to encode in your budget. How much is your net income. As mentioned above, this will be your take home pay less government fees and taxes. This money will act as your starting point.


Step 3. List down your budget categories

Budget categories refer to the items where you’ll allocate your money. This includes Tithe, bill, house rent, food grocery, etc. It is important to have a budget category that works for you. Keep it as simple as possible so you won’t go crazy budgeting every end of the month.


Step 4. Calculate your spending percentage

I recommend you use the 50-20-30 Rule of Budgeting to calculate how much of your income goes to each category. You can also use other budget allocation depending on your comfort level.


Step 5. Start budgeting

Put an amount dedicated to each category and stick to your budget. Don’t forget to adjust your budget if needed.


In case your budget revealed that you have more amount set on your expenses than your current income then you need to harshly cut-off on items that can be cut-off.


From coffee dates, dining out, movie times, etc. you have to simply stop for a while so you’ll have money for more important items. You may also try a no-spend week or month rule where you can’t buy anything and save a ton of money.


During the adjustment you may also want to look into where you are overspending. Not all fixed expenses are essential.


For example, Netflix is a fixed expense every month but it falls under Lifestyle Fund. You now have to ask yourself and rate how important it is for you to have access on TV/Movie stream. If you really want it then the Php 450/month must be paid no matter what. This would mean cutting some things away from your lifestyle fund. Less clothing allowance, less money spent on repurchasing toiletry items.



Final Notes from Savingspinay


I hope this post helps millennials find ways to overcome being broke. Budgeting may seem like a daunting task at first, but once you do it consistently you’ll find it to be more of an extension of yourself instead. You will be amazed by the difference it can do to your financial life.

Clariza Glino

Izza of SavingsPinay helps Filipinos bridge the financial literacy gap one content at a time by providing insights and tips on budgeting, saving, investing, side hustle and growing your net worth. Aside from this blog she also writes at, a beauty and lifestyle blog for frugal Pinays and manages,, a wedding and event business since 2011. For inquiries, topic suggestions or future collaborations email her at

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>