Your Bank Account Should Be Empty on Payday...Here's Why - Part 1

Hi Teman!

Let's be honest, budgeting often feels like a constant battle. We track our expenses, try to cut back, but somehow there's never enough money left to really save. It can feel like trying to squeeze in a workout at the end of a long day – by the time we get to it, we're tired and easily distracted.

The Old Way: Gym at the End of the Day

Imagine Kirana, a young professional in Jakarta. She wants to build healthy habits, including regular exercise and saving money. But her living costs like rent, food, and transportation eat up a significant portion of her paycheck. At the same time, catching dinner with friends, going out to the movies, or buying new gadgets and clothes can also take a big bite out of her budget.

Following the traditional approach, it often seems like there's nothing left for savings after these expenses:

Income - Mandatory Expenses - Discretionary Expenses = Savings (Try to fit this in at the end)

The problem? Just like that late-night gym session, Kirana's "leftover" time and energy for saving is unpredictable. Some months it happens, but often it gets skipped.

The Smarter Way: Gym Before Work

There's a better approach, and it starts with a mindset shift. Just like prioritizing hitting the gym in the morning for a focused workout, let's make saving happen at the beginning of the month, not the end.

Income - Mandatory Expenses - Savings = Discretionary Expenses (Spend guiltlessly whatever is leftover)

This "pay yourself first" method is like getting that workout out of the way. Kirana knows her savings goal is taken care of, giving her more freedom and peace of mind with her spending for the rest of the month.

Key Financial Terms:

• Mandatory Expenses: Costs that are essential and stay relatively the same each month (rent, utilities, loan payments, groceries, etc.).

• Discretionary Expenses: Spending on non-essential items or activities (entertainment, dining out, new clothes, etc.).

• Savings: The portion of your income set aside for future financial goals.

Why It's a Game-Changer:

• Stops mindless spending: Limits what's available for impulse purchases.

• Reduces financial stress: Building that safety net brings peace of mind.

• Makes reaching goals real: Consistent saving adds up faster than you think!

This Week's Action:

Track your mandatory expenses: Calculate your absolutely essential monthly costs (Rent/Mortgage, School Tuition, Basic Groceries, etc.)

Next Week: We'll create your “Savings Infrastructure”

Take control of your money, Teman!

Salam, Chris