Monday, July 27, 2020

Calculating My Travel Budget

As a mom who can still work from home during this COVID-19 pandemic, I still consider myself very lucky to have a job that I can still earn from remotely. A lot of people nowadays are unemployed and are struggling to find work, which is why I'm still very thankful. 

I know that flights are suspended this year especially international flights, but that doesn't stop me from wanting to travel in the future. It may be 2 years from now or 3 years or maybe more since I need to prioritize other expenses since I have kids. So now I really wanted to seriously start saving exclusively for travel or have a travel budget. 

Determining Your Goal

Why are you saving money? What's it for? I think it also helps if you know your goal on why you want to save money. And as early as now, we should be honest with our finances. According to an article from The Balance, a budget only works if you are honest about both your income and expenses. To make an effective budget, you must be willing to work with detailed and accurate information about your earning and spending habits.For me, like I said, my goal is to have a travel budget. Take note that having a travel budget is different from our savings. The two of them must be separate. 

Find a Calculator

So given that I had trouble calculating my finances, using the resources we have today like the internet and Google, I searched for websites that could give me some tips about budgeting. Lo and behold, I found a very useful tool from I found a very interesting budget calculator that helps me to somehow plan my travel budget and hopefully stick to it.

Pigly has plenty of types of calculator which is one of the reasons why knowing your goal is important. They have a budget planner calculator which is the one I should be using. But for now, I chose the Reaching Your Savings Goal calculator because I do plan on reaching a travel budget of P100,000 (more than $2,000) within 2 years using my current salary. The Savings Goal Calculator is very simple, even kids can easily understand it.

Savings Goal Calculator
Savings Goal Calculator

When you look at the pic above, I set up my savings goal to 100,000. I put zero (0) to my current savings balance because I actually have zero balance in my savings account (I just live from paycheck to paycheck so please don't judge me). But I plan to change that soon.  The annual percentage rate is the interest rate that can be applied once you have an amount entered in the current savings balance. I chose monthly contribution for 2 years to reach my goal and this is the result after clicking "Calculate:"

Savings Goal results
Savings Goal Results
Current savings future value is zero because, as mentioned, my current savings is zero. Savings gap is the amount I still need to earn so naturally that's 100,000. So the calculator says that my monthly required deposit to be able to earn 100,000 after 2 years is 4,087.36. When I computed 4,087.36 x 24 months (2 years), it is equal to 98,088 so I'm assuming I will earn the 1,912 through interest from the bank. If I were to use a simple calculator, I wouldn't be able to compute this so thank you, Pigly :) 

Final Question: Can I Do It? 

So the question now is can I save 4,087.36 per month? I think I can if and only if I find a sideline or a part time job to co-finance it. The said amount is a huge chunk out of my current salary. I can only shell out 1,000 for it so for additional 3,000, I would need another sideline for it. That's why I'm currently blogging so I can somehow have a little income from it and save. 

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