Quote from: ASloveapg on Today at 06:29:16 AM

Quote from: kotajikikox on June 30, 2025, 12:30:19 PM

I think that we should allocate our money into 5 categories.

1. Necessary expenses. I am talking electricity bills, food, school fees (if you are studying or have children), housing, healthcare, and transportation. I believe this group is where most of our money goes because we basically can't survive without these things.

2. Emergency fund. In cases of emergency, we should be able to get some money for it. Especially in countries where healthcare is not free, we should be prepared to pay if ever we get into accidents or we get sick though hopefully it never happens but still we have to be always prepared either way.

3. Savings. Some people save up for specific things like buying a better house, a better car, getting your kid into a better school among other things. Some people may just save for the sake of having money to pull for emergencies. I think emergency money and money I want to use into building a new home should be separate.

4. Investment. Aside from our day jobs where we get most of our money to pay for our necessary expenses, we should invest in assets to make our money grow. This could be gold, real estate or cryptocurrencies.

5. Luxury. When I mean luxury, I do not actually mean it has to be expensive. But I say luxury because there are things that we do not need but still want to have or experience like traveling or eating at a good restaurant. I believe that even though we should be smart in finances this does not mean we have to completely deprive ourselves of enjoyment.

Money means planning and preparation. When we plan our income in a well-organized manner, it brings us financial freedom. The way you have divided your income into five parts makes it easy to meet expenses as well as invest consistently. As a result of proper planning of income, there is no excess expenditure in any area and all needs are met properly. The goal of earning money is not only to meet needs but also to build security in the future. And proper management of money is essential to build the foundation for the future and it takes us forward.

I agree with you because money without planning usually slips away faster than we even notice and that is where a lot of people end up struggling, when income is not organized properly it often leads to overspending in one area and shortage in another, but when you divide it with a clear system like you mentioned it gives a sense of balance and direction, you know exactly what portion goes into daily needs, what part goes into savings, investments, emergencies and even little things that bring comfort. That habit builds discipline and consistency which is really the foundation of financial freedom.

It’s true that the goal of earning money is not just to meet present needs, if we only focus on the present then we remain in the cycle of always catching up, but when money is managed well it becomes a tool to build future security, it gives peace of mind knowing you are prepared for unexpected events while still working toward bigger goals. Proper management may not feel exciting every day but it is like laying bricks for a strong foundation, slowly and steadily it shapes a better future and keeps you moving forward without the constant fear of financial setbacks.