What is Cheap or Expensive?
Everyday, we spend for things and think of worth of the expenses we make. However, is there a general rule of what is cheap or expensive? Should we have an idea of a limitation, then we could guide or limit ourselves from buying unnecessary things.
In my personal experience, the concept of what is cheap or expensive lies on three values, namely (1) daily gross salary, (2) weekly gross salary and (3) monthly gross salary. By saying gross salary, it refers to the amount before tax and other deductions. Say for example, you work five times a week and earning 1200 everyday, so your weekly gross salary is 6000 and the estimated monthly gross salary is 24000.
The following simply guides will help one in evaluating good spending habits:
Daily Gross Salary
The daily salary must be divided by a constant six or seven to get the approximate hourly gross salary. For example, a1200-daily salary will yield an estimated 200 hourly salary. 200 represents a benchmark for ordinary single purchases. If you eat outside for yourself, then the expense is considered cheap if it is below 200. Same thing applies with expenses related to daily transportation or expected regular expenses related to education or living expenses.
On the other hand, daily gross salary serves as a good estimate for how much you need to spend in total in a day. General rule about one-third to one-half of your gross salary is allowed to spent. Anything less than this range is cheap and on the contrary, going beyond this means it is expensive and beyond one's means. For example, spending 800 for a dine out with given daily gross salary of 1200 is considered expensive.
Weekly Gross Salary
Average grocery expenses, recurring expenses related to insurance, utilities (electricity, phone, water, etc.) and house rent are based on the weekly gross salary. All of these expenses when summed up most not exceed your weekly gross salary. This means if one is earning 6000 per week, an expense of 8000 is considered expensive, so there is a need to find ways to save money by either transferring to another house, saving in the usage of electricity or phone, or check grocery lists to be certain that only those essential are bought.
In addition; when deciding on buying something luxurious or for self-gratification, the weekly gross salary must be considered. The salary for one to two weeks could be spent for items wanted, rather than needed. Anything more than that results to unnecessary debts, which may make one regret over the purchase made. So given a 1200-weekly salary, a watch costing 1200 to 2400 is appropriate unless one finds other ways of earning money.
Monthly Gross Salary
Every person wants to have a well-deserved vacation once in awhile. A good rule is to set your monthly gross salary as the maximum amount one can use for vacation. This somehow requires detailed planning to control cost without compromising fun, weather or other individuals. Spending for a vacation is expected for OFWs (Overseas Filipino Workers). However, if an OFW spend an amount more than one month, debts become inevitable although non-essential. This range can also be used in allocating money for savings. All the time, one must save or ensure saved money on the back, equivalent to one to month salary. This is the individual's safety net or emergency fund.
Moreover, investments on carreer, business or education aiming on a better future must not involve money more than three to six months. This certainly reminds Filipinos spending half a million pesos to go abroad, using money of monthly earnings is way excessive, given average monthly salaries ranges from 10000 to 20000. Furthermore, should one engage in business, one must prepare capital for about 6 months of salary to ease the family's financial burden when the difficulties start to arise. This translates to a maximum of 144000 ( 24000 x 6 months ) when doing an investment.
Lastly, it is not about what you buy. What matters most is the worth and value of the things bought. The utility of one purchase determines its worth. Should a thing be useful to one for a longer period of time and may eventually yield more income, then there is no reason to regret spending for it. However, this does not prohibit one to buy things for self-gratification. The measure of its utility are the indelible memories that comes after and the long-term happiness it brings, rather than short-lived gratification.
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