“Tumaas nga ang sweldo, pero bakit parang wala pa ring ipon?”
Sound familiar? Many Filipinos experience salary increases or receive more remittances from loved ones abroad, yet still struggle financially.
More income should mean less stress, right?
Not always!
In fact, if we’re not careful, having extra money can lead to bigger spending, more debt, and zero savings.
But don’t worry, today we’ll break down the common money mistakes people make when their income increases and how you can avoid them.
The Financial Reality of Wage Increases and OFW Remittances
According to SM Investments’ recent report, the Philippine economy is still heavily consumption-driven.
This means that Filipinos love to spend, especially when income increases.
✅ The minimum wage is going up in many regions.
✅ OFW remittances are higher due to the weak peso.
✅ Retail stores like SM and Alfamart are expanding as more Filipinos continue to shop and spend.
This sounds like great news, right? But here’s the catch:
- More income often leads to more spending.
- Lifestyle inflation happens when we upgrade our lifestyle every time we earn more.
- Higher prices cancel out wage increases.
If your salary increased by ₱2,000 but your spending increased by ₱3,000, lugi ka pa rin!
So, how do we make sure extra income actually benefits us?
First, let’s talk about the biggest money mistakes people make when their income increases.
The Common Money Mistakes People Make When Income Increases
1. Lifestyle Inflation
✅ “Dati okay na sa Jollibee, ngayon laging sa buffet restaurant!”
✅ “Before, simple phone lang, now kailangan iPhone 15 Pro Max!”
When we earn more, we feel like we deserve an upgrade—more shopping, expensive dining, and luxury gadgets.
The problem? We spend everything we earn!
2. Ignoring Savings and Investments
If your income has increased, but your savings remain the same, something is wrong.
Many people prioritize spending over saving, thinking,
“I’ll start saving next time.”
Reminder: The more you delay saving, the harder it is to start.
3. Underestimating Inflation and Rising Costs
Yes, wages are increasing, but so are gas prices, grocery costs, and rent.
If you don’t adjust your budget wisely, your higher salary won’t make much of a difference.
4. Not Planning for the Future
Having extra income feels exciting, but thinking long-term is the key to financial security.
Instead of spending everything now, ask yourself:
🔹 “Will this purchase help me in 5 years?”
🔹 “Should I invest this extra income instead?”
Now that we know the common pitfalls, let’s talk about how you can actually make your wage increases and remittances work for you!
How to Make Extra Income Work for You
1. Follow the 50-30-20 Rule
A simple and effective way to manage your money is to follow this 50-30-20 formula:
💡 50% Needs: Bills, groceries, transportation
💡 30% Wants: Shopping, travel, dining out
💡 20% Savings & Investments: Emergency fund, investments, retirement
Example: If your salary increased by ₱5,000:
- ₱2,500 for necessities
- ₱1,500 for fun
- ₱1,000 for savings
You Can Also Follow My B.E.S.T. Budgeting System
If you prefer a more structured approach, my B.E.S.T. Budgeting System ensures every peso you earn is used wisely:
💡 B – Bills & Basics – Rent, utilities, groceries, transportation, and essential expenses.
💡 E – Extra Expenses – Birthdays, insurance, holidays, and other irregular expenses.
💡 S – Savings – Emergency Fund, Sinking Fund, and Investment Fund.
💡 T – Total Income & Tweaks – How to adjust your budget and increase your income.
Watch my video to learn more about the BEST budgeting system.
Both budgeting methods help you take control of your finances, avoid overspending, and make the most of your extra income.
The key is finding a system that works for you and sticking to it!
2. Automate Your Savings and Investments
Before you even touch your money, set aside money for savings and investments first.
- Set up an emergency fund with at least 3-6 months’ worth of expenses.
- Open a high-interest savings account.
- Invest in a mutual fund, UITF, or stocks to grow your wealth.
If you automate your savings, you won’t be tempted to spend everything.
3. Be Strategic with Expenses
Instead of splurging, upgrade wisely:
❌ Buying the latest iPhone just because you can
✅ Investing in a laptop or tools to start an online business
❌ Dining out every week without a budget
✅ Cooking at home and reserving dining out for special occasions
❌ Splurging on new clothes every payday
✅ Saving for long-term financial goals like property, travel, or retirement
Small, mindful spending decisions can make a huge impact on your finances in the long run.
4. Use Banking & Financial Tools Wisely
Banks like BDO offer savings accounts, time deposits, and investment products. Take advantage of these to grow your money.
Avoid unnecessary loans and credit card debt! Don’t fall into the trap of
“Eh may sweldo naman next month!”
Instead, use your extra income to pay off debts and build financial freedom.
More money can mean more financial security, but only if we manage it wisely.
“The goal is not to earn more just to spend more. The goal is to earn more so you can save, invest, and create a better future.” —Pinay Investor
Need help with budgeting? Check out my budgeting templates here or order them here.