We need money to be able to
buy our essentials and to sustain our needs. However, with all that we see and
hear about money, the truth of the matter is, only a few people have truly
mastered how to handle money properly. Money isn’t bad. What is wrong is the
greediness of people and their love for money. It is when we allow money to
control our lives that makes it bad. Money should enrich our lives instead of
controlling us.
I don’t mean to become a ray
of sunshine here. I'm no financial expert either. I just want to share what I had learned about keeping my finances in the hope that it might work for you too. But people, in general, must learn more about money management.
About having too little or too much. About how to spend and save wisely as well
as know when to invest. About the satisfaction it brings and the hassle it can
cause if you don’t manage it well.
Contrary to what we have
been made to believe, mastering money doesn’t need any financial related degree
or expert investment strategies. It only takes both short term and long-term
planning, being consistent on the plan, also entails lots of discipline and
having the right attitude.
Here, I am sharing some personal finance tips to get you started:
1. USE CASH WISELY
Back when I was a teenager, I was given a supplementary card of my mom’s credit card. When you’re at that age, swiping cards seemed so cool! So out of my immaturity, I would use my credit card each time I’d dine in restaurants and cafes with friends and when I’d go shopping. Until such time when I’ve maximized my card’s credit limit. Can you imagine how my mom got the shock of her life after she has learned what I had done? The lesson here is it’s still best to use cash instead of a credit or debit card so you can monitor well your outgoing expenses. You have to use your money wisely. Cliche as it may sound, but it's true, it's important to distinguish your needs versus your wants. The thing is, if you can't live without it, it is a necessity. But if it's one of those things you've been jonesing for, it's best to forget it.
2. SAVE SMALL WEEKLY SAVINGS
This isn’t really easy especially
if you’re doing it the first time. If you’re not sure where to begin, follow
this simple formula: Salary-Savings=Expenses. Or make it 60-20-20 because you
might feel that you’re going to be short each time you receive your salary. Try
to save a small amount of money on a weekly basis. For example, each week try to save P125. It
may be a small amount but at least you will be having P500 savings per month!
It isn’t bad to start with. Once you’ll get used to saving weekly, you can try
to save bigger money.
3. STAY AT HOME.
If there isn’t anything important
to do, remain at home. By doing this, you stay out of the many temptations, especially at the malls. You are saving not just your energy, but your gasoline
(if you have a car) and money as well.
4. COOK AT HOME.
Cook for the entire family, be it an
heirloom dish you have learned from your grandma or you try to recreate your
favorite restaurant dish. Your family will even thank you for it. You could
also always go back for another serving and even your tummy might thank you for
it.
5. USE THE ENVELOPE STRATEGY & CREATE A BUDGET.
This trick has been effective for most people I know. Even financial guru/resource
speaker Chinkee Tan teaches this method of saving. If you have not heard of
this strategy, the concept is simple and easy to understand. You must make use
of different envelopes and segregate your money according to your needs. There
should be an envelope for the grocery, tuition fee, debts, luxury/leisure
activities, etc.
It’s
easy to spend every single peso we earn. Filipino encourages splurges and
overspending on the latest gadgets, fashion trends, frequent dining-out,
high-end coffee, and lavish vacations. But as they, the problem isn’t how much
you earn, rather it is how little you save. Having money in savings helps you
deal with emergencies and unbudgeted needs. It also minimizes the need to
borrow money and pay interest on credit cards.
Allot
a particular budget depending on your needs, bills, and other expenses. Set a
budget including savings and unforeseen expenses and sticking to that budget no
matter what tempts you to overspend is the key.
6. TALK IT OUT AS A COUPLE
If you’re married, it’s best to discuss finances with your wife or husband. Both of you must arrive at the same decision and should be on the same page. You need to discuss where to spend and where you have to save. This way, you will prevent any disagreement and fights regarding money in the future. The best kind of couple is when they encourage each other to invest and save at the same time. Stock market advisor, author, and Catholic preacher, Bo Sanchez believes that when a couple freely and openly talks about financial issues, the better they will be able to settle all their debts together.
7. PAY YOUR DEBTS
You need to pay your debts because
your reputation and credibility depend upon this. You might be subjected to
shame if you have made a promise to pay your debt but failed to do so and act
as if you did nothing wrong. Check and improve your credit score. Your credit
score informs lenders and other interested parties of your credit risk. It
gives information on how much debt you have relative to your income and if you’re
able to pay past debts in time. There’s nothing like having a peaceful sleep
when you don’t step on others and don’t cause them any trouble.
8. DECLUTTER
Throw away or sell those items in
your household that you’ve been keeping for years now and would only
accommodate dirt and dust on your shelves. Organize a garage sale or sell your
preloved items online to help you gain more money. It’s hitting two birds with
one stone: decluttering your house will make your house cleaner and more
organized while gaining extra income as well when people purchase your preloved
items.
9. USE A FINANCIAL CALCULATOR
Yes, you need to use a financial calculator. Financial calculators are specialized tools for business and
finance. They include necessary features and components that you won’t be able
to find in a regular calculator. Using a financial calculator will help make
your lives easier when you calculate the rate return on an investment or loan
payments. By doing so you will be able to learn how to handle your finances the
right way. One of the benefits of using a financial calculator is that it can
calculate more complex problems like discounted cash flows, internal rates of
returns, loan formulas, net present value, and markup calculations.
Mastering
anything in life needs an abundance of knowledge and patience to get it. With
numerous resources available to help you learn essential financial concepts
(make your research, read up online, buy financial books, listen or attend
financial lectures, etc.), you can learn what financial concept works for you.
The key here is to find out which concept is the best fit for your lifestyle. And
whatever it is that works for you, embrace it. That way, the time you invest in
understanding how to improve and maintain your financial health will be time
well-spent.
10. BE SATISFIED WITH WHATEVER YOU HAVE
The problem with most people is
that they tend to live beyond their means. When you must be happy and make do
with whatever you have. Stop competing with others. Stop comparing your life
with your friends. Comparison is a thief of joy. The minute you compare your
life to someone else’s, it’s the start of envy. We all have our own journey in
this life. Keep your life simpler but keep reaching for your dreams. Start
saving and there’s no better way to do it but NOW!
The Bottom Line:
Time
is money. The sooner you begin saving, the more you will potentially have money
even after your retirement. Being an expert when it comes to handling your
money isn’t exactly a walk in the park. It entails hard work, patience, and
lots of self-discipline. It is in fact a lifelong journey. It requires patience
and diligence as you plan for your future. There will be mistakes along the
way, but for as long as you never lose focus, the drive to save for the
future—you will learn it a lot sooner than you think.
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