MANILA – It’s been a year of spending, saving and growing your money. As we assess our personal “fortunes.”, we’ll rundown the top 10 money advice that are always relevant whatever the season or the reason, for those who want to continue on the path to financial freedom.
- Spend less than you make.
The road to financial wellness begins with this. When you don’t use up all your income, you can come up with a sound savings plan and be able to invest these to meet future goals. Embrace a sensible lifestyle that meets your needs, knowing that you are setting the foundation for your financial future. At the very least, try to save at least 20 percent of your monthly income, and make sure that you set aside your savings before you start spending.
2. Set a budget.
To live within your means, it is helpful to set a budget that will guide you and prevent you from overspending. If you don’t have a budget yet, try to make one now, guided by your daily routine and regular expenses. Keep a record that will let you monitor this regularly–an Excel file is handy and will work very well. Most importantly, make sure you stick to this budget. It may be hard at first, but with discipline and adjustments in your lifestyle and spending habits, you can stay within your budget.
3. Plan for emergencies.
Life is full of uncertainties and risks that you have to be prepared for–a sudden illness or death in the family, accidents, job losses. When these things happen, you need to be financially ready, which is why it is important to set up an emergency savings fund. Ideally, this should be a separate fund from your regular savings fund. Make sure it is easily accessible for those moments when you need cash quickly.
4. Pay your bills on time.
Keep an eye on the due date of your various bills so that you do not lag behind in payments. Late payments can cause you a lot of inconveniences like having your electricity or phone service cut off. They can also be expensive–credit card companies charge for late payments while utility firms ask for re-connection fees to restore services. Lastly, paying bills on time ensures that you don’t get a black mark when someone does a credit check on you.
5. Use credit judiciously.
Credit can be your friend when you use it appropriately as it allows you to purchase the items or services that you need, and gives you financial elbow room to grow your business or improve your cash flow. However, if you abuse your credit lines, you can find yourself in trouble. When using your credit card, make sure to buy what you can afford. The card simply extends your paying time or makes a cashless purchase possible, but it does not increase your income. Make it a habit to pay more than the minimum amount due so that you can minimize interest expenses.
6. Pay attention to fees.
In everything you do, watch out for transaction fees, late charges, and interest. These charges may come when using some of your credit card’s features such as cash advances when you pay past the due date. When using your ATM card in another country, make sure to know about charges. When investing in various funds, there may be termination fees and the like. While there are some fees that you cannot avoid, there are some that you can minimize by simply being mindful of these.
7. Ensure the safety of your transactions.
Fraud is a real problem and if you are not careful, you can see all your savings blown away and find yourself saddled with debt that you did not make. Fraudsters are forever trying to get your identity details, as well as your credit card and ATM numbers. Make sure to follow your bank’s suggestions on how to improve the security of your transactions. Also be careful in not sharing your identity details freely with people you don’t know, especially on the phone or on social media.
8. Protect yourself.
You don’t know what lies out there–typhoons, floods, earthquakes–so it’s best to protect yourself and your property. Buy life insurance, which is important especially if you have dependents or are the breadwinner. Health insurance is also a must at all times. Also look into getting insurance for your car and home. When purchasing insurance, make sure it adequately covers your needs and make sure to read the fine print to make sure that your needs are included.
9. Invest for the long term.
People are living longer, and you’d like to make sure that when you reach your senior years or have retired, you have enough funds to cover your basic and other needs. This is why you should build your pension as early as you can. Look into the various pension funds and other financial products being offered and start putting money into these, knowing that time is your ally and will work to your advantage when it comes to investing.
10. Invest in yourself.
Don’t forget to look for ways to advance yourself in all aspects. Make sure to improve your skills so that these are up to date and that you are not left behind by the emergence of new technologies. If you need to pursue higher studies or enroll in courses, then plan for these and do so. Don’t forget your physical wellness and your emotional and mental health as well. Remember that your greatest asset is yourself.
Grow Your Money is an editorial partnership between news.abs-cbn.com and Citi Philippines to promote financial education and provide helpful information to Filipinos on how to better manage their personal finances.
Visit www.citibank.com.ph for more information.