“Earning a lot of money is not the key to prosperity. How you handle it is.” – Dave Ramsey
How certain are you about your financial situation right now?
Whether you’re worried about paying off your debt, missing out on the latest tech, or trying to make ends meet, it’s obvious that looking for money can be a huge source of stress for us Filipinos. Truly, the path to financial security can be a daunting task. But the good news is: it doesn’t always have to be like that! There are many simple solutions to create a financially secure situation for yourself. If you wish to control your finances, read on, as we share with you bits of advice to start your journey to financial freedom.
Build your emergency fund.
We have to know that nothing is promised. As much as we prepare for life’s events, the unexpected can happen. Your car could break down and need expensive repairs. Your pet might need a pricey treatment. You could damage your stove and might have to replace it. Anyone of these unplanned expenses could impact your budget by thousands of pesos. Would you have enough money to cover these financial blows? That’s where an emergency fund comes in. The size of your emergency fund will depend on your financial situation. An ideal one would be about three to six months’ worth of your monthly expenses. This means if you’re spending PHP 10,000 every month, you will need at least PHP 30,000-PHP 60,000 in your emergency fund. This should be kept fairly liquid so you’ll be able to access them quickly if need be. If you need to use your emergency savings, you’ll be glad they’re available.
Budget. Budget. Budget.
If you want financial security, following a budget religiously is the only answer.
Since budgeting allows you to create a spending plan, it will make sure that you will always have money for the things you need and the things that are important to you. Following a budget plan will also keep you out of debt or will help you work your way out if you currently have one. Budgeting is the foundation of financial security—once you create and follow your budget regularly, you will get a good feel for how it can keep your finances on track. By doing this you can easily forecast which months your finances may be tight and which ones you’ll have extra wiggle room. We have an article that goes more into detail about budgeting and other valuable solutions, so make sure to read it here.
Create a Financial Plan
This pretty much sums everything up. If you wish to be financially secure, you must create a smart financial plan. Here are a few expert-approved methods to help you get on track.
#1. Set Goals for Your Financial Plan
Before anything else, you must have your “why”. Why do you want to be secure financially? Where do I want to be ten years from now? By setting goals for yourself you give yourself a target to shoot for. This sense of direction allows your mind to focus on the target rather than waste energy on the non-essentials.
#2. Track Where Your Money Is Going
This is related to budgeting. Tracking your expenses down to the last centavo will serve as your monthly guidebook. Once you figure out your expenses, you’ll be able to make better financial plans in the future.
#3. Start Saving
The importance of saving money cannot be understated. The essence of saving money is simple: It allows you to enjoy significant security in your life. Also, saving money can help you pay for major purchases, avoid debt, and reduce your financial stress.
So if you need a little push to save money, or just want a more thorough explanation as to why it is important, you may check our previous article here.
If you wish to learn more about financial planning, check this article out.
As I end this article, I would like to remind you to manage your finances or your money will manage you. Financial insecurity has nothing to do about how much money you make, it will always boil down to how much money you keep and how you handle your finances. Yes, the future is such a troublesome topic. The key to overcoming financial insecurity is through planning, preparation, and discipline. Examining financial habits alone cannot account for a holistic understanding of the issue—you will only be financially secure when you decide to act on it. Remember, a goal without action is just an idea.
If you’re still hesitant about starting your journey to financial security, make sure to seek help from a Registered Financial Consultant. You can look for one near your area by clicking here.
Disclaimer: Just a reminder, dear reader, that the content in this column is my opinion only and should not be construed as investment advice because I am not your financial adviser, neither did I take into consideration your personal objectives, financial situation, needs or circumstances as your fiduciary. This column is mainly for your entertainment and education only.
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