Ask any millenial or Gen-z what life skills they should have been taught in their school and university, and inevitably the answer includes the management of personal finance. Managing your finances is not easy. There is no handbook and no one-size fits all solution. Some prefer investing in long-term growth plans while others prefer more low-risk options. Whatever you choose to invest in, you must find the means and methods that best contain your current financial situation.
Here are a few ways to manage your personal finances better:
1. Balancing the incoming and the outgoing
To find the right balance, you must first calculate your take home pay after deducting tax, contributions to SSS, PhilHealth and various other deductions. Then, estimate your monthly expenditure for basic needs and finally, what are the bigger annual expenses such as travelling.
A persons monthly expenses include all the basics such as food, eating out, transport, entertainment, student loans, personal loan payments, parental allowance, insurance etc. The more detailed you are, the better your planning can be. Take into account birthdays, anniversaries, Christmas presents and festive angpaos etc. Dont forget the small details such as your monthly salon visit, your haircuts, your shopping. If you find it difficult to remember and estimate, you can use an app to track your spending. Once you have a ballpark estimate, it will be easier for you to manage your monthly finances. Similarly, track your budget for yearly costs like travelling or a big party. You can even divide this number by 12 and allocate it to your monthly budget.
2. Start saving
The earlier you start saving, the better it is for your long term future. Experts recommend saving at least 25 percent of your income. Set up an automated bank transfer to a separate savings account so that you are not tempted to spend it all.
3. Be ambitious
Calculate your yearly saving and verify if that is enough for your long-term goals. Does this amount give you security? Having goals and ambitions helps you save a bulk of money and invest it in more profitable financial assets. Whether it is a better car, a big holiday, buying a house or a wedding, a goal is something that gives you a tangible dream.
4. Increase your income or cut down your expenses
With the help of these goals you have set for yourself, you will need to augment your savings. Either you need to increase your income or spend less and be conservative with your budget. Some ways of cutting down on unnecessary expenses include: making your own lunch for work, finding a roommate to share the rent, earn more by taking up a side gig etc.
5. Be flexible
The best laid plans often go awry due to emergencies and unplanned events. In such a case, it is best not to be rigid and seek creative ways to manage your financial crisis.
An increasing number of people now take personal loans to meet the shortfall in their finances. Personal loans help households meet their immediate requirements by using the funds for either buying a house, a car or medical contigenies.
The best thing about personal loans in Manila right now is that you dont have to wait too long, or deal with a whole pile of paperwork to avail a loan. All you need to go online, fill up the forms and necessary documents and it is a matter of few clicks before the process gets rolling. Read more about personal loans on Asteria.
Borrowing is not a bad thing but borrowing without a definite payment plant is a slippery slope.
6. Safeguarding your money
Financial security is an important component of financial literacy. Especially in the digital era, where there are more financial crimes at a larger scale. Always bear caution when dealing online and never share your credentials with anyone. Change your passwords frequently and beware of popular online scams and techniques like phishing.
Another way of protecting your finances is insurance. It is best to invest in appropriate insurance plans be it life, health or retirement.
Conclusion
Managing personal finance well is a life skill that you can learn at any stage of life. Being careful and spending with caution can guarantee you a stable and comfortable life and a worry-free retirement.