You personal economy is as important as any other economy. And in any economy, your financial stability is necessary. Stability in terms of your personal economy requires a lot of discipline or good financial habits. In the midst of a consumerist society that incessantly tells you to SPEND, SPEND and SPEND we sometime end up at the losing end.
Although saving is not really a thing for Filipinos, this should be your top priority (especially if you do not have an emergency fund in place yet). Each payday, make sure you allot a percentage of your salary (or a fixed amount if you wish) for your savings. A hassle-free of doing this is by subscribing to online savings account. There are banking options that allow you to automatically wire transfer an amount from your checking account to your savings account. Your saving, take note, is a key cornerstone in financial stability. Trust me, you won’t even notice you’re piling money in your savings account after several months.
2. No to impulse spending!
Oops. This probably is the biggest hurdle for many of us; the most common financial habit there is. Economists have this concept called “permanent income hypothesis” that explains how we spend based on our expectations of our permanent income in the future. As a result, we usually spend too much and too irrationally because we believe “there’s still money coming in”. This is a big budget breaker! Online shopping, eating out, and movies are the greatest temptations to us all. So, better watch out how much money comes out of your pocket. And before buying anything, ask yourself: Do I really need this? (And please don’t rationalize)
3. Live frugally and know how you spend!
Track your expenses. This way, you can identify where you spend your money and assess or evaluate if you have been spending wisely. In evaluating your expenses, there’s just one question you need to answer: “Is this expense ABSOLUTELY NECESSARY?” Take note of that qualifier “absolutely necessary” that means ‘an expense that was, in fact, necessary’ and not ‘an expense I feel and I wanted to believe was necessary’. Be mindful of your financial wellness, cut out unnecessary expenses
4. Now, know how to spend.
Never spend beyond your means. Spend within a budget – a real budget, and not an imaginary budget. List your necessities with corresponding prices, and compare them as against your budget (less your savings of course). And when you go shopping, bring a list with you and stick to it. You know that’s called smart shopping.
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