Adulting with Tita May

6 Financial Lessons I wish i knew in my 20s

Becoming financially smart does not happen overnight. It takes practice and change of mindset.

Hindi naman tayo pinanganak with a ‘golden spoon’ at may trust fund 😄 kaya diskarte, disiplina at oras ang kailangan to be money smart.

Learning how to handle your money at an early age may not be sexy and the norm for your circle of friends. YOLO! Buy the latest cellphone unit! New clothes for OOTD! SALE! SALE! SALE!

It’s not that you will deprive of yourself of these things but think and ask: Do you like to go through life not saving and living paycheck to paycheck?

In your 20s you feel invincible, but remember, you’re not young forever. Use your age at your advantage. One of the financial advice for young adults, learn about your finances AND consider your retirement. Be frugal with your cash and practice this 6 financial habits.

We know we have to budget. There are even apps available now to track down our finances and for sure you already read articles on the importance of having a budget. However, very few stick to that budget or make any budget at all.

It’s time to stop that thinking..sige lang may pera pa naman ako, sige lang may sweldo naman ako..and start thinking were your money goes and the savings you should allocate. It means, if you only have Php300 budget a week for coffee, you’ll have to think if that would be for a Starbucks run or maybe you can make your own? The Dalgona coffee craze should have taught you a thing or two in making your own caffeine fix.

The point of having a budget is to know where your money goes. Knowing your spending habits and assessing which are your biggest expenses will help you discover which you can cut down for your savings or to pay down your debts (more on this on #4)

Document all your spending. I’m using Expense Calendar app to track down my daily expenses, including the money that goes in. At the start, you have to keep your receipts and enter that daily expenses for you to know where your money goes. This activity will help make you realize the spur of the moment purchases that should not be done and make you rethink buying on an impulse.

So we usually spend and only save the remaining money. If there is any left at all! ohhh ohh…You have to change that.

Start living within the 90-80% of your salary and putting immediately 10-20% of it to your saving. Deduct that money at the start and put it in your savings account. Yes, you have to learn to live off that money. Believe it or not, successful people did not get what they have right now by spending all of their paycheck. Spend your income modestly. If you have an extra source of income, the better.

What are your financial goals? Sit down and meditate on it. At what age would you like to achieve it? Write it down and figure out how to make that real.

Example, if you are planning to open up a business, stop daydreaming about it. Make a game plan. Do your research how much initial capital will be needed. Calculate how much you will need to save up per month. Your dream can be a reality if you take the right planning and saving up.

This is the same with paying off that credit card debt or working on your dream house. You need to be serious, write it down and have a plan.

Many of us are complacent with out debts. instead of saving, mas naging habit na natin ang pagbabayad ng utang. Or nag-uutang para ibayad din sa unang utang. We even view debt as normal. But the truth is, we do not have to live our whole life paying off our debts. Assess how much debt you have and create a budget that helps you avoid getting more debts.

Write down all of your debts- from the smallest to biggest amount. Pay the minimum payment for all of your debts, except for the smallest amount. For the smallest amount (it is you who will determine ano yung ‘small’ para sa iyo), pay it in full soonest. Get that small debt paid off and move on to the next debt. Believe me, you will have more breathing room and peace of mind, as you have more money freed for your financial goals.

Ahhh ilang lupa at bahay na ba ang naisangla kasi walang emergency fund? Or yung sasakyan na hinuhulug-hulugan pa na nabawi dahil wala ng pambayad kasi nagkasakit ka?

An emergency fund is very important for your finances. If you do not have an emergency fund, you will end up using your savings or credit card for health emergency.

Build an emergency fund say of Php 50,000. That is the minimum amount you have in case one of you get into accident or hospitalized especially if you do not have any medical insurance. Put a part of your salary every month to reach that goal. Some financial advisors say your emergency fund should be worth to 3-6 months of your living expenses. That would be the ideal, and this will also depend on your current financial situation. The goal here is to protect your savings in cases of emergency.

If you are working already, you have a mandatory SSS/GSIS contribution that will serve as your pension later on your retirement. Not much of us are thinking of retirement, so we stay with the minimum contribution on these government’s social insurance system. But you know if you ask the retired personnel now who gets Php 4,000 a month (from the minimum contribution), you know that will not be enough for medicines! So envision a future where you can enjoy your retirement.

That is why you need to have a financial advisor to discuss with you your goals and your current situation and investment options you can have. If you are considering variable life insurance (an insurance with savings component), your quarterly payment will be lower if you start early.

Do you feel overwhelmed with all of these? Don’t be.

Start with what you can. For now, just immediately…

  • Assess your monthly expenses.
  • Pay off your debts.
  • And stay healthy!

Your healthy mind and body is still your biggest investment.

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