Time to put your big girl pants on.
It’s a new year and if there’s a time to be adopting new habits, it’s now. Channel that new year, new me energy into taking your finances more seriously. It’s time to take a good hard look at how you spend your money and decide whether or not you’re happy with it or if you need a total reboot. Because, really, it’s a way to take care of yourself.
It’s okay if you haven’t figured everything out. Exploring your finances can be intimidating but even small adjustments can make a big difference. The important thing is to start. To help you out, we’ve recruited Corporate Planning Officer, Abbygayle Estrella, to share some pro tips on how you can start this year with a better financial plan.
- Create a “cashflow” to know where your money is going.
It might seem like a lot of work logging in all of your financial activities every day but once you get the hang of it, it’ll feel less of a chore and more like a fun activity. Plus, Abby says that you don’t have to make it overly complicated. Just a simple one will do. “The cashflow doesn’t have to be complicated. You can start by listing your inflows (i.e., income or salary) and outflows (i.e., savings, investments, expenses on utilities, recreation, etc.).”
- Set a portion of your salary to your savings.
Saving for a rainy day may not be on top of your priorities, given that some things may be more urgent, but setting aside even just a small sum of money every month can add up to a sizable amount in the future. You can also try creating a separate bank account to make sure you don’t spend it. “Save first. You can open another bank account where you can make transfers for your savings. If you have extra money (after spending for expenses), you can start making investments through UITFs, bonds or stocks.”
- Classify your expenses.
In relation to the first item on this list, Abby adds that you can categorize everything to give you a clearer overview of your spendings. “Not all spending should make you feel guilty. There are those that you need at a certain moment, and those that you can do without. Categorizing your expenses will enable you to determine which you can cut out and/or stop spending on.”
- Use your credit card wisely.
A credit card is also something you can look into if you think you’re responsible enough to own one. But make sure that you understand both the pros and cons of having it because it’s definitely something that you shouldn’t take lightly. “It’s tempting to apply for credit cards, especially if you are sold on the freebies, perks, and points. But remember that a credit card is just a physical manifestation of a loan and you can pay the principal without being charged with interest if you pay on time. An additional tip is you can delay payment by another month when you use your credit card right after its cut-off date.”
- Go digital.
And lastly, handling your finances is definitely challenging, but processing and documenting it shouldn’t be. Traditional banking is, of course, an option but given the circumstances we’re in right now and just how the times have changed in general, familiarizing yourself with the new way of banking will definitely play to your advantage. “Digital banking is the future of finance. It is convenient and hassle-free banking. It will help younger individuals especially in managing their finances better.”
Written by Chin Ann Obiedo