Are you unable to save money every month? Even if your income is good, you always feel like there is a hole in your pocket. You may look good on the outside, but the amount in your bank passbook does not seem to increase. Sometimes you still feel insecure about your wealth. If you are like this, it means that your current financial situation is a mess. But don’t worry, as long as you master some basic financial knowledge, you can solve this problem.
After reading this article, you will be systematic and confident about your personal finances. You will understand wealth management method and how to do it. A cash flow statement format will also be provided for your reference to help you better understand the flow of your funds.
1. Clarify your monthly income.
Whether you have full-time salary income, part-time income, or passive income with dividends, you need to confirm the amount correctly. Record your monthly income and its types. Only in this way can you understand the source of income. Call it Money In list. Fill it out according to the monthly income items. Only when you know your income can you manage it and distribute it.
2 . Understand consumption expenditures.
Consumption expenditures are divided into four types:
a. Necessary expenses: For example: food expenses, insurance premiums, rent, etc., which are fixed in most cases.
b. Dream expenses: For example: buying a house, buying a car, my own business, or long-term travel expenses.
c. Wanted expenses: This type of expenditure can bring you short-term happiness. For example: mobile phones, computers, designer bags, etc.
d. Instant expenses: This type of expenditure is a very short-term impulse consumption. For example: coffee, milk tea, a drink after a meal, a beer on the weekend.
When you spend on necessary expenses and dream expenses, you are getting closer and closer to your dream. However, because these two types of expenses are too difficult, many people directly ignore them and jump to wanted expenses and Instant expenses. They seek short-term happiness, but as a result, they get farther and farther away from their dreams, and even cause life chaos, addiction or financial problems. When you understand these four types of expenses, your life will so change.
3. Plan your budget.
When you receive your salary, save 20% of your salary first and transfer it to savings or investments, and then spend the rest.
4. Reduce expenses.
Most people spend most of their money on rent, mortgage, and transportation. If your rent exceeds 50% of your salary, it is recommended that you move to a low-rent area or move to a smaller house, or find someone to share the house with. In addition, you can also review your daily expenses. , find unreasonable expenses and improve them:
a. Reduce the number of meals with friends at high-end restaurants: restaurants that cost more than the usual three meals are entertainment and not normal meals.
b. Control abnormal shopping consumption (shopping mall consumption): It is also an expense that needs to be controlled. Avoid losing balance in income and expenditure.
c. Cancel subscriptions to online movies: For example: Netflix
d. Reduce the number of food delivery: For example: Foodpanda or Uber Eats
e. Reduce the number of expensive activities: For example: diving
5. Increase income
a. Ask for a salary increase
b. Part-time job
6. Investment
Investment is to use money as a tool to help you make money. For example: stocks, dividend-paying stocks, ETFs (index funds) to earn dividends and passive income. Of course, investing also requires you to spend time studying and researching so as not to lose money. Learn investment as early as possible and let the compound interest effect snowball, so that you will not end up with empty assets and let inflation dilute your wealth.
7. Realize your skills
If you have a certain expertise, With your talent, knowledge, and experience, you can sell your knowledge or services online and expand your influence. For example: writing blogs, operating Youtube self-media, or producing and selling your own online courses.
8. Set financial goals
a. Short-term financial goals: Most of them are within one year, such as buying a car, buying a mobile phone, traveling...
b. Long-term financial goals: 5-10 year plans, such as retirement plans, for children College tuition...
9. Emergency funds
Emergency funds are an indicator of whether a person has healthy finances. Generally speaking, 3 to 6 months of reserves are needed to cope with unexpected needs. For example: mobile phone failure, car breakdown, or temporary medical expenses... You can avoid paying high interest rates caused by credit loans and credit card swipes.
10. Automated fixed expenditures
For example: setting up automatic payments in the bank account APP: rent, mortgage, car loan, credit, credit card bills, etc. It is a very convenient tool to prevent yourself from temporarily forgetting to pay and incurring additional interest.
11. Insurance
It is required at least life insurance and medical insurance. If your family has medical needs, it is best to participate in medical insurance and you can apply for medical benefits when necessary. Medical insurance is something you must do before investing.
12. Regularly check your financial situation.
Personal finance is like a regular physical examination. It also needs to be checked frequently. Daily activities of making money, saving and investing must be balanced with liabilities and assets.
13. Invest in yourself.
Invest in yourself It is the least likely way to lose money. Improving your skills and paying some fees for professional projects that you like and are interested in will also be helpful for long-term assets. For example: reading, watching knowledge-based videos, copywriting, programming, manage social media communities, online marketing, and even investing, etc.
hash tags: #1 million pesos, #passive income, #investment, #budget, #expenses, #multiple income, #financial freedom, #money management
Philippine Peso Exchange Rate
Comments powered by CComment