spending

May

2021

Common Sense Money Advice That People Don’t Follow

Reading Time: 3 minutes

Money has always been a top source of stress for most people. If not addressed, too much worrying about money can lead to serious physical and emotional problems. It can even result in a breakdown in relationships. How to solve money problems then? There are tons of financial advice that people probably already heard or read about. In fact, most of these advices are simply common sense yet one the greatest mysteries about life is that no one really follows them. It sounds so easy to do but for most people, it is very difficult to follow. Here are some of the common sense money advice that people don’t follow:

1. Spend Less Than You Earn

This rule is so simple. Just live within your means. Obviously, if you spend more than you earn, that will only spell debt. Even a grade schooler knows that if you subtract more than you add, you will end up with a negative number. You need to have financial discipline; otherwise, it will be very hard to create wealth. Avoid keeping up with the Joneses.

There are many ways to reduce your monthly expenses. It helps to have a budget. The money jar budgeting system is a good money management technique because it not only helps keep your spending in place, it also helps slowly build your wealth. If spending less is really not an option, then you need to look for ways to earn more money.

2. Understand How Credit Cards Function

How many people are buried in consumer debt simply because they do not understand how credit cards function?

Credit cards are very useful. With credit cards, you don’t always need to have cash. You can purchase anything without having to worry of paying them immediately. However, if you don’t have a basic understanding of how it works, credit cards can turn into your worst nightmare. Always remember that you are not using your own money when you purchase items using your credit card but rather you are borrowing the bank’s money.

Credit card companies use the power of compound interest to their advantage. Compound interest is a very powerful mathematical concept that you can use to increase your wealth. Unfortunately, it is a two-edged sword. If used against you, it is a sure way to financial bankruptcy. That is why understanding how credit card functions is a necessity if you have a credit card.

Unless you know how to manage your credit cards, it is better for you to refrain from using your credit card altogether. Use credit cards only in emergencies. Buying because it is on sale even though you don’t really need it is not a valid definition of an emergency.

3. Automate your Savings

One of the lessons of this pandemic is the importance of having a savings account. Life is unpredictable. Saving money can ensure financial stability in case of emergency.

Pay-yourself-first has always been the initial advice that wealth managers will tell you as the first step towards building your wealth. Unfortunately, most people would rather spend or pay everyone else first before themselves. Savings always comes last. Usually, people save using whatever it is that is left (if there is any).

The best strategy to avoid this scenario is to automate your savings. By regularly setting aside a fix amount through automatic savings, you will soon be able to build up your emergency fund. One of the wealth rules of the richest man from Babylon is to always save 10% of income.

4. Seek Help from Qualified Persons

If your financial woes are already big enough for you to handle on your own, then it is time to seek help from other people. If your problems are about money, ask a professional in financial planning to help you. If you cannot afford your own financial planner, then ask a friend who is an expert in handling money.Don’t just ask any friend.

The problem with most people is that they normally seek advice from friends or relatives who are close to them. However, they fail to consider if these people are also having financial problems of their own too.

Think of it this way, if you are in school and you are having problems with your Math subject, obviously, you will not ask your Filipino or Science teacher to help you. Instead, you will seek the help of your Math teacher or a fellow student who is good in Math because they are the ones who can help you.

Remember to always ask the correct persons for advice.

So, If you want to have a better financial life, it is best to follow the common sense money advice that people don’t follow.

First published in Pinoy Smart Living on 03.26.2019.

Photo by Monstera from Pexels

Apr

2021

Money Leaks That Can Sink Your Budget

Reading Time: 3 minutes

There are little money leaks that can sink your monthly budget. Most of them are unnoticeable unless you track your spending. If you’re already budgeting but still end up overspending, then check out for these money leaks in your spending habits.

1. Transaction Fees

Late payment fees and other financial transaction fees can leak money out of your budget without you noticing it. These are small amounts that you don’t think will affect your budget that much. Once they accumulate, that’s when you realize they already ate a huge chunk out of your monthly budget. This applies to credit card fees, insurance fees, loan fees and online money transfer fees. Check your monthly statements so you can plan ahead.

TIP: Make it a habit to always check your transaction receipts for any hidden fees or charges. Also, pay your bills on time to avoid incurring late payment fees and other penalty charges.

2. Impulse Buys

Little purchases that you make several times a month won’t be little once added up. Especially if these items are just trendy for a time or they’re for one use only. That one cup of coffee a day can eat a big chunk of your budget. This is one of the little money leaks that can sink your budget. It can be avoided if you plan and list down what you’re actually going to buy in a supermarket, for example. The best way is to set aside a budget for it so you’re prepared for it. You can set aside money for fun that you can spend however you want.

TIP: Make a wish list of big and small items that you need and want to buy and set aside money for them. Don’t buy it if it’s not on your list and it’s not covered in your budget yet.

3. Discount Buys

Just like impulse buys, discount purchases are also a common cause of overspending. Sale items are often packaged attractively and the festive spirit of the “sale day” event makes it even more enticing. Making transactions online only makes things easier to splurge. Not all discounts are great buys though. If you’re buying an item only because it’s on sale or because you have a coupon, then you might be wasting your money.

TIP: Having a wish list and the budget to buy the item on that list is one way to avoid spending on discounted items that you don’t really need. If you get an item on your wish list at a discounted price, then consider it as savings.

4. Wasting Products

Sometimes we buy in bulk because of the huge discount. Then we find out that we’re not really fond of the product so we end up giving them away or disposing of them in the trash. Or they expire before we can use them so they end up in the trash. This is why a list of what you need to buy is important. It is also important to list down exactly how much you need so you maximize your use of the items. Subscriptions to services that you don’t actually use regularly is also a leak in your budget. So review your subscriptions and see which ones you don’t need or you can downgrade.

TIP: Preparation is key to ensure that you use up perishable goods before they expire. Meal prepping is one way to ensure that you don’t end up throwing away produce. It also allows you to control what you eat so you can choose to eat healthier meals.

Do sometimes feel that you are living beyond your means? These money leaks could be part of the problem. To ensure that you don’t fall victim to these little leaks that can sink your budget; become more aware of your spending habits. Learn how to discipline yourself so you can figure out how to spend your money wisely.

Feature Image: Original Photo by Andrea Piacquadio from Pexels.

Mar

2021

How To Reboot Your Finances

Reading Time: 3 minutes

What stage are you in in your financial life? If you are not happy with where you are right now, the good news is that you can actually reboot your finances once and for all. True, your financial woes will not disappear overnight but it will give you a chance to change your financial future. In the computer world, a reboot means the act of instantly shutting down your computer and restarting right away. The same is true with your finances. You can actually shut it down and restart right away. Don’t wait until next month, next year or when things start going well again. Do it as soon as the clock strikes zero o’clock . So, how to reboot your finances?

1.Abstain from Spending

The first thing to do is halt all spending at once. Unless it is a necessity, stop all unnecessary spending for now. A cup of coffee, a pack of cigarettes or a can of soda may be little expenses but it is actually these kinds of small expenses that is harming your budget. While you are at it, refrain also from using your credit card. Until you have fully understood how credit cards work, it is best to put your card use on hiatus.

Beware of little expenses, a small leak will sink a great ship.
– Benjamin Franklin

2. Track your Spending

The next thing to do is to track your expenses. Why do you need to track your expenses? The main reason why you should write down all your spending is for you to be able to identify where your money is going. Record everything that is going out of your pocket even small ones like a piece of candy, tips or parking fees. Don’t miss anything. Only through knowing will you be able to control your finances and eliminate bad spending habits.

3. Set Financial Goals

Now that you know where you are right now in your finances, the next thing to do is to define where you want to go from here. Thus, it is important to set your financial goals . Identifying your short-term, mid-term and long-term goals are crucial in your journey towards financial freedom. Your goals will help you make better financial decisions in the present. For example, you will not do an impulse buy on a new handbag that you see on the display window of a mall when you have an upcoming spring trip to Japan or New York for example.

4. Follow a Budget Plan

A budget is a financial plan on how you plan to spend your money. Since it allows you to plan your expenditures, following a budget will help you define your limits as far as spending is concerned. A budget will help you know if you can afford something or not. T. Harv Eker, best-selling author of Secrets of the Millionaire Mind introduced the money jar budgeting system. It is a simple money management system that will not only solve your finances but you can actually lead you to wealth accumulation.

A budget is telling your money where to go instead of wondering where it went.
– Dave Ramsey

5. Pay-off Bad Debts

Once you have your budget plan in place, you must first focus on paying off your bad debts. You see, not all debts are created equal. There is such a thing as good debts and bad debts. Good debts are money that you owe that can help you build your wealth over time. A housing loan is considered good debt. Money that you loan to use as capital for your business is also considered good debt. Bad debts on the other hand, drags you down. Examples of bad debts are consumer and credit card debts. Thus, it is important to prioritize paying off bad debts first.

6. Start Investing

Saving money alone is never enough. In order to grow your wealth, you need to learn to invest. As opposed to working for money, investing allows money to work for you. There are so many investment vehicles to choose from depending on your risk tolerance. You can invest in bonds, funds, stocks or stock options. You can also invest in real estate, jewelries, antiques, art pieces, even luxury watches and bags.

7. Raise Your Financial IQ

And last but not the least is you should make an effort to raise your financial intelligence. Financial literacy equips you with the knowledge and skills that you need to be able to manage money effectively. There are many things that you wish you learned in school. Unfortunately, most schools do not teach money management. Thus, it is up to you to fill the gap.

What are you waiting for? Reboot your finances now. Good luck!

Feature Image by Amit Karkare from Pixabay

Dec

2020

Avoid Overspending This Holiday Season

Reading Time: 2 minutes

It’s the Christmas season once again. Christmas is a big cultural and religious event as Christians all over the world celebrate the birth of Jesus. It is about celebrating love and joy with families, friends and loved ones. But, it has also become a huge commercial phenomenon as people spend so much money on gifts, parties and new things. Although Christmas celebrations and parties may be different this year compared to the previous years because of the new normal, it is still easy to fall prey to consumerism. To avoid starting the new year with piles of debt, here are a few tips on how to avoid overspending this holiday season.

1. Set up a Christmas budget and stick to it.

First of all, you should have created a plan even before the Christmas season even began. Plan on how much you can afford to spend on gifts, food, events, travel, decorations, clothing, etc. Once you have it, by all means stick to it. Don’t be tempted to buy a more expensive gift for your loved one just because it’s Christmas. If it is way above your budget, it simply means you cannot afford it.

2. Track your spending.

The easiest way to make sure you are spending within your budget is to track your expenses. Write down everything you are spending on a daily basis. Just record all the items you have spent and compare them to your budget. Do this on a daily basis. It will take some time and effort on your part but it will serve as a reminder to help you stay on track.

3. Be creative with your gift giving.

You don’t need to spend a fortune for your gifts. Be creative. There are so many Christmas gift ideas for less. You can give them something handmade or cook for them. It is kind of cliche but it’s the thought that counts. What is important is that you remember them during this holiday season.

4. Look for Deals.

Most stores over holidays deals this Christmas season. Buy these items because they are normally offered on discounted rates.

5. Pay cash.

Never ever use your credit card if you think you won’t be able to pay the full amount due in January. Instead, always pay cash so as to not get carried away with your purchases. Don’t be a victim of paying more than your actual purchase by paying fees and interests in your credit card.

6. Don’t overspend on yourself.

Once you are done with your Christmas shopping, go home. Don’t expose yourself to temptation by lingering in the store. The displays are there to lure you into buying them. By going home, you are preventing yourself from buying unnecessary things.

7. Entertain for less.

If you plan on hosting a Christmas party, skip those costly dinner parties by telling your guests to do potluck. Don’t put the burden of preparing for all the food yourself. And besides, until this pandemic is over; it is still not advisable to hold gatherings most especially if it is done indoors.

8. Get better deals after Christmas.

If you can postpone giving yourself or even other people a gift after Christmas, then by all means do so. Stores normally start selling items on discounts the day after Christmas because they need to clear their inventory for new ones for the coming year. By shopping after the holidays, you will get larger discounts for the items that you want.

First Published in Pinoy Smart Living on 12.04.2018

Feature Image by StockSnap from Pixabay

Sep

2020

How to Get Out of Credit Card Debt

Reading Time: 4 minutes

Credit cards can be a blessing and a curse. They allow you to spend for something even without cash on hand. However, if you don’t monitor your expenses well, you end up paying more than what you originally spent. If you don’t monitor your swiping sprees wisely, you could end up in credit card debt. I had seen this happen to several friends but I never thought it would happen to me. You then find yourself wondering how to get out of credit card debt.

Credit card debt is scary but it can be avoided and overcome.

I used my first credit card for a new cellphone and for the cellphone purchases of my 3 friends too. In the same month, we had lost our jobs (as we worked in the same company). I had no savings to back me up for the next months. I had to spend my last pay check to look for another job. In the meantime, my credit card debt was getting larger. My friends didn’t have the capacity to help with the payments at the time. What was I to do?

Are you are in the same situation? Are you trying to pay off more than one credit card? Here are some tips to keep you focused on overcoming your credit card debt.

Avoid creating more debt.

Needless to say, this is the first step you should take. Look at your current spending and find out where you can reduce your expenses. Avoid using your credit card for necessary expenses (e.g., food, utilities, etc.), use cash as much as possible.

Leave your credit card at home. This way, you don’t succumb to the temptation of whipping it out every time you are strapped for cash. If you just can’t help yourself, resort to some extreme measures. Some people actually freeze their credit cards, in the refrigerator, so they don’t have the convenience of taking it out.

Make sure to pay your credit cards on or before the due date. This is to avoid getting additional late payment fees added to your outstanding balance.

Be a smart and focused payer.

Educate yourself about your credit cards and pay your credit cards strategically. Talk to your credit card companies. Find out which credit card has the highest interest rate and total outstanding balance.

In general, you should pay off the credit card with the biggest balance or the biggest interest rate first. Aim to pay that credit card first as soon as possible. At the same time, you should still continue to pay for the other credit cards that you have. As soon as you’re finished with the first credit card, tackle the second one next. Repeat with the other credit cards remaining.

Some people choose to pay the credit card with the highest interest rate first. Others start with the credit card with the biggest outstanding balance first. Still others start with the credit card with the smallest outstanding balance. Choose the payment method that you are most comfortable with in your current financial situation.

Find out which credit card companies you can request payment arrangements with. Credit card companies offer payment plans too. You can pay a fixed amount every month until you pay off the full amount. This means that you don’t incur more debt from the monthly interest rate on top of your actual balance. The end goal of this payment arrangement is to eventually close your credit card account once you are fully paid. That’s one less credit card to worry about.

Close the gap with each payment.

As you pay for any of your credit cards, try to pay more than the minimum monthly amount required. Paying more than the required monthly minimum will help you reach your payment goals much faster.

If you are really on a tight budget, you don’t need to do this with each payment. Each time you have some extra cash on hand, pay off more than the minimum amount for your credit card. This means that you also avoid spending the money on something else. That’s hitting 2 birds with one stone.

Don’t close a credit card account that is not yet fully paid. If you are already thinking of doing this, stop immediately. Closing a credit card account that you have not fully paid will have harmful effects to you and your future.

Expect to be hounded with calls, letters and emails with threats of a court case. You might be able to endure it but your unpaid credit card debt may haunt your loan applications too.

Your unpaid credit card debt will reflect badly on your credit history. When you apply for a personal loan from a bank, they will take a look at your payment history. With your unpaid credit card, that’s definitely a red flag on your record. You may not be able to get a personal loan from any bank because of your unpaid credit card.

Also, when looking for employment, some companies do check their applicant’s background including their credit card history. Your shady credit card history may be standing in the way of your dream job.

Endure and learn your lessons.

One of the obvious ways for you to pay off your credit card debt faster is to create more income. You can use your talents to help other people and earn.

List down the things that you are good at. Write down the things that you love to do or would love to do. Be honest with yourself on this or seek the help of friends. Doing this can help you explore hidden talents. You may rediscover a passion that you have been putting on the back burner for a while.

Can you play an instrument or are you good at drawing? Offer to teach for a fee! Do you like to teach children? Be a tutor! Have you always wanted to share your passion for gardening with others? Now is your time to start sharing your knowledge and start earning!

There are many other ways to create income or additional income. You just need to have a clear focus on your goals. Be open-minded to new ideas and be brave enough to grab the opportunity.

Finally, don’t fret about the amount of your debt. By educating yourself and keeping your focus on your goal, you will eventually overcome it. Just don’t forget the lessons you learned along the journey so you can be a wiser spender in the future.

Updated. First published on Pinoy Smart Living on 2018.09.12.
Feature Image: Original Photo by Pixabay from Pexels.

Sep

2020

Coping with Financial Stress

Reading Time: 3 minutes

Are you overwhelmed with financial worries? Don’t dwell in that negative emotion. Instead, take a deep breath and apply these guidelines on coping with financial stress. When you follow these guidelines, you should feel less stressed and have a better perspective on how to deal with your financial situation.

1. Talk Things Through

Talk to the family about your financial worries. This is an opportunity to air out all your worries and brainstorm solutions. If you live alone, talk to a friend to get some advise or at least to receive emotional support.

Putting your worries out in the open can help you ease the mental and emotional burden. The emotional support you get from your family members and friends can also help you gain more confidence in facing your circumstances and changing it. More importantly, you gain a different perspective about the situation which will help you gain more clarity in coping with your financial stress.

2. Track Your Finances

Now that you have gained some different perspectives from other people regarding your financial worries, the next step is to crunch some numbers. Take pen and paper and take inventory of your finances.

Keep track of all your spending. Write down your basic expenses and identify what expenses you can eliminate. Try to track your daily spending as well so you can better identify your spending patterns and triggers. This way, you are more aware of how to avoid your temptations so you eliminate impulse spending.

List all your debts. From the biggest to the smallest, try to identify everyone that owe money to and how much. This should strengthen your motivation to keep your spending to the basic minimum as you are coping with financial stress.

Identify your sources of income. Now that you have a clearer perspective of your spending habits and what you truly need to spend on, it’s time to count what money you will actually have. List your sources of income and how much you earn from each. If some do not have a fixed amount, then write down your minimum expected amount. Finally, add up everything and compare your total income with your total basic expenses.

3. Plan Your Budget

Whether your income is bigger than your spending total or the other way around, setting financial goals is important. You need to make a plan for where your money will go so you can start changing your situation.

Make a budget based on your basic living expenses. Use the money jar budget system as a guide but customize the names and amounts according to your requirements. Food in your budget is one of the easiest item to lessen spending on. Make sure you stick to your budget so you can get closer to your goal of being in a better place financially.

Increase your income. Your next plan is to identify opportunities on how you can raise your income. Maybe you can increase your earnings from a current source of income or maybe you have another skill or talent from which you can earn additional income.

Keep monitoring your finances. Don’t let your planning go to waste by forgetting it some days. Be consistent in tracking your spending and making sure that you stay within budget. At the same time, work hard to increase your income and keep adjusting your budget as your income increases. Don’t increase your spending and prioritize savings and paying off debts first.

4. Stay Positive

Finally, keep a positive attitude as you make small progress daily. As long as you are consistent in making small changes, you will definitely achieve your long-term goal of getting to a place where you are financially comfortable.

To help you cope with your finances better, try to improve your financial literacy. Understanding how money works in business will also help you tweak your own personal financial strategies and goals. Read books that inspire you to take care of your finances better and to keep working on your dreams.

In the meantime, don’t beat yourself up if you make mistakes. Just do the right thing the next day. Try to do fun things that don’t cost much or cost none at all so you can keep up the positive vibes.

Feature Image: Original Photo by Pixabay from Pexels.

Aug

2020

Track Your Expenses

Reading Time: 2 minutes

Did you know that tracking your daily expenses will help you save a lot of money? Knowing where your money is going is the only way for you to take control of your finances. So to improve your financial life, you need to track your expenses.

You are not buying anything lavish. You don’t eat at upscale restaurants. You don’t have the latest gadgets. You don’t even drive a fancy car. But don’t you ever wonder why your money is still not enough?

Launch Challenge

Get a notebook and write down all the things that you will be spending for the next 30 days. You need to write down all your cash expenses, even small purchases like candies, tips and sticks of cigarettes. There are several apps available online that you can download for free to make your tracking easier.

At the end of 30 days, summarise your expenses under two major categories: Fixed and Discretionary Expenses.

Fixed Expenses – essentials or living expenses such as food, transportation, housing, education, bills and utilities and debt payments.
Discretionary Expenses – non-essentials that vary each month as entertainment, travel, restaurants, vices and other miscellaneous expenses.

Once you are finished categorizing them, you will then have an idea on your spending pattern. You will also have a brief overview on what percentage of your income goes to unnecessary expenses.

Then use this data, to create your monthly budget. If your spending is more than your earning, you need to experiment and see what items you can reduce or cut down totally from your budget. Remember, your monthly income minus expenses should always be greater than or equal to zero. The money jar budgeting system is a good budgeting guide to use.

So, what are you waiting for? Begin to track your expenses now!

Updated Version. First Published in Pinoy Smart Living on 08.21.2018

Feature Image by Michal Jarmoluk from Pixabay Images.

Jan

2020

How To Recover From Your Holiday Spending

Reading Time: 2 minutes

As you pack your Christmas decorations back in their cabinet, the money that you’ve blown away during the holidays is now finally sinking in. The mere thought of looking into your credit card account balance may even petrify you. If it’s any consolation, you are not alone in your predicament.The holiday spending hangover is ranked as the number one problem by most people at the start of a New Year according to a study made by LearnVest, an online seller of personal finance software. To put your finances in place, you need to figure out ways on how to recover from your holiday spending.

Try out these tips to get your finances back in shape after the holidays.

1. Put your plastic on hiatus.

The first thing to do is to put a stop on your credit card spending. Your bills as well as the interests will keep on piling up if you will continue using your credit card. A hiatus means to pause – pause just until you pay it in full. Use cash for your purchases instead.

2. Assess your situation.

One thing is for sure, you cannot leave your bills unopened. You will have to face them sooner or later (although later is a bad idea because once your bills become overdue you will find yourself facing unwanted late charges). Instead, gather all statements and receipts related to your holiday purchases. Sum them all up. Then arrange them from the highest to the lowest interest rates. Prioritise and settle all those that charge higher interests rates first. Take note of all payment due dates.

3. Set up a payment plan.

Once you have a figure in mind on how much you are supposed to pay off, the next thing to do is to set up a payment plan. The best option is to pay the amount in full. Although it is the best solution, it is not always viable. So instead, come up with a goal or a target date on when you want to fully pay your holiday spending. Once you have a definite goal, you need to have a smaller goal each month. Pay the maximum amount that you can on a monthly basis and calculate how long will it take you to fully pay the bills.

4. Trim your budget.

To speed up your progress, you need to limit your spending at least until all your holiday overspending has been paid off. There are various ways to reduce your monthly expenses.

Aside from trimming your expenses, this is also the best time to start using a monthly budget (if you haven’t started yet).

5. Sell items that you don’t need anymore.

The start of the year is also a good time to start cleaning your closet or your house for that matter. Get rid of items that you no longer need and sell them. The proceeds can be use to pay your holiday bills. By doing so, you not only earn extra cash but you also get to declutter your home and remove stress.

Finding out how to recovering from your holiday spending should be your first step in having a fresh start in your financial life.

First published in Pinoy Smart Living 01.01.2019
Image Credit: Gundula Vogel from Pixabay Images