ONCE again, we will be welcoming the New Year with hope and enthusiasm. After all, the beginning of the year is an exciting time to set goals and make plans. We can pursue what dreams we might have left off the previous year, or perhaps start building something fresh and entirely different goal. Whatever these resolutions are, they should be sensible, specific and absolutely doable. It would also be best if it includes financial resolutions that would eventually lead you to the kind of life you dream of.
If you’re excited to get started with your new year’s resolution, then here’s Philippine Business School’s steps for a brighter 2019. If you have you have gone through these milestones before, you can still upgrade your game plan and take it to the next level.
Track expenses daily
It really is important to keep track of how you are spending your money. It is the first step to understanding how you are managing your money, and to taking control of your finances. There are a number of free apps like Cost Track or Expenses OK or you may simply put it all in an excel spreadsheet every day. It does not need to take very much time each day, but if you consistently track your expenses, you will be able to get out of debt and make the necessary changes to finances. This will allow you to begin to build wealth and go after the things that you want out of life.
Reduce or pay off debt
If debt has been a constant problem for you, make 2019 the year that you tackle it head on. When you are in debt, the potential to grow your finances is held hostage. No matter how much you save, the interest from your bad debt will just keep piling up and cancel out what you managed to keep. So lessen that debt until it’s completely off your financial plan. The first step is to figure out the total debt you have and the type of interest rates on your debt. After you have figured out your interest rates, look for ways to consolidate your debt or lower your interest rates either through 0% balance transfer credit options. Once you have all of the debt and interest rates set, then pick the best repayment strategy for you.
Save 15% of your gross income
Most people say they want to save more, but they don’t know how much they should save of where they should save. A savings goal starting with 15% of your gross monthly income would go a long way. One of the best way to stay successful in achieving this goal is to set up an automatic transfer from your salary account to your savings account for each month. If you need money to pay your bills, you can always transfer it back, but challenge yourself to live off of what’s left after your automatic transfer happen. It’s a sneaky and compelling way to save.
Go on a “Cash Diet”
There is neurological research that has proven that when we swipe debit and credit cards, we literally shut our brains down and we don’t process what’s happening. When you use cash, you are forced to keep your brain engaged whether it’s counting the money to pay it out or realizing that you’re about to run out of it and have to change your plans. Cash diets are great ways to keep your spending under control and increase your money mindfulness. We’re more attuned to the value of 1000 pesos or 500 Dirhams than when paying with plastic.
Use the “Envelope System” budgeting
With the envelope system you use cash for different categories of your budget, and you keep that cash tucked away in envelopes. You can see exactly how much money you have left in a budget category just by taking a quick peek in your envelope. However, it can be very tempting to shuffle cash from one category to fund another. Don’t cheat on your envelope, be careful not to borrow from the other envelopes. Remember, the whole purpose of the envelope system is to control your spending and help you stick to your budget.
Set up the emergency fund that has to be worth 6x one’s monthly salary
Even though its name sounds urgent, your emergency fund is not about spending it as fast as you have saved up for it. If you find yourself between jobs or hit by sudden ailment, your emergency fund must be able to cover such expenses.
Invest for long-term goals
Most Filipinos put all their money in savings accounts. While a savings account is useful for safety and liquidity purposes, investing is necessary to make money work harder for you. Think about your long term goals and how much money you would need to fulfill them. Then find an investment product that can beat inflation and provide you with a return on your investment that is higher than the inflation rate and most importantly grow over time so that you can accumulate the funds you need by the time you need it. There are target-date funds available that can help you get your financial goals on time and on target.
Stick to your resolutions by tracking your progress
Success breeds success, feeling encouraged by progress would help you to stick with your plan. When you could see the bottom line impact of you actions, you will felt empowered and motivated to keep going. You will be surprised at how much savings you have accumulated in no time.
Invest on yourself
Investing in yourself is one of the best return on investments you can have. Whether it’s investing in learning a new skill, developing yourself personally or professionally, tapping into your creativity or finding a mentor, you need to give to yourself first before you can give to others.
We are inviting all global Filipinos to join in the Philippine Business School’s LIFE Masterclass where we help you expand your horizon on the 4 critical areas of welfare and prosperity: Leadership Investment Finance Entrepreneurship (LIFE). The program provides a unique opportunity to bring your leadership skills to the next level; gives a solid understanding of today’s investment landscape, help you learn how to make better financial decisions to increase the value of your company in the marketplace or manage your personal finances effectively and equip you with knowledge on the global business trends to ignite your career or passion in business.
Allow us to thank you, our dear readers and students, for your most precious resource – time. We wish you a productive, prosperous and healthy new year!
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