The price of adulting or why you need to check your finances now
THESE days, nothing makes people feel more empowered than being in good financial health. The irony is keeping one’s finances in check can be pretty tough in a consumerist environment. From gadgets to clothes to investments, so many things are trying to siphon whatever cash or assets you may have painstakingly accummulated over the years.
If you’re employed, the coming weeks could mean a season for bonuses. That’s the good news. The somewhat bad news is — you guessed it — it’s the season for splurging.
Now if that idea sends shivers down your spine, like what the blast of air from the mall’s inviting interiors does the moment you step in, then it’s time to step back and take a hard look at what to do with your finances, or better yet, how to manage your money.
Literacy is key
A study by financial company Standard & Poor’s last year revealed that one out of four Filipinos has poor understanding of basic financial concepts, which puts the Philippines among the 30 least financially literate countries in the world.
One is considered financially illiterate if he doesn’t understand key concepts such as credit, interest, or inflation, as well as the need to save and invest. Fortunately, anyone who has internet access can look these concepts up and do a bit of research. As an adult, you have no excuse not to learn.
Adulting is inevitable
The thing is some individuals, even those in their 30s or 40s, dread being adults. Like it or not, you will need to do some adulting and more of it as you grow older. If you already have bills to pay — the primary sign of adulting — there will be more of it in the coming years. No one can run away from adulting, not from your bills, not from the responsibility of settling them.
As terrifying as it may sound, adulting can be managed, and you can start with managing your bills. The rest will follow.
Time to check your finances
The first step to managing your finances is managing your bills and other expenses. And the first step to managing your expenses is knowing how much you earn versus how much you’re spending. That sounds like common sense, and yet it’s one of the pitfalls of those who fall into money troubles.
The reality is few people really bother to check if they earn more than what they spend, and when they do, many are aghast that they spend more than they earn. Finding a remedy to this problem won’t be easy, but addressing the problem early can do wonders. And this brings us to the next point…
Live within your means
If you figure that you’re in the red or that you’ve barely any savings or investments, then you have the following options to increase income: commit to spending cuts, find other sources of income, or both.
A few tough questions need to be asked first. Are you spending too much on non-essentials? Where and how can you cut expenses, such as transport and utility bills? Would if hurt so much if you spent less on clothes, dining out or travel?
The answers might be hard to swallow, but think of all the savings and dividends you’d get from cutting costs and making extra money. A little sacrifice will eventually go a long way.
Know the good from the bad
Chances are, you’ll soon need to make a loan, whether it’s for a car, a house, or a business. Any of these loans are fine as long as these are put to good use and you diligently pay the monthly amortization.
Interestingly, one of the best ways to check your financial health is by applying for a loan, since banks, to find out if you if you can pay or not, will examine your finances. What they find may surprise you.
And then there’s the credit card: it can be friend or foe. To be on the safe side, here’s one rule to follow: pay the balance in full on or before every statement date. Again, that also means minding how often you swipe and for what. By diligently paying the right amount on time, you won’t get charged wasteful interest rates and fees. Otherwise, just shun the plastic and spare yourself of more financial headaches.