Good Money Habits to Practice
Wed Nov 02 2022
In these trying times, financial stability remains to be a challenging goal to achieve. Headline inflation in the Philippines eased to 6.3 percent in August 2022, after five consecutive months of acceleration. With this month’s inflation, the Philippine’s average inflation from January to August 2022 stood at 4.9 percent. In August 2021, inflation rate was posted at 4.4 percent (PSA, 2022.) Because of this, it is important to establish good money habits in one’s life especially coming into 2023. Here are a few money saving habits to practice that can help achieve your goal of financial stability:
1. Sticking to a monthly budget Setting a monthly budget is just one of the most basic rules in saving money. Sometimes, going back to the basics can be the most helpful and effective.
If you want to save money, one of the best things you can do is to create a monthly budget. This will help you track your spending and ensure that you are not spending more than you can afford. It is also a good idea to set aside some money each month for savings. This will help you build up your savings over time.
For example, if you are working, one popular guide to budgeting is the 50/30/20 guide that has been shared widely online. This rule recommends dividing your income in this way: 50% - Spend for your needs. These include basic necessities like food, housing, utilities, health care (insurance, treatments), or car payments. 30% - Spend for your wants. These would include recreation (movies, eating out, etc.), hobbies, gadgets, cable TV, etc. 20% - Set aside for savings. You should also set this aside to pay for any outstanding debts.
For students, setting aside a fixed amount coming from your allowance every month can help in saving money. Just make sure you won’t get your hand on it in order to save it!
Once you have a clear picture of your finances, you can start making changes to your habit. This could include cutting back on unnecessary expenses, or finding ways to boost your income. It takes discipline and effort to stick to a budget, but it's worth it if you want to reach your financial goals.
2. Don’t live beyond your means One way to save money is to buy only what you can afford. Whether it's on big purchases or everyday items, only buying what you can afford and sticking to a monthly budget are both key ways to help keep your finances in order. By being mindful of your spending, you can make sure that your money goes where you need it most.
Don't live beyond your means. It's a simple piece of advice, but it's one that can be difficult to follow. After all, it's easy to be tempted by the things we can't afford. But living beyond our means can lead to financial ruin. It's important to be mindful of our spending and to only purchase what we can afford. Otherwise, we may end up in debt or worse. So next time you're tempted to buy something you can't afford, remember this advice and refrain from doing so. You'll be glad you did.
3. Saving money on both small and big things Saving money on big things like houses and cars is important, but don't forget to save on the small things, too. Those little expenses can really add up over time! There are plenty of easy ways to cut back on spending, like making your coffee at home instead of buying it every day, or bringing your lunch to work instead of eating out. Just a few simple changes can make a big difference in your bank balance. So next time you're about to make a purchase, ask yourself if you really need it, or if you could save by doing without.
Look for ways to cut costs on both big and small purchases. Another way is to set aside money each month into a savings account. This can help you reach your financial goals quicker. No matter what method you choose, saving money is a great way to improve your financial situation.
4. Don't touch your money! Saving money doesn't only mean to save a specific amount for a specific amount of time. For example, the concept of money saving doesn't stop when you save money for a concert within the year. Saving is an investment.
Don't touch your emergency funds unless you absolutely have to. These funds are meant to be used in case of unforeseen circumstances, such as a job loss or unexpected medical bills. If you dip into your emergency fund too frequently, you may not have enough money saved up when you really need it. So, only use these funds when it is truly an emergency.
Investing in our savings account is something most people overlook and take for granted. Sometimes, we don't appreciate the value in even the smallest amount of savings. No matter how small you are able to add into your account, you'll be surprised at how much you've saved in 5 years time!
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