It can be hard to navigate all the ins and outs of household finances on your own. That’s why we asked people for the best advice they’ve ever received about spending more wisely at home. Here’s what they had to say:
1. Live Within Your Means
It may sound like common sense, but a lot of Filipinos still struggle to stick to this mantra. No matter how much you make, you’ll never have anything left to save if you always spend more than you earn.
If you’re living paycheck to paycheck, take a step back to evaluate your financial situation. As a rule of thumb, it’s best to live on at least fifteen percent less than what you earn each month.
To hit this spending goal, check if there are any recurring purchases that you can do without. For example, you may want to cancel a monthly streaming subscription or cut back on fancy dinners out.
2. Create a Budget and Stick to It
Some people find the idea of budgeting to be too intimidating to try. But at its core, it’s simply the process of creating a plan for how to spend your money. Most experts suggest dividing your income into three categories: needs (50 percent), wants (30 percent), and savings (20 percent).
With a budget in hand, you’ll no longer have to wonder about whether you can afford something or not. However, it isn’t enough to just come up with a plan and leave it at that. To make it work, you have to do everything you can to stick to it, no matter what.
3. Be Mindful of What You Buy
Have you ever bought something on a whim only to find out that you didn’t really like or need it after all? That’s called impulse buying, the act of purchasing something without planning for it in advance. And if you aren’t able to keep your spending in check, it can really do a number on your budget!
One way to curb your spending is to delay gratification. If you’re tempted to buy something, wait at least thirty days before making a decision. This will give you enough time to think about whether you really want or need the item in the first place.
4. Build an Emergency Fund
Financial surprises always happen when you least expect them. Whether it’s a broken car, a medical emergency, or even the loss of a job, a single emergency could wipe out your savings in an instant. But if you have a liquid pool of money set aside, you’ll be able to cover your expenses while recovering from an unexpected blow to your finances.
That’s why it’s important to start building an emergency fund as soon as you can.
Generally, it’s a good idea to save up at least three to six months’ worth of living expenses, in a bank account that’s separate from your daily-use savings account. You want to keep it separate for a reason: you must not use this money for anything that isn’t an actual emergency!
It’s never too late to get your spending in check. Just follow these tips and you’ll start hitting your financial goals in no time.