Money is the root of all evil, so goes a saying. But that’s not what the Holy Bible says; it’s the love of money. First Timothy 6:10 states: “For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.”
“Money is a great servant,” Sir Francis Bacon once said, “but a bad master.” Alan W. Watts offers this explanation: “If you say that getting the money is the most important thing, you’ll spend your life completely wasting your time. You’ll be doing things you don’t like doing in order to go on living, that is to go on doing thing you don’t like doing, which is stupid.”
Albert Camus has the same idea. “A man wants to earn money in order to be happy, and his whole effort and the best of a life are devoted to the earning of that money,” he says. “Happiness is forgotten; the means are taken for the end.”
Money may not be everything, “but it ranks right up there with oxygen,” to quote the words of Rita Davenport. That seems to sum up all these talks.
When money talks, everyone listen. Who doesn’t heard of American billionaire Warren Buffet? He started with US$100 and turned it into US$30 billion. That means that it isn’t about the money you have, it’s about the knowledge you have. In other words, there are no real barriers to you getting rich if you’re willing to work hard and learn.
This year 2018, what should you do to make your finances become much better compared to last year or other previous years? The Bank of Philippine Islands (BPI) shares some 18 financial resolutions you can make this year. Let’s discuss them one by one:
- First and foremost, you need to know what exactly you want to make this year. “Have a clear financial goal for the year by outlining your long-term and short-term financial goals, whether you want to buy life or health insurance or build your retirement fund,” BPI suggests.
- It’s the beginning of the year and so if you have standing debts, pay them off for a clean slate. “Whether it’s credit card debt or money you owe a friend or family member, paying them off is something you should prioritize,” BPI says.
- You will get there if in the first place you don’t know where to go. The same is true with your financial goals; you have to create a financial plan. “A financial plan involves creating strategies to help you make wise financial decisions that will get you closer to achieving your financial goals,” the bank says.
- Do you know the difference between wants and needs? Learn to identify the difference then. “Distinguishing wants from needs will help you spend less and find contentment with what you have,” it points out.
- Whether needs or wants, you have to be realistic – and stick to it no matter what. “This will help you spend less and reduce impulse buying,” the bank explains. “When you create a budget that’s too strict for comfort, you end up just putting it away and spending as much as you want.”
- If you want to succeed with your financial plan, try to follow the 50/20/30 rule. “Spend no more than 50% of your income on your necessities and use no more than 30% on your leisure activities and wants. Put the rest (at least 20%) on your savings and investments,” it says.
- Where does my money go, you may wonder. The best thing you can do is to track all your expenses. “Create a list of all your expenses including utilities, housing, transportation, food and other necessities, and make a separate list of the leisure activities you spend for each month,” the bank suggests. “This will help you determine how much you’re really spending on a daily, monthly, and yearly basis.”
- Reduce and eliminate expenses to save more for investments. “Sometimes, we end up spending our extra cash on unnecessary expenses such as new clothes, shoes, or gadgets,” the bank says. “Evaluate your spending habits to determine how to cut your monthly expenses and save more for your investments.”
- There are bills to be paid? Don’t avoid paying them. Whether you like it or not you have to pay them anyway. “Set automatic monthly payments,” the bank says. “It can save you the trouble of physically going to payment centers and avoid being penalized for a late fee.”
- If you happen to have a credit card debt with the highest interest rate, pay it first. “This will let you save money in the long run,” the bank says. “If you can’t pay in full yet, be sure to pay the minimum to keep a good credit score.”
- Ever heard of emergency fund? If you haven’t yet, try to make one. “Set aside a separate fund that will cover you during times of emergencies and unforeseen crises,” the banks says. “This will prevent you from dipping into your retirement fund and liquidating your assets.”
- To make your emergency fund viable, add one month of expenses to the said fund. “The ideal amount in your emergency fund should cover at least six times your monthly expenses,” the bank suggests. “Whenever you have extra, take the opportunity to build one more month of additional expenses.”
- Health is wealth, so they say. You have to focus as well on your wellness. “When you’re physically, mentally and emotionally healthy, you can better focus on your life goals, instead of being burdened by illnesses,” the banks says. “So, start practicing a fit and healthy lifestyle in 2018.”
- You don’t know what is ahead of your life so you have to protect your future. “Don’t let yourself financial ruin should unforeseen tragedies or disasters such as accidents, serious illnesses, job loss, or natural disasters happen,” the banks says. “Consider life or health insurance while you’re young and healthy.”
- Plan your investment strategies to build wealth. “Do your research and look for smart investment opportunities that fit your specific short-term and long-term financial goals,” the bank suggests. “Money market fund, mutual fund and viable life insurance plans are smart investment opportunities that can be tailored to your risk personality.”
- Do you happen to have several accounts – then close those unnecessary ones. “Ask yourself if it’s necessary to have several credit or checking accounts as these accounts can incur annual fees that you may not even realize you’re paying for,” the banks says.
- It’s not only from salary you make money but also by doing what you love. “Find a way to turn your passion into profit,” BPI says. “You can try to monetize a creative hobby and sell your products online. The extra money you can earn will help you reach your financial goals faster.”
- Finally, avoid distractions. “It’s easy to get distracted from your financial plan,” the bank says. “There are activities and things you don’t need, but may strongly want. Don’t let yourself be influenced by external distractions so that you can stick to your financial plan and budget.”
It’s not enough to plan your financial goals; it how you work on them that matters. Christopher Rice reminded: “Everyday is a bank account, and time is our currency. No one is rich, no one is poor, we’ve got 24 hours each.”