The new year is always a good time for new beginnings, which is why we make new year’s resolutions. If one of your goals for 2020 is to become financially fitter, here are some new year’s resolutions that you should consider keeping.
Set financial goals. One of the reasons why it’s hard to stay disciplined in investing is the absence of tangible financial goals. Although we need to invest as soon as possible to have a secure retirement, the need doesn’t seem urgent, especially for those who are just starting their careers in their twenties.
In contrast, it is easier to spend because of the immediate gratification we get from buying something new. After all, we deserve to be rewarded for working hard.
One of the factors that pushed me to invest more consistently was having children. I wanted to accumulate enough so that I could help them in the future, in the same way that my parents helped me when I was starting my own family. I also wanted to make sure that I would have enough when I retire so that I would not be a burden to them.
However, you don’t need to have children to be motivated. It could be the goal of traveling somewhere you have always dreamed of going to, or having enough to pay for the down payment of your first home. Or, it could simply be the fulfillment and security of having one million pesos in the bank.
Shop less. Shopping is one of Filipinos’ favorite pastimes. However, if you are like me, you probably end up buying a lot of things that you don’t really need just because they are nice or are on sale. Or, you needlessly upgrade your gadgets to the latest model just because there’s a pay light deal that is too good to pass up.
Resist the temptation to overspend by setting a fixed shopping budget every month and pay in cash as much as possible. Once you have finished your cash, it is time to stop shopping. Also, try to avoid window shopping and online shopping so that you will not even be tempted to spend.
Eat out less. Eating out is another favorite Filipino pastime. Unfortunately, eating out can also be very expensive.
Assuming that you eat out three times a week, and each meal costs P500, this pastime will already set you back by P6,000 a month.
Although it is impossible to completely avoid eating out, eating out less can help you save money. For example, instead of eating out three times a week, just eat out twice a week. This will already save you P2,000 a month. It will also help you lose weight since home-cooked meals are usually healthier.
Brew your own coffee. I confess that I used to buy coffee every day after lunch because it was more convenient. After a while though, I realized that I was spending too much on something that I can easily make on my own for much less. For example, a bag of good quality coffee beans only costs a few hundred pesos and can last a few weeks while a cup of coffee from a coffee shop easily costs 150 pesos. Multiply 150 pesos by 30 days and the total amount would also be substantial at 4,500 pesos.
Set aside 50 percent of your pay increase for investments. One of the main reasons why people don’t save or invest is because what they earn is only enough to support their lifestyle. If you also have the same problem, then promise yourself that starting 2020, you will keep your lifestyle constant and set aside at least 50 percent of all future pay increases for investments. To help you stay disciplined, automate the investment process by enrolling in an investment program that automatically sets aside a portion of your salary to buy bonds, stocks or mutual funds. This will help you accumulate a good-sized investment portfolio to help you achieve your financial goals.
Prioritize paying down high-cost debts. If you currently have high-cost debts such as credit card debts, prioritize paying them down before you start investing. The savings you get from not paying interest on these high-cost debts is much bigger than what you can make from investing in bonds and stocks. For credit card debts, consistently pay more than the minimum amount due. In fact, pay more than the interest expense so that the principal will also diminish. Most importantly, make it a point to stop using your credit card this 2020 to avoid increasing your debts and just pay cash when making purchases.
By keeping these new year’s resolutions, I hope that you will end 2020 financially fitter compared to today. I am also hopeful that you will be inspired to maintain these good habits even in the future so that you can stay financially fit forever. Happy new year! INQ