coins, pens and a financial plan

Why do you need to learn personal finance and money management?

1. To be disciplined in saving. 

It is hard to build the saving habit if you were not trained as a kid and due to lack of financial literacy as it is not currently being taught in school. To be disciplined in saving money, having a goal and knowing your priorities are important. It is good to start saving for an emergency fund or an equivalent of 3-6 months of your monthly expenses in case something unexpected happened like job loss or sickness. During this time, you won’t need to borrow from relatives or friends as you have already prepared for this circumstance. Plus, you can keep your lifestyle while looking for another job or source of income. Do not forget to replenish your emergency fund when you used it and already have the capability of saving again.

Save patiently for your wants. Do not buy things you can’t afford and avoid the debt trap. Just because your friends always have new gadgets and traveling in and out of the country does not mean that you also have to do it. Know your priorities and save for your wants. There is nothing wrong to spend and reward yourself besides it is your hard earned money.

2. To avoid bad debt and learn to use credit card wisely.

Several people I know including myself have made mistakes in the past in using credit card. Understand the terms on your credit card bill like the minimum payment due, interest rates, rewards and rebates, etc. Pay the full amount of your bill monthly, not just the minimum amount due so that it won’t incur interest. You can also request to waive your annual fee from your credit card bank provided that you will agree with the conditions. Contact your customer service for clarifications of obscure terms or computations of your credit card.

Compare first the different bank offers on credit cards before getting one. Choose what fits your needs and lifestyle so that you can take advantage of their offers. Like if you are a businessman that requires frequent travels, you can opt to get a credit card that provides high points and rebates on travels.

3. To learn different investment streams.

Saving is not enough they say, invest! But do not invest your money in something you don’t understand. There are a lot resources in investing in stocks, UITFs, mutual funds etc. that you can find online–blogs, social media, groups; books; and seminars. It is not easy but it is something that you can learn and it requires your time and effort. Gaining knowledge step by step gives you the confidence to start investing.

Building a business is also a form of investing your money. To become an entrepreneur and leave the 9-5 hour job is a dream to many while others can keep both the day job and being an entrepreneur at the same time. There are many inspiring business stories of rugs to riches and failures to success that you can learn from.

4. To prepare for your retirement.

Plan and fund your retirement as early as you can so that you can enjoy when the time comes. On your retirement, you probably want to spend quality time with your grandchildren, travel, or keep yourself busy with your hobbies and other things that you enjoy. Your source for retirement can be your savings, investments or pension. You can also check with insurance providers for your life insurance, healthcare and retirement funds.

5. To be a blessing to others.

Because you are blessed to be a blessing to others. 🙂

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