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Growing up is an inevitable part of life. There comes a time when you have to leave the nest and strike out on your own. For many people, this process starts in their early to mid-twenties once they’ve graduated from college.
If you’ve gotten used to the creature comforts of your family home all your life, striking out on your own as a full-fledged adult can be a scary experience indeed. Before you can successfully assert your independence, you should consider mastering the following financial skills for your own money security.
1. Pay for the future
The sad reality is that far too many young Filipino professionals underestimate the importance of things like insurance, estate planning, and retirement. Avoid this trap by getting a head start on your future. Look for tried-and-tested ways you can keep your money prospects secure decades down the line.
Once your regular expenses are stable, you can make room in your budget for long-term needs. Put down mortgage payments on your future home, invest in a comprehensive automotive insurance policy for your cherished set of wheels, or even start saving money for your retirement.
2. Stop relying on your parents
If something truly terrible happens to you, one of your first instincts might be to run to your family for financial help. It doesn’t even have to be your parents; it could easily be your older brother, your grandmother, your great-uncle, or even a rich family friend.
We’re not saying that turning to family for help is bad, only that you should avoid making a habit of it. Start relying on yourself by finding a steady job you can use to pay the bills. Build an emergency fund so you have something to tap into during rainy days. If possible, avoid getting into situations that could leave you in heavy debt in the first place.
3. Stick to a budget
Landing yourself a good-paying job is only the first step to financial stability. Even lottery winners lose millions in an instant thanks to poor money management. To prevent this, draw up a basic budget that includes all your essentials: food, bills, transport, and rent. Once your budget is ready, exercise those self-control muscles and stick to it.
Let us once again emphasize the importance of setting up an emergency fund for worst-case scenarios, like losing your job or winding up in the hospital. Experts recommend setting aside enough money to cover all of your basic expenses for at least three months.
4. Get only what you need
Now that you’re making your own money, you might fall into the temptation indulging often on fancy dinners, expensive shoes, or spur-of-the-moment trips to Boracay with your friends. All those splurges and impulse buys add up though, and before you know it you might have trouble paying for things like your dinner and regular doctor’s appointments.
If you’re having trouble making ends meet, cut down on the luxuries until your finances are in good shape again. If you must have an allowance dedicated to your indulgences, you can make it a habit to set aside a fraction of your income just for “fun money.”
5. Invest
What comes next after you’ve grown confident about your basic budgeting skills? You can take things one step further by learning the ropes of investments, bonds, mutual and index funds, and other ways you can grow your money.
If your current job serves as your main source of income, the right investment can serve as a backup source of passive income you can use to strengthen your safety net. Investments are calculated risks you take with your hard-earned cash, so make sure you do plenty of research before you jump in.
These are only a handful of the skills any young man or woman should learn in order to take control of their finances. Once you’ve scratched the surface of money smarts, you will be sure to discover tons of other ways you can save for tomorrow. Here’s wishing you the best of luck on your journey to financial independence!
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