Archive for the ‘Spending’ Category
10 Money Mistakes Every One Should Avoid
10 Money Mistakes Everyone should avoid
by: Kendrick Chua, CIS, The Wealth Warrior
We all make money mistakes once in a while and in my years of financial planning practice, I have come to realize the 10 Money Mistakes people often commit.
1.) Spending all income. I know of people who spend their income down to the last peso the day before their payday. It’s as if they can’t stand having the money carried over to the next payday. As a result, when a glitch in accounting system delayed the pay, the solution: cash advance or buy on credit.
2.) Spending more than you earn. What is worse than spending all your income? It’s spending more than what you earn. So if the cash runs out days before the next batch of funds come in, the result is incurring debt. You can always be a free-loader but then you won’t have any friends left.
The One-Day Rich Phenomenon
The One-Day Rich Phenomenon
by: Kendrick Chua, CIS, The Wealth Warrior
In one Pugad Baboy’s strip, the characters Bab and Igno were dining in an expensive restaurant. Bab had just won a bet in cock-fighting and they were celebrating. When Igno expressed doubts over their capability to pay for their orders, Bab explained that his prize money was P300,000.00 and they are entitled to splurge everything (note: everything).
The strip reflects the sentiment of the creator Pol Medina and I thought he captured the idea very well. Majority of the Filipinos love to do a one-day splurging and the strip was this representation. Not all will be fortunate to win in gambling but those who do usually spend everything rather quickly; treating the whole barangay to a drinking spree to celebrate his good fortune. After that, he goes back to either bumming around or doing his dreadful work and relishes on the good time he had the night before and hoping and praying he wins again.
To be or not to be…impulsive
To be or not to be…impulsive?
by Kendrick Chua, The Wealth Warrior
That is the question. I pride myself in not being an impulsive buyer nor shopper (unless it comes to food). A trait I have inherited from my mom. I’d constantly debate with myself whether or not I should buy an item. Thinking it twice, thrice and even ten times until the instinct to buy it subsides or it’s channeled onto another item, whichever comes first.
Lately, I have been contemplating whether or not the trait I’m proud of makes me lose more money. The first time it happened was when Dan Brown’s latest novel, The Lost Symbol hit the Philippines last year. I have read the two previous titles, The Da Vinci Code and Angels and Demons and I loved both of them. I believe I wouldn’t be disappointed should I buy one.
How to solve the greatest financial mystery
How to solve the greatest financial mystery
(as published in Business Mirror http://www.businessmirror.com.ph/home/opinion/15936-how-to-solve-the-greatest-financial-mystery.html)
For all corporate employees, the feeling of seeing your ATM (paycheck is so old-fashioned) account filled with your salary is so empowering. The surge of endorphins gives you that sense of jubilation for the next two weeks (or until you receive you next pay again). You start to think about buying those clothes, shoes or gadgets that you swear you really need. And so even before that money is withdrawn, it is already spent.
This applies to all levels of income. That is why a mystery as enigmatic as the Loch Ness Monster, Big Foot and the Easter Island Statues haunts young professionals, two weeks from the payout-”Where did all my money go?”
Just like any other mystery, this one has its own variations. At times, it is “Why haven’t my savings gone up despite my salary increase?” or “Why did I end up short this month?”
Sounds all too familiar?
Fortunately, while it seems like money is just disappearing out of thin air, there is a way to solve the enigma, and it doesn’t need complex mathematical formulas or scientific equations. It just takes common sense and discipline.
1.) Spend for savings. Treat savings as if they are another item to spend on. They are, in fact, a luxury that you all are entitled to. Once you get your salary, immediately deposit that into another bank account because leaving it in your payroll account would just make it be easily withdrawn and spent. If you have none, entrust that with someone for the time being until you open one. If possible, arrange an auto-debit transaction with your bank to link the savings account to an investment account.
The point is if you can’t see it, you can’t spend it, and treating the savings as an expense means you just spent on it. It is now gone! Remember the income-less-savings-equals-spending approach? This is just another way of applying it.
2.) Clearly classify priorities. Expenses are classified as either necessities or luxuries. The two are often used interchangeably. My advice: Don’t! There is no concrete definition for the two. What can be considered as a necessity for one is a luxury for another. The hint: If you can live without it, chances are it is a luxury.
Naturally, necessities take the first bite out of your salary sans the savings. After that, you’re entitled to luxuries. A word of caution, though-luxuries that are bought often tend to become necessities (a mocha frap in Starbucks is not a necessity). Don’t fall into that trap.
3.) Collect and list all purchase receipts. Keeping track of your purchases mentally can be easily forgotten either on purpose or not. The solution is to collect all the receipts and list them at the end of the day or the week. The key here is to determine the amount being spent on miscellaneous items, which can easily run to thousands of pesos. You want to avoid that.
What you want is to know how much the miscellaneous items are costing you. Then make the conscious effort to curb them down to a more manageable level.
4.) Save the money saved from discounts. Discounts are great! They are designed to help you save money but did you really save it, or were the savings used to buy other items? Chances are it is the latter.
Savings on discounts can be tricky if they are stashed inside your wallet with all the other bills. Instead, put them in another one (an envelope can also do the trick) which will house your savings from discounts. Accumulate them and deposit them in your other savings account. You’d be surprised at how much you saved from all the discounts.
5.) Apply daily rewards. At the end of each day, you normally can assess how you fared. Then, rate and reward yourself accordingly. Monetary rewards can be as low as P5 and as high as P20. Put this reward in a coin bank and leave it there.
The amount for daily rewards should be small enough so that you won’t miss it but big enough that it can accumulate to something significant. That is why P5 and P20 are good amounts to set as the minimum and maximum, respectively. Just do the math, if on the average you reward yourself P10 for the next 365 days that will immediately total to P3, 650. You can spend this any way you like it.
The road to financial freedom is not a difficult path to take. Oftentimes it even gets easier as you go along. The most difficult is to take the first step. And that first step is debunking all myths and solving the greatest financial mystery, which you just did.
Tags: published article
Why Some Don’t Spend Much at All
Why Some Don’t Spend Much at All
by: Kendrick Chua, the Wealth Warrior
We live in the age of consumerism. And consumerism is highly encouraged! No surprising why companies spend millions in marketing campaigns to get people to buy their products. How you buy it is none of their business as long as you buy it. Kind of irresponsible on their part isn’t it. But we consumers have also a lot to be responsible for. For starters, we need to learn how not to fall prey to these campaigns eating all of our hard-earned money. Or if the inevitable comes, learn how not to spend too much on them.
That is one end of the spectrum but at the other end, there are those who can say no easily to consumerism. No matter how much bombardment of ads and viral marketing, there are just those who won’t and don’t buy. End of story.
Tags: financial freedom
