(Editor’s note: From today and the Saturdays thereafter, this space will carry the column contributed by the Registered Financial Planners of the Philippines)
“Everything will be all right in the end. If it’s not all right, it is not yet the end.”
I’m not quite sure who’s the original author of the quote, but sometime in recent years it was popularized in th e British box office movie The Best Exotic Marigold Hotel. The quote highlights one of the greatest privileges of the human race—second chances. There’s beauty in redoing things and making them better. If you feel that piles of money mistakes have descended upon you, causing a personal financial slump, don’t fret. Here are things you can consider doing to revamp and improve your financial life.
1. Imagine your Future Self. Psychologists suggest that by visualizing ourselves in the future and creating an image of what we want to be teaches our brain to act accordingly toward the fulfillment of that goal. Basketball coaches use this technique in helping their players who are poor free-throw shooters to be better during game time. They would ask their players to commit 10-20 minutes every practice to just visualizing themselves shooting and sinking in those free throws before taking actual shots. They would ask players to close their eyes and try to create an environment in their mind that they’d like to see every time they made those successful shots. The results of this technique are well received and had helped players to become better in their game. So, if you want to improve your finances, start by visualizing an image of your future self being financially successful and let this exercise boost your activities toward realizing your financial dreams.
2. Understand the “WHY” of your Financial Goal. While having a specific strategy on how to achieve your financial goal is important, understanding the reason behind that goal and focusing on that “why” will more likely help in motivating yourself to take action. Doing something without a motivation behind it will only be wishful thinking and increases the likelihood of giving up if setbacks are encountered. If your plan is to improve your finances, take time to reflect on why you’d like to save, invest and cut down on your spending. The stronger the reason behind these actions, the greater chances you have in not giving up in making your goal a reality.
3. Go on a Spending Diet. Yes, diet! This means cutting back on all non-essential expenses, the unhealthy “fat” that’s causing your pocket to bleed. More often than not, it’s our spending habits, not the size of our paycheck that keeps us from being financially healthy. We often have this idea in our head that our income is not enough to regularly save, yet if you practice writing down all your usual expenses, you’ll be surprised that there will be something left for you to set aside for savings. For your spending diet to be effective, you need to adopt a spending plan to follow month after month. First step is you need to list down all your necessity expenses then deduct them from your income. Divide what’s left between your non-necessity or ‘wants’ expenses and your savings/investment fund. Allocate a bigger portion on things that you value the most. If your priority right now is to improve your finances, then put a bigger chunk of that income into your savings and investment accounts.
4. Pay off high interest debts. Remember that debt is bondage. It’s something that sticks to you and causes you stress before going to bed and the moment you wake up in the morning. I bet that paying off debt is far more difficult for you than filling out that loan application form or swiping your credit card. It takes commitment and sacrifice to wipe out those outstanding debt obligations, but doing this will not only free your mind of the stress that it has been causing you but will significantly improve your cash flow. The fastest way to clear off debt is earmark every cash windfall you’ll get like quarterly bonuses and 13th month pay toward paying your creditors. Painful, but rewarding in the end.
Jesi Bondoc is a Registered Financial Planner of RFP Philippines. He is the Director of My Wealth MD and Partners, Inc. specializing in investment advisory and oversight. You can send your money questions at email@example.com or firstname.lastname@example.org and they’ll be answered on his next article. For more info about Registered Financial Planner program, e-mail to email@example.com or text <name><e-mail> <RFP> at 0917-9689774.