How To Practice Responsible Financing
At least once in our lives, we’ve dreamed about having a taste of the finer things in life — bringing home a bunch of shopping bags after a day of splurging at the mall, cruising around town in a brand new car, and going home to a big house. There’s nothing wrong with that, unless you wake up one day with very little to no savings. Why? Because on your journey to reaching your life goals, it’s important for you to first achieve financial freedom.
There are probably a hundred and one different ways to start on your path to financial freedom. But one simple and effective first route is to learn how to practice responsible financing. Responsible financing, as grand as it may seem, simply means living within your means. Here are five steps on how you can practice responsible financing as early as now: 1. Reward yourself by saving. They say the best reward you can give yourself is to save your hard-earned money. You can easily do this by taking 10% of your income and putting it straight into your savings account before setting aside money for your bills and other expenses. When you have extra money, instead of thinking of where you can spend that amount, just save it. Having a savings routine that is well within your means is a good investment for your future.
2. Prioritize spending. Living within your means also entails prioritizing your cash outflow. You can do this by listing down your usual monthly expenditures and check if you can divide them depending on how often you get paid for a month. (Example: Your 15th of the month payout will shoulder your electricity bill, while your 30th of the month payout will shoulder your phone bills.) After listing down monthly expenditures and after saving at least 10% of your income, you can now use the remaining money to buy things you’ve been wanting to purchase, or save it for future use. 3. Don't buy what you can't afford. For sure this comes to mind when you say living within your means, as it should. A general rule is to avoid impulsively buying something that’s more than what you earn because most of the time, this is how debt starts. This is also a good rule of thumb when borrowing money - only loan money that you can afford to eventually pay with your income. If you are at that point of deciding to make a purchase, pause. Think about it for a few days to check if you really want the thing you want to buy, or if it can wait, save up for it first. 4. Focus on yourself. Don't compare! Responsible financing also means that you should only focus on your lifestyle. Wanting to live the life of others can also be a reason why you can’t live within your means. And this might even be the reason why you are discontented with what you have now. It’s your life, after all. Once you break away from the habit of constantly comparing your life to others, you can finally start your OWN journey to financial freedom and in reaching your OWN life goals.