8 Money Tips
for Young Professionals
By Luanne Arevalo
Yay, you’re finally earning your own money! It’s all fun and games until you realize that managing your own finances is no walk in the park. Payday is always fun and exciting, but weeks or sometimes just days later, you find yourself wondering where the heck your money went. It’s time to get a grip, before you get yourself stuck in a cycle of living from paycheck to paycheck, with financial stability looking less and less a possibility. After all, it’s not just about earning your own money, but more about handling it properly. Here are some ways to help you take control of your finances:
Read up and learn
You may have stopped going to school, but the learning must continue, especially for a topic as complicated and abstract like finances. Scour the bookstore for a self-help book on managing money and take advantage of the many materials and courses available online for free. Some key phrases to Google: “tips for budgeting,” “investing in mutual funds,” and “what is health insurance for.”
It’s easier to put a financial roadmap into place if you know exactly what it is you want to accomplish. Visualize your goals and put them into writing. Want to buy a car? Looking to replace your cumbersome laptop with a new one? Eager to travel solo for the first time? Knowing what you want will help you focus, especially when the temptation to spend arises.
The only way you can understand your spending habit is to list down where your money goes. Even before payday comes, figure out how much you can allocate for your savings and take note of the bills that need to be paid. The most advisable formula is “income less savings is equal to expenses” – meaning, you prioritize your savings above all the other things you need to spend on, so you adjust your expenses according to what’s left after you’ve saved.
Don’t get into credit card debt.
Credit cards are quite easy to acquire these days, and it is definitely tempting to use it for “wants” while convincing yourself that you will pay for it come pay day. Stop right there and repeat this phrase over and over: “Live within your means.” Don’t go spending money you don’t even have yet, and especially not on things that you can actually do without. Not to say it’s entirely bad to own a credit card; just make sure you use it for emergencies, and that cute purse you saw at the mall sure doesn’t fall into that category.
It might seem overwhelming to think of yourself as an investor, but the thing is, you can actually start doing it for as little as P5,000 via mutual funds. This is where you put your money in a company that would pool it with other people’s money and invest it in securities like stocks, bonds, and more. That means you can invest even if you don’t have time or enough knowledge on how to play the stock market. Of course, make sure to invest in a legitimate company. While you may not have the minimum amount needed, it’s worth learning more about investing and making it one of your financial goals.
Understand the difference between savings and an emergency fund
Create an emergency fund. Yes, this is different from your savings. Savings are usually for specific goals like if you want to make an expensive purchase or want to travel – which means you have a specific amount in mind as well. On the other hand, an emergency fund is for unexpected expenses like job loss or illness – for which you’d ideally have three to six months of your current salary, so you can get by until you’re able to recover.
Take on freelance work when you can
Being young, you’d have the time and energy to take on freelance work here and there, so why not take this chance to earn extra? There are several opportunities available online for writers, artists, virtual assistants, and more. Into cooking or baking? You can offer your products to people within your network. Having more sources of income can bring you closer to achieving your financial goals.
Yes, you can. While you should stick to your game plan as best as you can, it’s also important to not feel deprived. So go ahead and have a nice meal, go on an adventure, or buy yourself something nice once in a while. Fun also pays dividends, so let this serve as a preview of what more you can do if you stick to your goals – so you can easily do so again the next day.
Got any more advice? Share them with us below!