14 Jun 4 Bad Habits You Need To Change To Be Financially Independent
People who live in third-world countries like the Philippines often encounter financial problems everyday. Aside from politics, money is always a heated topic between family members and individuals. Conversations usually revolve around expenses and getting new sources of income, and within this environment, a big part of the population depends on loans to keep themselves afloat because of the economic challenges. In the recent years, however, individuals beginning to take steps in order to be financially independent, but how can Filipinos overcome this problem?
As with any problem, it begins with the attitude to change one’s old habits. In this article, we’re gonna list four bad habits that we need to change or look out for in order to be financially independent.
Living the “Credit” Life
If you haven’t been paying your credit card in full, been missing out on the payment due of your bills, or worse, have been declined from using your credit card for going over the limit, then chances are, you’re caught in a life of credit. These three are indicators that you’re already in debt, and being in debt means the opposite of having financial independence.
As much as possible, you should only get a loan when you need immediate capital on expanding your business and if you already have a debt payment strategy in effect. However, if loaning at the early stages is inevitable due to your financial situation, then make sure to 1) take your card off your wallet stop using it if you haven’t paid in several months, 2) monitor your spending and have less credit card purchases, and 3) commit to a budget plan that will pay off your regular monthly expenses so you can clear all your debt.
A Lack of Savings
According to the National Economic and Development Authority (NEDA), Filipinos usually lack the correct mindset when it comes to savings. Instead of allotting a portion of their income for savings, the general population thinks about where they’ll spend their money first. If there’s a leftover from their income streams, then that becomes their savings; and if none remain, there will be no “savings” for that month. Being financially independent means compartmentalizing all possible financial situations and preparing for the future. For this to happen, it begins by having consistent and portioned savings from your current and projected income streams.
The best way to counter this habit is to be frugal and constantly think of savings first. Minimizing expenses and maintaining a simpler lifestyle will create more opportunities to reallocate funds better for you and your family. This way, your resources are optimized and you can pave the way to financial independence.
If you’re the type who can’t sit still when you see a sale on the mall especially during salary cut-offs, then you should try to reconsider this habit of yours if you want to be financially independent. Of all the types of bad financial behaviors, this may be the worst because impulse buying can significantly drain your hard-earned savings if there isn’t an overall change towards it.
Are we saying that you have to get rid of your wants entirely? No. Not necessarily. What you just need to do is to keep your impulses in check. If you want to be able to purchase something that may or may not go to sale in the next six months, just make sure you have the funds for it. One suggestion is to allot 5% from all of your earnings per month and pool it to buy a specific item after a set duration. If you go beyond a few months of not spending, it’s easy to give in to impulses to “reward” yourself, so make sure to have a set time for the expiration of your “reward” funds.
Relying on One Income Stream
Some Filipinos weren’t really taught to have an entrepreneurial mindset when they were young. They were born into families who say that they should study well to get good jobs and have a good life. As a result, Filipinos lack passive income streams that could pave the way for a better future for them. They become content with their day jobs and tend to have difficulties if a tragedy happens—like the loss of a loved one, sickness in the family, or even natural calamities like that of Ondoy and Yolanda.
If you’ve been raised this way and have experienced the same difficulties, then you should pursue to change your reliance on one income stream as soon as possible. To do so, you should start saving and growing the money that you have saved by diversifying your portfolio and finding other income streams, like mutual funds, stocks, businesses, or becoming a funder. If you’re an OFW who wants to achieve financial freedom, then you can check our advice from this previous article which discusses smart ways on how to increase your wealth.
Financial Independence Starts With You
Despite the different advices that we’ve given on becoming financially independent, it all goes down on your intent to make a change in your life. By starting with a plan to remove the shackles of debt and beginning to take care of your future through savings, you can make sure that you are in the position to take control of your future. It just takes a bit of sacrifice on your end, but if you do away with your impulses and begin to open your mind when it comes to growing your wealth, you will be one step closer to the goal of living your life to the fullest. If you want to start being financially independent now while helping out the Philippine SMEs, learn more about Acudeen.