Many Filipinos are faced with financial difficulties, and the global pandemic is only partly to blame. Economic uncertainties combined with a lack of financial literacy lead to wrong decisions.
In these turbulent times, it is important to have a solid plan to manage financial challenges. Follow our tips to ease some of this stress.
1. List the Biggest Stressors
What financial difficulties are keeping you up at night? Pinpoint the sources of stress and deal with them one by one. If you are faced with a financial emergency, such as medical bills, loan apps Philippines could help you pay the bills on time. If it is your credit card debt, you should review the conditions and your budget to make larger monthly payments.
2. Create a Monthly Budget
You do not have to create Excel spreadsheets to manage your budget, as there are so many mobile apps. Some of them can even be connected to your bank accounts, so you can track the transactions automatically. An app will give you a full picture of where your money is coming from and where it is going.
Begin by calculating your net income — the amount you get monthly after taxes. Then, enter all of your expenses, from rent to coffee. Depending on the app, you may be able to set up automatic payments and get notified if you go over budget.
3. Make the Most of Your Income
Even if you think that your budget is too tight to deal with the problems, you should still make the most of it. Start small by identifying a few expenses to cut at least slightly. Analyse your spending habits to see where you can trim your wants.
Prioritize your goals. If you have several credit cards or loans, focus on repaying the debt with the highest rate of interest first. This is known as the avalanche method. Note that you still must make at least minimum payments on all other accounts. The snowball method follows the opposite logic — i.e., starting from the smallest debts. The first method lets you save more, but it also requires more discipline.
4. Build an Emergency Fund
Ideally, your emergency fund should cover 3-6 months of expenses. If it seems overwhelming at the moment, consider setting aside as much as you can. Calculate the amount you can afford to contribute each month. You can set automatic transfers to your savings account.
5. Consider Outside Help
Finally, if you are not happy with your progress, consider seeking help from trusted experts. Financial advisors can provide a strategy for reaching any financial goals, from reducing regular expenses to saving for retirement. They can help you save a lot of money, particularly in difficult times like these.