How to Actually be Good with MoneyMarch 30, 2015
I will have days when I save and days when all I do is spend. I am not perfect and though I have a whole lot of posts talking about money management I still stumble in terms of owning my budget, committing on my financial goals and so on.The idea of being good with money is a gift.
As Christians, we have the term called Financial Stewardship that simply explains that God gave us the anointing to take care of the wealth that He had blessed us. He is the one and only source of our prosperity and He gave us the ability to get wealthy.
We all have an innate ability to be good with money. All it takes is for us to act.
How to be Good with Money in 8 Easy Steps
Step 1. Be aware of your current financial status
In April last year I started tracking my net worth by the numbers.
Using the formula Total Assets – Total Liabilities = Net Worth, I manage to come up with my current value.
This helped me make sound goals and decisions in life. It’s good to see where I am at financially versus where I’ve come from. How much my money have grown and where it went.
If there’s one activity I want you to do as soon as possible, it will be to calculate your net worth.
Why you should calculate your net worth?
According to this post by Investor Junkie there are six reasons why you should bother calculating for your current net worth.
Reason #1. Net worth is the most accurate measure of wealth.
Do you want to know how rich you are? Calculating your net worth is not just the easiest but also the most accurate way you could measure your wealth.
Reason #2. It’s a way to track your financial progress
Net-worth gives you an idea how you’ve been doing financially. Are there debts you need to focus more? Are your savings enough for retirement?
Reason #3. Moving the financial focus beyond your income
At the end of the day you’ll realize it’s really not about how much money you earn but what you do with what you earn that matters.
Reason #4. Avoids the over-emphasis on asset value alone
When it comes to net worth, you are measuring not just the total asset you have but also the liabilities. This give you an understanding how credit card debts, personal loans and other liabilities can have negative impact on your overall wealth.
Reason #5. Puts your debt level in proper perspective
an whether for a new house or a new car, your net worth will be most often than not get asked. Knowing your net worth not only helps with the application but it also serve as a guide on up to how much loan can you really afford.
Sometimes we forget how much debt we have. This hinders us to really work on our way of being debt-free. We need to have a clear number on how much we owe. This is the first step to getting free of debt for life.
Reason #6. Important in applying for a loan
If you’re getting a loan whether for a new house or a new car, your net worth will be most often than not get asked. Knowing your net worth not only helps with the application but it also serve as a guide on up to how much loan can you really afford.
Want a simple Net worth Tracker same as what I use with my Extra Income Report posts?
I uploaded an Excel File Template Freebie on the SavingsPinay Resource Library.
Click here to sign up and receive instant free access.
Step 2. Assess where you are lacking discipline
One lesson I learned is the word “DISCIPLINE”.
Each one of us should practice discipline in terms of our finances.
One main excuse why people don’t bother saving money is “eh wala na naming masi-save sa dami ng gastusin”.
I’ll tell you honestly today that no matter how much your current expenses or debts is there will always be a tiny little amount of money that you could save. Change your lifestyle and think about the long term.
There will always be items in our life that we need to stop spending too much. Having the discipline to cut off on Alcohol, Cigarette Smoking, Newspaper, Coffee, Load and Fast Food/Snacks… will lead you saving more than how much you have expected.
You will be surprised how quitting your vices and unnecessary spending can boost your overall savings! Bad habits are extremely costly not just for your wallet but for your health too! If you begin saving the money that you would normally spent smoking, drinking or gambling, etc. the faster you can build an emergency fund!
My dad was a previous chain smoker but right after our bunso came he quit. He mention how much he wanted to live a longer life to see our bunso grow old! Now he has been smoke-free for 16 years!
When you are encouraged to do something bad just think of the following:
- A cup of coffee from specialty shop costs 170 pesos
Multiply by 30 days, you could have saved 5100 pesos already.
- A pack of cigarette will cost you 80 pesos
Multiply by 10 packs, you could have saved 800 pesos already.
- A night of clubbing will cost you more or less 2000 pesos
Multiply by four Saturdays, you could have saved 8000 pesos already.
See how much of your money is wasted on your vices?
Discipline gives you the possibility to really create a bigger opportunity for savings.
Step 3. Save first and foremost before anything else
The moment you had your first earning automatically SAVE.
Do not let savings become an option rather treat it is a priority.
What is the first thing you do when you get your paycheck?
Isn’t it nice that you pay yourself first before allocating money on expenses and other stuff?
As soon as you get your paycheck transfer 500 pesos to your emergency fund! Then you can now pay your needs, your wants and your miscellaneous spending!
Step 4. Talk to Person who are also good with money
As the saying goes, “Tell me who your friends are and I tell you who you are”.
Now if you want to be good when it comes to money then make sure that you surrounding yourself with people who will help you and will encourage you to stay financially fit.
Step 5. Track your progress
If you really want to be good in terms of how you manage your money then you might want to start tracking your progress.
How do you do this?! Secure a new or old notebook where you can record your monthly savings as well as your spending.
You may want to do this so that you have a vivid idea on the growth of your money.
Step 6. Set your Personal and Financial Goals
If I can just go back to the many posts where I mentioned the word “goal” or “financial goal” then maybe we will get more than five posts.
I have always viewed goal setting as a great way to start the day. Once my goals are written down it is way easier for me to follow with action. Start creating your needed goals.
Step 7. Learn from your mistakes
If you are currently in debt then make sure that you are not dragging yourself more on bigger debt.
Treat the wound while it is still fresh so that it won’t leave a scar in your financial life. If in the past you have an investment gone wrong then learn from the mistake and take think better this time in how you will invest your money.
Step 8. Increase Your Cash Flow
If you really want to step up in your game when it comes to money management then learn to increase your cash flow.
Do not be happy with just one source of income instead step up your game and find other means for you to earn.
I have written blog post called 8 Reasons To Start a Side Hustle and I believe the post could help you better in life.
Final Notes from SavingsPinay
I know that everyone wants to be good in terms of handling their money but just remember financial stewardship and you will surely realign everything. Let God give you the peace of mind that you need. Acknowledge Him on the good times and the bad times.
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Izza of SavingsPinay helps Filipinos bridge the financial literacy gap one content at a time by providing insights and tips on budgeting, saving, investing, side hustle and growing your net worth. Aside from this blog she also writes at www.izzaglinofull.com, a beauty and lifestyle blog for frugal Pinays and manages, www.izzagevents.com, a wedding and event business since 2011. For inquiries, topic suggestions or future collaborations email her at firstname.lastname@example.org