You have a job and a steady income, yet you find yourself staring at the bottom of the barrel, seemingly broke and crawling to pay day every 2 weeks. You ask yourself, “What am I doing wrong? Why is it so hard for me to save?” Every financial decision you make is based from your perspective on money, and sometimes that perspective can be naive or incomplete.
At times you may wonder how (and why) other people are capable of such discipline and restraint. You can be too. All it takes is a fresh take on money and how to handle it properly. See if the following phrases reflect the way you currently handle your money. If they do, then maybe it’s time to shake things up a little.
“I prioritize now over later”
Short term vs long term–this is the financial dilemma we all face sooner or later. When it comes to planning a budget, a huge chunk of your cash flow probably goes into your current–more short term–needs instead of long-term savings/investments. After all, units in an investment fund are less tangible than, let’s say, a new pair of shoes or a handbag. This can result to a cycle of impulsive spending that can haunt you paycheck to paycheck.
How to turn it around: Set up a routine to facilitate saving. For every paycheck, set aside a fixed proportion or amount for your savings account (a good way to start is a 70-30 spending to saving ratio). Yes, that means that you shouldn’t deprive yourself; overspending is bad but underspending can also be dangerous. Remember, there’s nothing scarier than a strong itch to spend and a fresh credit card.
Pro tip: We recommend automating your savings by scheduling a recurring fund transfer from your main account to your savings account.
“My expenses become relative to what I earn”
Getting an increase in salary means that you have more purchasing power than before. When this happens, you suddenly have enough cash to buy the things you want. Then it becomes worse: the more you earn, the more you spend, and the cycle continues.
How to turn it around: A bump in salary usually warrants an adjustment in your budget. If possible, allot your additional cash flow to meaningful expenses. These could be purchases that will pay off in the long run, additional units of investment, or advance payment for your bills. You should keep your spending-saving proportion the same as before the salary bump, or better yet, allot more to long-term financial instruments.
“I always use up my bonuses”
Whenever we get a financial windfall, we somehow find ways to use it up before it has even warmed up to our bank accounts. Whether it’s a bonus, a seasonal boost in profit to your business, or petty cash from a generous relative, extra cash could always go towards something more meaningful. Building an emergency fund, opening a time deposit account, or even investing in a UITF–these are just some of the most practical alternatives.
Read more: What Should I Do with My Bonus?
How to turn it around: Setting your whole bonus aside might be too painful, especially if you’ve been anticipating it in order to buy something. To keep your sanity, make sure to direct at least half of it to practical use then use the remainder to satisfy your spending urges.
“I forget how it feels like to be broke”
Let’s face it, whenever we get our salary, we feel like kings and queens. While that thinking isn’t necessarily bad, the attitude of going for broke every single paycheck is a sign of unhealthy financial attitude. The rush might feel good at first but the incoming onslaught of regret (and unpaid bills) should be enough of an incentive to stop this cycle.
How to turn it around: Aside from the aforementioned tips on portioning your salary, you should set clear, attainable savings goals. These goals could be short, medium, or long term. It’s also a good idea to set up timed reminders before or on the day of your pay. At worst, it helps you reevaluate the worthiness of your spend and at best, it could help you save up for bigger–more long term–goals.
“I easily give in to (peer) pressure”
Aside from the ever-present feeling of getting the latest and greatest, you might have a penchant for giving in to the wants of your lavish acquaintances. Owe it to the sense of community and belongingness, not saying no will eventually drain the life out of your wallet.
Read more: 4 Tips in Hanging Out with Expensive Friends
How to turn it around: When you’re faced with overwhelming peer pressure, ask yourself over and over “Can I really afford this?” or “Can I use this money better?” As with all purchases, think of the costs and benefits and factor in your overarching budget. If the quality and use of the product/service more than compensates its cost, then go for it.
The bottom line: Don’t look at saving as if it’s an insurmountable task; saving can be easy as long as you have the right mentality. The challenge lies in finding the balance between spending and saving. Just remember that no matter how big or small the amount is, the important thing is that you took the initiative to save, and that you are keeping with it until you reach your goal.