5 Habits of Financially Responsible Filipinos

A majority of Filipinos are having difficulties making ends meet according to a World Bank survey.

While the result may not come as shock to many, given the poverty rate in the country, it is surprising that the problem affects even those who are not poor. More than 60% of the respondents with an income of at least PHP50,000 reported that they also lack money to pay for their food and basic necessities.

Although most of the people surveyed blamed insufficient income for their predicament, the poll revealed that lack of financial planning and financial knowledge is a major contributing factor. Many Pinoys remain poor because they have no idea how to manage their money effectively.

If you do not want to end up in the same sorry state, especially when you grow old, it is time to

improve your financial literacy.  Start by developing the following habits that often distinguish fiscally responsible people from those who are not. These can help you reach your financial goals more easily.

They Monitor Their Expenditures

 People who know how to handle their money keep track of their expenses on a regular basis. Adopting this practice will help you to be in control of your finances. Think about it. When you know where your money is going, you can readily identify spending issues that you need to address.

For instance, upon review of your monthly expenditures, you might discover that you tend to splurge on branded clothes every payday or expensive cups of coffee every morning. If you are aware of such things, it would be easier for you to plan and make adjustments before you get into deep financial trouble.

Begin monitoring your spending by taking inventory of all your accounts, such as savings, credit, and checking accounts. Sign up for mobile banking access like Robinsons Bank’s RBank Digital Online Banking so that you can retrieve your account history 24/7 at your convenience.

Reviewing your account statements will give you a better sense of your cash flow—of how much money is coming in and going out of your accounts—so you can budget more effectively. It is also a good way for you to immediately detect fraudulent activities that are relatively common nowadays so that you can protect yourself better from financial losses.

They Create a Budget and Stick to It

Individuals who are financially literate do not spend their money carelessly. Instead, they creat a definite budget and stick to it. Planning your expenditures is one habit that can help you immensely. It will keep your spending in check and ensure that you are financially on track.

Note that the World Bank survey mentioned above also revealed interesting insights about the importance of having a budget. It was found that Filipinos who plan their expenses are more likely to have leftover money for savings. They are also less likely to borrow money beyond their means and purchase things they cannot afford.

Creating a budget for the first time needs time and effort. But the process becomes easier once you get the hang of it. If you do not know where to start, there are plenty of budgeting apps that you can choose from, or you can follow the simple steps below:

  • Calculate how much money you earn every month after deductions and taxes (net income)
  • Make a detailed list of all your monthly expenses including miscellaneous spendings, such as parking fees, tips, and entertainment.
  • Categorize your expenses into fixed (unavoidable and necessary) and variable (you can do without if money is tight) expenses.
  • Compute the average monthly cost for each expenditure.
  • Match your net income to your average monthly expenses and make adjustments when your expenditures are higher than your earnings. Cutback on your variable expenses or reevaluate your fixed expenses to see if you can reduce the amount you spend on some items.

Once you are done creating a budget, the next crucial step is to stick with it. Control your spending and avoid getting into situations that will tempt you to spend more, especially on things that are not included in your spending plan.

They Save Money

Financially responsible Pinoys do their best to manage their income to save money. You must learn this habit so that you’ll have money for rainy days. What will happen to you if you are faced with unexpected medical bills or similar emergencies and you do not have a reserve fund?

Saving money is also important so that you can buy a house, pay for your children’s education, start your own business, and retire comfortably. Keep in mind that you don’t need to save thousands of pesos every month. When it comes to savings, every single peso counts.

Making small changes in your daily spending can add up to big savings in the long run. Besides saving a portion of your income regularly, here are other ways to help you save precious money:

  • Cutback on your expensive coffee spending, or find cheaper alternatives.
  • Cook your own meals and eat out less.
  • Create a grocery list when shopping and make sure to follow it.
  • Use public transportation, walk, or bike whenever possible to save on fuel money.
  • Use cash or your debit card more often to avoid overspending on credit.
  • Start a side business to increase your income.

They Spend Wisely

Being financially knowledgeable does not always mean choosing the cheapest items so you spend as little as possible. The key is spending your money wisely.  Instead of choosing based on the price tag, you should purchase according to what will give the best value for your money.

It is better to cough up a little extra cash for a product that you know will last for a long time rather than buy an inexpensive item that you need to replace over and over. To help give you an idea, here are several items that financial experts believe are worth the extra bucks:

  • Investing in a course or training that will help you learn essential skills that can boost your qualifications, help you get the promotion you are eyeing, or help you start a business is worth every peso.
  • Fuel-Efficient Cars. Perhaps the most crucial factor when choosing a car, especially if you will drive in a highly congested place like Metro Manila, is fuel efficiency. The car may cost more, but you get to save a significant amount of fuel money in the long run.
  • Medical Check-Ups. As the famous adage goes, “prevention is better than cure.” Spending a few thousand pesos to protect your health and prevent expensive medication and treatment in the future is worth the expense.
  • Fresh fruits, vegetables, meat, and fish may cost more than their packaged versions, but they can do more in keeping your body healthy. Never scrimp on things that benefit your health and wellbeing.

They Live within Their Means

 Perhaps the number one habit you need to learn from people who manage their finances well is living within your means since this practice impacts many aspects of your life. When you do not spend more than you earn, you can save more and live without any debt or loan to pay.

You may not have fancy cars, signature clothes, or tickets to expensive concerts, but you will enjoy freedom from stress and anxiety. You may go to bed in ordinary pajamas, but you will sleep soundly since your mind is not bothered by piling credit card bills and unpaid loans.

While the idea may seem challenging, cultivating the habit of living within your means is doable. Here are a few tips that may help you get started:

  • Evaluate your income and expenses. Similar to the steps in budgeting, it is important to know how much money you bring in each month from all sources (minus taxes) and how much you are spending. If there is more money going out than coming in, you can address this by cutting back on unnecessary expenses or finding ways to supplement your income.
  • Know the difference between needs and wants. Before you buy something, make sure that you need it. If you are uncertain if the item you fancy is a necessity or a mere luxury, try using the 48-hour rule. Wait for two days before you buy it so that you will have more time to assess its importance.
  • Stop comparing your life to others. It is easy to feel dissatisfied or deprived if you keep comparing your situation to other people. Your friends or neighbor may be living a glamorous life, but for all you know, they might be buried in debt. Living below your means may seem unexciting, but you can take consolation in the fact that you will be much better off over the long term because of it.
  • Save money for expensive things. If you need to buy something expensive, you should save up for a few months and pay for the item in cash instead of borrowing money.
  • Explore other ways to make extra money. Living within your means is much easier if you have more money coming in. While you may have no control over your salary, you can find ways to make extra cash. You can turn your hobby into a business or explore various freelancing websites to find suitable side jobs.

Improving your financial situation does not mean accumulating tons of money at once. The secret is forming little habits—like the items above—that will slowly, but surely, help you get where you want, moneywise.