Tuesday, 10 October 2017

Lessons Learnt: Managing Money

October is officially here, which means it's time to countdown to my birthday and do a bit of a review of all the goals on my 24 Before 25 List. One of it was to manage money better (and save for the future). While the latter part of that goal/challenge was yet to be achieved, I think I definitely learnt how to organise my money much better now—especially since I have a relatively steady income flow as of 2017. I've gone from a hedonistic, ignorant girl to a full-fledged money-saving woman in the span of one year—okay, actually, this journey has been going on for longer than that. A little disclaimer: I am no money expert, perhaps even far from it, and my money-managing journey is far for perfect, but I feel like I have some lessons in my pocket now that I can share with all of you. Of course, if you want actual, professional tips, you could check out The Financial Diet—there are some kick-ass money-savvy ladies over there. In the meantime, I hope you'll find these lessons somewhat helpful.

Have It on Record

All your expenses, all your incomes, all your debts—make sure you have a record of all of them. When I used to live on my own, I used to have an actual book where I keep these things on record. But, after moving back home and familiarising myself with technology, I started to have an app for these things. I use Monefy to keep track of all my earnings and spendings and Splitwise to keep track of all my debts. Having the apps on my phone really helps me keep up with my day-to-day spendings at all times. Although I don't have an actual, nominal monthly/weekly budget, doing this helps me so much in knowing which aspects of my life I could/should cut back on, which parts of my life I should invest in and how much of my monthly salary I could save up. Sometimes I lose track too, though, and a great portion of my money disappears into thin air—but that's okay, because I still can find out how I use my money and what can I do to make it better.

Two Is Better than One

This is something I've been learning over and over again through various sources on the internet: have more than one income. Usually, it applies to freelancers, but I think everyone should do it. The thing about income is you actually never know when it'll stop coming—freelance or otherwise. Your office could declare bankruptcy tomorrow or your boss might have to let you go or you might not get any clients at all this month. Who knows? Which is why it's always best to have a spare income in the pocket. You can do this through various means. Some people have side jobs—this is how freelancing often starts—and some people make investments. If you get a side job, make sure it doesn't get in the way with your main job, lest it would defeat the purpose. Pick something light on your body and brain or maybe a passive income—which is where you create something and you can sell it forever, making an effortless income flow. A plan B, you know.

Pay Up Front

Debt isn't something I like to keep—although I do still have a lot—and I'm sure a lot of people feel the same way. Whenever I borrow money from my friends, I try my best to pay them back as soon as possible. Last year I finally acquired a credit card and, while I don't like to have it burning holes in my wallet, I started using it almost right away, out of necessity. My Dad sat me down and gave me some great advice on managing my credit card—and the debt it comes with. He said, pay more than you owe and try to use it after the billing date, if possible. This I do, but also added my own rule: try as much as possible to pay it off at the beginning of the cycle. For instance, my credit card is billed every 19th of the month and due every 4th of the next month. Personally, after acquiring my salary, I try to pay the upcoming bills—which I can already pretty much check online—on the 5th or within a week of that. That way, I wouldn't have to worry about it for much longer or blow that money on whatever—ending up with possibly bigger debts.

Switch It Down

What I realise more and more as I grow older is how many things are unnecessarily pricey, i.e. "healthy" products. Honestly, not all things that are more expensive have better quality—sometimes they have even worse quality. How can that be? More often than not, all this excess money goes to their branding and packaging. It is best to buy something for cheaper, especially when you don't use it very often. Buying something packaging-free is often less expensive—and you can buy in bulk too! Getting certain things at the farmer's market can be a good choice for your wallet too—while supporting local farmers in the process. Also, pay attention to limited offers/promotions that could save you a lot of money. Check your local supermarket's weekly catalogue and note down the on-sale items that you might need. It might be a bit of a chore but you wouldn't believe how much of a difference it could make.

Pick Your Battles

Obviously, with money, it always comes down to the owner. How and where you want to spend your money are entirely up to you. There is no one formula for how to manage your money, basically, because everyone treats their money differently. You might want to invest on certain things, but not others and your friends might want to do the exact opposite—and it's okay, because we all live different lives. Just always know when you should save and when you should splurge—and why. Maybe if last month you spent a lot on eating out and clothes shopping, this month you focus your money towards groceries and homeware items. Make that a commitment and let your friends and family know, when they ask you to hang out in a fancy eatery. Also, make a (mental) pros-and-cons list of a potential purchase when you see something you like in a store—online or otherwise. If you feel like you would get a lot of use out of it, maybe it's worth buying. If not, then put the item down—trust me, your life won't feel less complete without it.

The most important thing of all to remember is to discipline yourself and keep at it with all these tips. It's no use if you do it once and then never do it again. Or if you note down all your spendings and earnings, but don't keep yourself in check and keep splurging on things anyway. As the TFD ladies once said, just as you never fully feel like an adult when you grow up, no one ever feels like they have financial success in their hands. Managing money, like most things, is an endless journey. As long as you have it, you need to keep doing it—and most of us need to have it to survive. Don't worry, a lot of people still struggle on how they should treat their money—as am I!—but to remember to keep on managing is the best thing to do. Related to this, you can also check out some lessons I learnt on a year of no shopping. It might really help you follow that last tip there ;)

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