November is coming to an end and Christmas will soon be upon us. It's that time of year when many Filipinos receive their Christmas bonuses and 13th month pay... and we all know what that usually means, right? Shopping, shopping and more shopping!
While this is not necessarily a bad thing, overspending during the holidays -- especially on things we want but don't necessarily need -- often means we end up with bad debts to pay plus extra clutter in our homes. It also means that we didn't get to save a single centavo of our hard-earned money (which can be depressing for a lot of us).
This need not be the case though. Make a commitment to improve your (and your family's) financial situation today by practicing these five tips:
1. Reward yourself first.
Most financial advisors and personal finance coaches would recommend that you "pay yourself first" whenever you receive your salary or bonus.
Basically, this means that before you spend your money on anything, you should set aside a certain amount for yourself -- to save, and not to spend. Some people say you should keep 20%; other say 10%.
However much you choose to save, make sure to put your savings in a bank account -- one that preferably has no ATM -- so that you don’t have easy access to it. The next step to take, once you are more knowledgeable about personal finance and investments, of course, is to invest your savings so that your money will "grow."
This may seem difficult for many of us, but it is certainly possible. Commit to saving part of your Christmas bonus and/or 13th month pay now, and you’ll be sure to reap the benefits later.
2. Identify your needs and wants.
One of the things I dislike when it comes to the holiday season is the materialism that mainstream society and media usually attach to it. Christmas is so much more than sales and shopping. I really hope that people would remember that, and do what they can to make Christmas more meaningful for their families.
Having said that though, I know that most, if not all of us, certainly need to purchase items during the Christmas season. The thing is, we should also be aware of what we don’t need to buy.
For example, do you really need that new iPhone 6, when your old iPhone still works perfectly fine? Or do you really need to reward yourself with designer shoes, when you still have five pairs of shoes in good condition on your shoe rack?
Differentiating our needs from our wants can make a huge difference in our families’ finances -- even beyond the holidays.
3. Make a budget and stick to it.
Related to no. 2, once you’ve identified what you need to buy and spend on for the holiday season, come up with a budget based on your spending capacity.
Obviously, it makes more sense to stick to your budget and not spend money that you don’t even have in the first place.
Also, do your best to avoid borrowing money to pay for your holiday-related expenses. If you plan to use your credit card to purchase anything, make sure you can pay the full amount when your bill is due.
4. Consider giving the gift of "presence" over "presents."
Gift-giving during Christmas need not be in terms of material goods. Our family members and friends might actually treasure the gift of our time and presence more than any material gift we could give them, especially if we have been busy or lost touch with them throughout the year.
Here are some ways we can give the gift of our "presence" to others:
- Visiting a relative who you haven’t seen in a long time
- Spending time with a friend who has had a challenging year (e.g. experienced the loss of a loved one, was down with a disease, etc.)
- Relaxing at home with the people most important to you (instead of going to so many Christmas parties and events)
- Praying over sick people in your family or neighborhood
5. Increase your financial literacy.
I am no financial expert -- I’m not a registered financial planner nor a financial advisor. I’m just a "regular" person who has committed to learn more about managing my finances. This is why I, together with my husband, attended a financial literacy seminar by the Wealth Academy a few years ago.
The seminar on basic money management and investment strategies really helped us take a closer look at how we could take charge of our finances and make our money "work" for us.
We also learned the importance of being financially literate, and of helping our kids to be so, too. Rich Dad, Poor Dad author Robert Kiyosaki explains why we need to increase our level of financial literacy in one of his blog posts:
"Our schools do well at teaching reading, writing and arithmetic, but they are horrible at preparing people to work with money. Nearly every person who graduates from school is financially illiterate
If you want to be rich, you must have a high level of financial literacy.
The good news is that you can become financially literate. It will take hard work, a lot of study, and trial and error -- but the dividends will be worth it."
In case you’re interested in attending a financial literacy seminar too (for FREE!), you can get in touch with my contact at the Wealth Academy via rfsanti.fantastic.life@gmail.com. They give weekly seminars in different locations, such as the one below:
You can certainly do so much more to improve your family’s financial situation this Christmas (and beyond!) -- the previously mentioned ways are actually just the "tip of the iceberg." What’s important, though, is that you take that first step towards a stronger financial foundation today. So go ahead and do it -- I’ll be cheering for you all the way!
For inputs/feedback on this article, please feel free to connect with me here. I hope the upcoming holidays will be full of blessings for you and yours!
(Note: All images used in this article, except for the last one, are from the Robert Kiyosaki Facebook page.)