3 bad financial habits to leave behind: Expert weighs in
MANILA, Philippines — Saving money has always been a struggle for many people.
According to Fitz Villafuerte, an entrepreneur and registered financial planner, the reason why people think it’s so hard to save money is usually their mindset. It’s all about the mindset.
We’re not talking about the people who have families to sustain or those who act as their families’ breadwinners. We’re talking about those who always have money to spare — but are still unable to save money for whatever reason.
Now, as we go through the new year with new life and financial goals, there are some things we must leave behind in 2021, according to Villafuerte.
Having a 'FOMO'
Villafuerte says that one should get rid of their FOMO (Fear of Missing Out). These days, online shops have marketing and sales promotions such as the 9.9s, 10.10s, or 11.11s, through which buyers can get huge discounts for items.
If you look at your social media, you’ll find your friends posting their “Budol Finds,” hoping to influence more people to buy what they’ve just purchased online at a discounted price.
Villafuerte explained that this works because of people’s fear of missing out, with many trying to “keep up with the Joneses,” which means that someone is trying to be as good as others by getting what other people have or doing what other people are doing.
Villafuerte noted that to get rid of FOMO, it helps to stop comparing oneself with others because people have different situations, goals, and resources.
“Just because someone has something doesn’t mean that we also need to have it, too,” he stressed.
Believing that saving is difficult
Many Filipinos would often say: “I’m not really a saver,” or “I find it very hard to save money,” or “I’m a spendaholic.”
When people say this, Villafuerte reminded them that it always starts with the mindset. His tip is to set a realistic saving goal.
When it comes to saving money, one’s mindset should be progress over perfection.
The personal finance expert said that it’s good to have a specific saving goal but he advised people to not be too hard on themselves when the goals are not met because the secret to attaining financial goals is “always making the effort” to do so.
He also warned that when having goals, it’s best to expect that one could fail, therefore one must be compassionate to oneself. There are really just days or even months when some goals can’t be met.
Having a fixed mindset
Instead of having a fixed mindset, it’s important to have a growth mindset, Villafuerte advised.
Many people who are not good at personal finance would give excuses such as “I’m bad at maths” or I’m not good with numbers.”
These excuses lead to missing out on various affordable investment opportunities all because of one’s fixed mindset, which limits oneself from trying to make an effort to understand new ways to grow one's money.
According to Villafuerte, one should have the determination to try to understand new investment vehicles such as real estate investment trusts (REITs), non-fungible tokens (NFTs) and cryptocurrency.
Every investment vehicle is easy to understand as long as one has patience, Villafuerte said, noting that self- and wealth development take a lot of time.
Therefore, it’s best to leave the fixed mindset behind and instead have a growth mindset, which entails patience, persistence, and determination to learn and understand ways to improve one’s personal financial health.
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