The key to financial security is simple, according to financial guru, Carl Dy. Most people are already aware that it is the crucial habit that one needs to develop if they want to start their journey towards financial literacy.
“It’s really simple: learn to save,” Dy said during the “Moneyfesting: Your Financial Guide to Financial Literacy” webinar held last March 10.
The first in a series of webinars organized by Rizal Commercial Banking Corporation (RCBC), “Moneyfesting” aims to equip Filipinos with the practical tips and knowledge that can lead towards making the right financial decisions.
In the webinar, Dy explained that the road to financial security can be summarized by three basic tips. The goal, he said, is to save as much as possible to open up more opportunities to earn money.
“To save, you save day-to-day. To earn, you earn day-to-day. The power is in the day to day,” he said.
Who gets your money
The first basic tip is knowing where your money goes. ‘And to do this, you need to monitor. Know where your money is going—house rental, electric bill, water bill, internet, charity work, tuition fee. Anything you can think of.” Creating an excel sheet of your daily expenses monitors even the most minute detail of your expenditure.
“If you can cut expenses every day, you can save every week,” Dy said.
Monitoring your expenses leads to the second tip which is to identify “money leaks”—unnecessary expenses that add up over time.
“It really drains our money fast. And if money is drained very fast, you won’t have anything to build and invest,” Dy said.
Money leaks can be obvious—for instance, monthly streaming service subscriptions or monthly purchases of designer clothing. But leaks can go unnoticed, especially if you are not conscious with your lifestyle choices and how it can cost you money.
You can consciously declare to yourself and everyone else your desire to save money. With this, you will weigh the cost of every little decision you make. This may mean giving up the weekly night outs or the monthly purchase of designer items while you’re working on your financial goal.
Good debt versus bad debt
The second tip is learning how to determine good debt and bad debt.
Good debt is a purchase that gives you something of tangible value in return. Buying a house or a property is good debt because its value appreciates in the long run. Bad debt, meanwhile, is anything that does not add value to you or your assets.
What can be considered as “good debt” may vary from person to person, depending on the asset that could provide them with additional value in the future. A loan to cover school expenses, for instance, is good debt since it could later add in career promotion. Traveling can be an enriching personal experience, but how you pay for it can determine if it is good or bad.
If you are financially in excess, traveling is okay. “But if the trip is causing anxiety in terms of finances and entails you to use credit, it becomes a bad debt, from a good debt/bad debt point of view,” Dy said.
Likewise, do not think of investments if you are in debt.
Once you have taken control of your finances, you can proceed to the third tip: create multiple streams of income.
For beginners, having multiple streams of income need not be about investments. It can be as simple as doing a profitable side job aside from your full-time work so you can have additional money to save.
“Once you have saved, increase your income. If you want to be wealthy, the income has to grow. The money has to grow.”
Saving, indeed, is the pillar of financial literacy. You don’t need to earn a lot in order to start saving. Start your journey to being financially secured with RCBC.
RCBC Digital offers a fast and simple way to open a deposit account online. With just one valid government-issued ID requirement, you can open a customizable bank account with zero-maintaining balance subject to verification. Upon verification within one banking day, you get full access to the online banking facility, enabling you to do advanced transactions such as converting foreign exchange, investing in UITFs, cardless withdrawal, and payment through QR codes.
Find out how RCBC can help you achieve your financial goals. Visit. www.rcbc.com or go to the nearest RCBC Branch.
