There’s so much confusion regarding money and personal finance. What sounds right to you may sound ridiculous to the next person. But there are some truths that we simply cannot ignore, because we just keep getting them wrong. Like these five things we have listed here.
How Much Savings You Should Have
Ideally, you should have savings that will cover your expenses for six months, in case of job loss, calamities, or emergencies. Your savings should be able to pay for all your monthly bills and still feed you and allow you some form of entertainment or luxury from time to time.
It’s not just about having a really good salary and several credit cards which you don’t really use. It’s the fact that if something unexpected happens today, you will be financially okay for the next couple of months.
How to Create a Budget
Every payday, most people just set aside money to pay the bills, and then it’s ‘anything goes’ from there. That’s nowhere near a budget. It’s important to create a monthly budget so you know where your hard earned money is going.
Set aside money to pay for the bills, for the home, and for the family. You can set aside some for rest and relaxation, but don’t go over your budget. The rest goes straight to your bank savings.
How Your Credit Card Works
A credit card is a convenient thing to have because it allows you to purchase things with almost a month to pay before the finance charge kicks in. But very few people are able to do this in real life. They carry their credit card balance from month to month because they only settle the minimum amount due.
If you can pay for your purchases with cash, pay in cash instead. Only use your BPI credit card for real cash emergencies. And when you do use it, pay for it in full so you don’t waste money on finance charges. Your credit card is money you don’t have, so think twice, thrice, and maybe even more before swiping.
How to Start Investing
You don’t have to wait until you’re rich to start investing. If you want to be rich, you should invest. Now.
We’re not talking about a million pesos here. Even with just ₱10,000, you can already be an investor. There are mutual funds, UITFs, money market placements, and equities. Take your pick.
You can also invest in business. If food, fashion, travel, or technology is your passion, why not make money out of it as well?
What Affects Your Credit Rating
Your bad credit rating is not just because of your unpaid credit card debts. Your credit rating is built upon how responsible you are with your credit card spending and paying them off in full and on time. This also applies to your savings accounts, personal loans, car loans, and home loans.
Not missing payments and keeping your debts low are just some of the things that you can do to build a good credit history.