Just because you have money does not mean you have financial freedom. Financial freedom is much more than having a few bucks in your wallet, it is the ability to do whatever you want to do without being limited by money concerns. Sadly, financial management is not a subject taught in school that is why many people are clueless as to how to do it. Failure to properly manage your finances is very critical if want to achieve financial freedom, this is not exclusive to us, young adults because there are also those who are in their 30’s, 40’s and even 50’s who have endangered their retirement plans because of the lack of knowledge in handling their finances.
Here are some signs that you need to start saving up.
1. You do not budget.
Learn to budget by listing down all of your expenses, it should never exceed your income. If you cannot afford to buy that savvy new smart phone yet, wait until you have enough cash. And if you would just limit your ‘compulsive buying’, you would have saved a lot already!
2. You do not have an Emergency Fund.
An Emergency Fund is a bank account with money set aside for urgent, unplanned situations only. It is intended to be used only for worst-case-scenarios such us such as the loss of a job, a debilitating illness or a major repair to your home. According to experts, you should keep between three and six months worth of your living expenses.
3. Payday can’t come soon enough.
Only a week has passed after payday and you’re almost out of $$$, you are left with no choice but to ‘penny pinch’ in order to survive the rest of your working days with what is left of your salary. Instead of budgeting, you are using that money for frivolous things like expensive coffee and etc.
4. Unable to pay your credit card bill.
Here’s the scenario: Your monthly credit card comes and upon checking your finances, it seems that you’re out of budget. You decide to pay for the minimum balance. Not a good Idea. If your purchase is not affordable then you are also unable to pay credit card bill and also the rate of interest, therefore you must avoid purchasing such things.
5. Relying on mommy and daddy in case of emergency.
There is nothing wrong with asking for financial assistance from your parents, if you’re 16 years old or a student (it’s normal because you have no means of income) but if you have been working for more than a year… Isn’t it too much?
6. Life Insurance? What’s that?
“I don’t need to get one yet. I’m still young, I have plenty of time to save up.” On the contrary, this is the perfect time to think about getting an insurance. It provides the financial means to preserve your way of life, or that of your family, in the event of an accident, serious illness or even death.
To sum it up…
If you find yourself in any of these situations, it’s not to late to reverse it. Try to control yourself from spending too much on things that you don’t really need.