MOST of us fail to attain financial freedom in our life, which is ironic given the fact that this is a universal desire. Which begs the question: Why is most everyone financially challenged?
Studies point to conformity as the probable culprit. The poor among us do not want to leave our comfort zone, while the rich people have the self-discipline to avoid doing the things that the poor always do.
Here are the five things that you need to avoid if you desire to be financially free:
Not enough income is a matter of psychological wallet problem for us Filipinos. I believe that no matter how big or small your earnings are if you don’t know how to save, then the “not enough income” problem will hound you throughout your life. Honestly, I, sometimes, have this problem. But I have my own solution: I would remind myself that there are people who earn less than I do, but they are able to save. Just having this thought is a challenge for me to start saving. My usual tip for people who want to save—but cannot—is to start saving 1 percent of their gross income every payday. Better yet, set aside P100 per month for your savings account. This way you are forming a positive habit. Once formed, a habit is hard to break. As an old saying says, “human beings are creatures of habit.” Once you have this habit, try to increase the amount that goes to your savings account. Earmark P200 if you can, then increase again later, until you are saving at least 30 percent of your income every month.
Not enough patience is an obstacle that you can hurdle by understanding the law of cause and effect. Filipinos generally want to have more money instantly. That is why the majority want to “invest” in lottery for instant cash, rather than save. Following the law of cause and effect, money is supposed to be an effect, and service is the cause. If you want to have more money, you need to put in more service. Do what is hard and necessary rather than what is fun and easy. My usual tip for this is, ask yourself this question: “What service can I put in to help more people?” Here is a quote from Zig Ziglar, “You can get all the things you want if you help enough other people get what they want.”
Wrong spending habits. Here in Cebu, we have seen how the SM in North Reclamation rise, and an almost finished SM Seaside and in Consolacion. Why is Henry Sy so bullish in building malls? I believe he knows the spending power of Filipinos, who spend more than what they earn. This kind of habit is good in the macroeeconomic aspect because it generates more jobs for Filipinos. However, it is bad in the micro side, which concerns the personal finance of individuals. My tip: The moment you want to buy something, ask yourself: Do I really need this? Does my family need this? Is this what God really want for me?
‘Bahala na’ attitude. We have seen it on TV, heard it on the radio and saw it in the big screen: Characters saying “bahala na!” I have a client who always mentions the words “calculated risk.” I have learned from him that for every business transaction he does, he always calculates the risk involved in his financial investment. He will not risk all his money in one project. Saying “bahala na” and doing things mindlessly is a reckless act akin to saying “I’m not responsible for my future.”
Procrastination. This should be a good habit for shopaholics. We need to procrastinate in spending our money on things that we don’t really need. Here’s a quote from Warren Buffet on spending: “If you buy things you do not need, soon you’ll have to sell things you need.” My tip: Every time you try to save money, think of it as an expense and try to smile every time you save saying to yourself, “this is for my dream vacation.”
Serge Bargayo is a registered financial planner of RFP Philippines from Cebu City. To learn more about personal financial planning, attend the Second Registered Financial Planner Program in Cebu from July 14 to 17. To inquire, e-mail at info@rfp.ph or text <name><e-mail><RFPCebu> at 0917-3464126.