Wise Money Tips

I have always thought there’s only one formula in making money.  That is work hard and at the end of each month, you get your paycheck.  Growing up in a family of farmers, I have seen what working hard really means.  I’ve experienced waking up early in the morning, go to the farm, plant or harvest rice until the sun sets in.  When you go home after a long day of working, the aching muscles says it all.  It is HARD work.  I’ve learned from my parents that if you want to have some money, you have to work  for it.  Often times, I’d go along with my mom to harvest tobacco leaves from a nearby town, and afterwards, she’d pay me for how much I was able to harvest.  That’s always been my training in terms of making money.  That was my first money habit – work to earn.

When I was in College, I wanted very much to help my parents pay for my education.  I was fortunate to have been granted a full scholarship, so that took care of the tuition.  Even then, making money from a far away province, and spending it in the most expensive city in the country is no easy task.  It is an uphill battle similar to walking up to a going down escalator.  So in my own little way, I also tried to make money by applying as student assistant to one of the universities’ projects.  It doesn’t pay much since it is a government project but enough to pay some of my daily expenses and grow my confidence.

After graduating, I immediately started work as a mainframe programmer for a multinational IT company.  The offer I got then was around 16,000 pesos which was BIG money then for someone who’s fresh out of college and don’t have much working experience.  I worked very hard and was fortunate enough to be promoted almost every year.

As my paycheck increased, my appetite for consumption also increased.  I bought a refrigerator, a washing machine, gas stove, shoes, etc, ALL at the same time, EVEN when I didn’t have the money to pay for it.  I just used my new credit card!  That’s when my debt started to pile up.  The “easy” monthly payments never lived up to its promise.  No monthly payment was easy, especially when you only have your paycheck to rely on.  As my debt seemingly increased every month, I also had to worry about paying my monthly house rental, buying groceries, eating out with friends, and more.  There were times I was so out of money I even had to do “cash advance” on my credit card.  As some of you might know, you get to pay a hefty “fee” for doing a cash advance.  This is on top of the amount of money you actually “advanced”.  My already big debt, ballooned even more!  I was so ashamed of having to do cash advance, I promised right there and then, I had to pay for my debt no matter what.  It was like a having compound interest working against me.  I had to learn how money works.  I had to figure it out no matter what.  I had no choice.

While pondering my huge debt, I tried to look for ways to earn more money.  I tried doing some programming projects for friends.  I even entered the world of network marketing, tried selling wellness products and failed miserably.  I remember that my only “downlines” (a term indicating those you’ve recruited into the business) was my mother, my aunt, and a few of my friends.  It was a learning experience.  The thing that struck me most, was that my “need” for money, was being transferred to my “clients”, without me being conscious of it.  It was hard “selling” something you don’t 100% believe in and it’s even harder when your motivation is “making” more money without necessarily helping other people.  I think this mindset barrier is one of the reasons why I was not able to make it work.  Everyday, I had to battle with myself.  Am I here to really help other people?  Or is it just because of the money?

One time, while me and my friends were hanging out at a bookstore, I saw the book Rich Dad, Poor Dad by Robert Kiyosaki.  I heard my friend say it’s a great book, so I bought it, took it home and devoured the stories and financial lessons in the book.   The book opened my eyes to the world of money I never knew existed before.  That’s when I realized that the rich have different sets of money habits from the poor and the middle class.  For the first time, it finally made sense why I can’t seem to be making a dent on my credit card debt; why I can’t seem to sell anything at all.  Because I had the wrong money habits.  I had to learn rich money habits to achieve financial freedom.

After that, it got me excited to learn more about money. First, I signed-up for our company’s savings plan.  I started really small. At first, only about 2% of my paycheck is automatically deducted and kept under my savings account.  I don’t even get to hold the money.  After a month, I increased it to 5%, then to 10%. After a year of saving, I was able to set aside 20% of my paycheck without necessarily scrimping myself too much.  That was rich money habit #1 – pay yourself first.

With the savings, I had, I was able to pay my debt slowly buy surely.  More than that, it gave me confidence to know that I can do it, with the proper discipline and rich money habit.  When the opportunity came for me to be assigned to the US for a 6-month stint in my company, I was able to save even more and pay-off the rest of my credit card debt. That was rich money habit #2 – get out of bad debt as soon as possible!

I also started to take serious notice of the numerous calls I got from insurance agents offering life insurance.  Before, I would always make up numerous excuses just to avoid talking to them.  But now, I wanted to know more how I can use the different insurance products to protect myself and my family.  I also started reading more on business, money, investing and personal finance.  After a few years, I managed to save up for an emergency fund.  That’s rich money habit #3 – Get some protection!

I’m still a long way to go from financial freedom.  That is my goal.  I am in the process of learning how to build passive and semi-passive income, and I am loving every minute of it.  In this website, I will share whatever I learned so that you too can build your own rich money habits and ensure your financial success and freedom!

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Here are my weekly money savings tips:

1. Maintain a good credit score! It will save you thousands of dollars in the short and long term when you need to borrow money to buy a car or a home. Creditors will give you an interest rate and the loan amount based on your income and credit score.

2. Large sums of money should NEVER be left in a checking account or even a low-interest bank savings account. Rather, put the money into a high interest savings account (like an ING savings), money market fund, or other forms of short term high interest investments with a fixed return.

3. If you have an employer matching 401K plan, maximize your contributions, so that you double your money!

4. Set aside 10% of your paycheck towards some form of long term savings account, like a money market account, mutual fund, retirement plan, or 401K. As you pay amount increases, your contribution will also increase automatically. 10% will also ensure that you stay ahead of inflation.

5. One of the best investments you can make is to first pay off all your high credit card debts. Credit cards typically carry a high interest rate and by paying off these debts, you get one of the best returns available which also is tax-free.

6. If you are losing sleep over an investment, whether its a stock, mutual fund, or retirement plan, its not worth it! Your lack of sleep is probably a good indication that it may be too risky, too good to be true, or just not the right invesment for you.

7. If an investment is projecting returns that are just too good to be true, they probably are. Unless you are intimately involved in the investment or are an insider, an investment that sounds too good to be true is probably too ambitious, too risky or just a scam.

8. Before you invest in something, always do your own research. Consulting with others and getting a second opinion is good, but you need to investigate for yourself. The internet is typically the best source for lots of information but make sure you read enough or get relevant data.

9. Always negotiate for commissions or fees paid for financial or real estate advice. Don’t be misled by standard commissions and “non-negotiable fees”. It is your money and the experts work for you.

10. Can’t get out of debt? If you are having problems meeting your debt payments each month and feel like you are digging a deeper hole, go talk to your creditors and banks to find a solution to get out of the mess. Beware of debt consolidators as they could charge higher interests in the long term and get you even deeper into debt.

If you like any of these tips, have questions on some, or have some feedback, I would like to hear from you. Visit this article by clicking on http://www.financialresource.org/blog/10-money-saving-tips/ and Post your comments. Look for more money saving tips each week!

Happy Springtime and be Money Smart!

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