Splurging on clothes, gadgets, and travel has never been so easy with the many irresistible discounts both in the malls and online. Before you know it, you’ve spent most of your salary even before your next payday.

Such is the folly and misery of petsa de peligro when you are cash strapped, especially one or two days before payday.

Here are five simple yet effective ways to avoid spending beyond your means:

1. Know how much you actually earn.

Even though it sounds obvious, it is an important consideration because there is such a thing as “takehome pay.” There are numerous deductions from your gross salary such as payments to SSS, Pag-IBIG, among others, and knowing how much you actually receive after the deductions is essential in understanding how much you can save and spend. Knowing your “take-home pay” will help you create a budget.

2. Calculate what you need.

Budgeting helps you understand your financial situation. It may not be easy but it is the best way to be in control of your income. Reconcile your income and expenses. Start by listing what you earn from your salary, investments, and other sources of income, and then all your expenses each month. Follow this simple 50/30/20 budget rule, wherein fifty percent of your money pays for your needs, thirty percent for your leisure, and twenty percent for savings.

3. Cut unnecessary expenses.

A big part of smart money management is being able to distinguish between “wants” and “needs.” Needs are nonnegotiable expenses like your grocery and utility bills, while wants are those nonessential expenses which may include restaurant meals and fancy gadgets. Remember, you manage your finances better by taking everything and every penny into account. Smart spending is also about using your credit card wisely. Remember that expenses charged on credit cards are loans. Harness the power of credit card management and that piece of plastic can be a powerful tool.

4. Set financial goals.

You have started saving, but will you have enough to buy a house in ten years? Write down what you want to achieve and set a deadline. Split your goals into three categories: short-term (one to five years), medium-term (five to ten years), and long-term (ten or more years). Then clearly list your goals in each category along with the exact amount you need. Setting financial goals can help you monitor your progress and your net worth over time.

5. Be an investor.

You don’t become rich by saving. You become rich by investing, which is based on a very simple principle: instead of working for money, you let your money work for you. Once you have prioritized your goals, convert your savings into investments. If you want financial wellness, and even financial freedom, start investing for your future.

You can invest in real estate, stocks, art, or you can let experts do the investing for you. You can even start for as low as PhP10,000. BPI Asset Management and Trust Corporation (AMTC) offers funds that deliver attractive long-term returns. As with any investment, you should consider the length of time you can keep your money invested, and your risk appetite, or how aggressive you want to be in your investments.

This advertorial is from BPI AMTC. To know more about our products and services, call (02) 580-AMTC (2682) or visit www.bpiassetmanagement.com.

*This article taken from Kerygma Magazine October 2019 issue*

Featured image is from Unsplashed.com.