When I was in my 20s, I started working for a BPO company.
I had no idea how to manage my finances. I was financially illiterate.
The only thing that I know is to keep my money in my savings account which is my ATM card for payroll provided by our company.
I bought stuff here and there. I remember buying the latest gadgets at that time which was the PSP (PlayStation Portable by Sony) for P14K.
I was convinced by my friend that it is an investment. I realized that my friend has no knowledge about the real investment at all as I was.
After few months of playing and bringing it while riding an MRT going to work, I lost my interest in this gadget. I just kept it at home until it malfunctioned. My P14K goes away in a matter of months.
If you are in your 20s, I wanted to impart some of my financial advice that I learned late in my 30s so that you won’t struggle financially as I was.
Here it goes.
- Learn the Discipline of Saving
In hindsight, saving money is very straightforward. You just have to keep your excess money in your closet or savings account.
But why most people struggle financially if it is just simple?
It’s because most Filipinos followed the wrong formula of saving money. It has been passed on to generation after generation.
I wanted to share with you the better way of saving which is by – Paying Yourself First. Here is the powerful formula for that:
Income – Saving = Expenses
What it does is simply save or set aside the portion of your income (at least 20% or more) once you received your salary.
Then, spend the rest of your income by paying necessities like electric and water bills, foods, ice cream, etc.
In this way, you are building the discipline to save first before you spend.
- Invest in Life Insurance
What comes to your mind when you think about life insurance? You may think that it is an additional expense, unnecessary or unimportant.
Honestly, I also think the same way when I was in my 20s. Perhaps, it is because of the advice and information we hear about insurance from the people around us where we were young.
That is why we have this kind of bad impression when it comes to life insurance.
I may be biased because I’m a financial advisor or a licensed life insurance agent myself. The major reason why you need to be secured is that life is uncertain.
You will never know when you will get a critical illness, experience accident or premature death.
I have to tell you that it will be the best investment that you can invest in your early age because there are many advantages and benefits that you can get when you are still young.
First, investing in life insurance when you are young will be cheap. It will become expensive as you grow older.
Second, you are definitely healthy and it is easy to get approved. If you already got sickness, the premium that you need to pay will be much higher or you will not get approved by insurance company anymore.
Lastly, there is a very popular product that you can invest in which is the – VUL (Variable Unit-Linked). It is a 2-in-1 product because is a life insurance with investment feature attached to it.
There are more benefits that you can get from life insurance but I just showed you the top benefits of it.
- Build your Emergency Fund
In the age of globalization, there is no job security anymore. In just a snap, your work can transfer or outsource overseas like in India. That is why it is necessary for you to build your emergency fund as fast as you can.
Most experts advised that you should have at least 3-6 months of your monthly expenses.
For you to come up with this amount, you have to compute and write down your estimated monthly expenses. Add up your monthly bills like house rent, electricity, water, foods, etc.
For example, your monthly expenses are P20K. Then, you have to build an emergency fund amounting to P60-120K.
- Invest in Yourself
The best asset that you have is – Yourself.
You are earning that kind of salary because of the skills and the contribution you give to your company. So, if you want to earn more and grow your income you have to invest in improving and upgrading your skills and yourself.
You can enroll in online courses, attend seminar and workshop and read books of your interest.
I want to leave you with this quote from one of the top motivational speaker in America, Jim Rohn. He says, “Your level of success will seldom exceed your level of personal development.”
- Invest in Mutual Fund
When you are a beginner at investing, I suggest you to start investing in a mutual fund than a stock market. The stock market is very volatile and you may get overwhelmed. You may also get disappointed when you see a negative in your portfolio.
I recommend you to invest in mutual fund. It is a pool of funds from investors which is being managed and invests by a professional fund manager.
He is like a professional pilot that will help you to fly safely to your destination than operating the plane in your own.
What do you think will happen if you operate it yourself?
There is a high chance that it may crash because you were not trained to do it yourself. It will take you months or so to learn.
There are many institutions offer this kind of investment as banks and financial companies. You can visit their website and freely inquire about them.
- Invest in Foreclosure
Another way for your money to prosper is to invest in foreclosure.
These are real-estate properties wherein the homeowner stopped or could not afford to pay the mortgage anymore to the lending institutions. Most lending institutions offer their foreclosure listing in a below market value.
You don’t need millions of pesos to invest in this kind of investment. In fact, you only need to pay the down payment of 10-30% to take control of the property and the rest can be loaned.
You can get the listing and you can inquire in some banks and other government institutions like Pag-ibig for you to start inspecting some properties.
- Start a Side Gig or Part-Time Business
Nowadays, it is easy to start a part-time business because of the internet. You can start an online shop and sell stuff without leaving your home.
My wife is a stay-at-home-mom. She sets up an online shop selling shoebox because she finds it interesting. She just looked for a supplier online and sells it on her Facebook Page. My wife is earning a decent amount of money for every sale.
There are many ways for you to start a part-time business. You just need to align this with your skills or passion. You can start a computer shop in your community, creating an app, offer online marketing service and many others.
- Join a Club or Group
There are many clubs or groups out there that you can join in. Like I am, I am a member of Toastmasters International Club. This club helps us to improve and practice public speaking for just a very small annual fee. Aside from that, we are able to meet new friends and grow our network.
You may think how can you prosper by joining a club or group? As they say, your network is your net worth. The more people you know, the more resources and help that you can get to achieve your goals.
It is also one way of personal development because you will learn new things and develop skills that will help you in building your career.
- Invest in Crowdfunding
It is a fairly new way of investing your money to prosper. What it does is a company or an institution like FarmOn and PhilCrowd will gather fund from the crowd of investors (the name itself explains it simply).
This crowdfunding company will invest the funds that they gathered to their preferred investment like agriculture, lending or business franchise. In turn, the crowd of investors will receive an interest in their investment in due time.
Please take note that I’m not investing in any of these companies that I mentioned. You have to do your own research and check their company profile.
You can also ask someone you know who is investing in this kind of investment for you to understand it better.
- Give to Charity or Church
You may be wondering why you will prosper when you give away your money.
Let me tell you this, there is magic in giving.
I experienced it myself when we bought our first home thru foreclosure. We were able to buy that property below market value.
Also, most successful and wealthy people give more that is why they receive more. But you must give wholeheartedly and not expect in return.
Try it to experience it yourself.
There you have it.
I hope you have picked one or two good ideas that you can implement now so that your money will prosper in the future.
This awesome article was written by Marvin Basa. He’s a financial advisor and the founder of Financial Advisor Manila blog.
His helping and educating Millenials about proper personal finance.
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