The start of a new year is an excellent opportunity to do something different, like trying a new hobby or losing weight. It’s also a good time to evaluate your financial health, reviewing your expenses and savings from the previous year to assess if you were smart with money.
Checking and improving your finances is crucial for achieving your short- and long-term goals, such as traveling, buying a car, starting a business, or preparing for retirement. As such, you must learn how to spend, save, and grow your money wisely. However, setting financial resolutions requires a lot of work and consideration.
To help you start, below are some money management or finance tips you can follow this 2023.
How to Spend Money Wisely
Good money management starts with identifying and listing your expenses based on priority. Below are tips on how to spend money wisely.
- Monitor your spending
Improving your financial health starts with tracking your expenses. You can write them down in a small notebook or record them through a money management app. You can also classify your expenditures into food, transportation, shopping, education, and other categories. Then, you can see how much you spend weekly or monthly and identify your priorities.
- Figure out which habits drain your money
Once you’ve listed your expenses, categorize them into “must-haves” and “nice-to-haves.” Must-haves include rent payments, phone and internet bills, and groceries. Meanwhile, nice-to-haves can consist of clothes, food takeouts, and monthly subscriptions.
- Think twice before every purchase
Some tend to make impulse purchases when they think they need more than they already have or feel pressured to conform to society. Such bad spending habits can drastically harm your finances in the long run. It’s best to practice mindful shopping instead. Whenever you feel the urge to buy something, ask yourself the following questions:
- Do I really need this product?
- How will this purchase benefit me?
- How long will my purchase last?
- Do I already own a similar product?
- Uninstall online shopping apps on your phone
Online shopping apps enable everyone to purchase whatever they want without leaving their homes. While convenient and accessible, online shopping can also be detrimental. Having one or a couple on your smartphone may make you spend impulsively on things you don’t need. So, consider uninstalling online shopping apps on your phone to avoid spending more than you should.
How to Save Money
Saving money entails more than putting cash in a piggy bank. Below are tips on how to save money, especially in today’s digital age.
- Open a savings account
Opening a bank account dedicated to your savings can help you stay on track with your financial goals while having easy access to your money. The key to choosing a bank for your savings account is prioritizing strong security features. If you plan to sign up with a digital bank, check if they offer multi-factor authentication such as one-time passwords (OTPs) and biometrics.
- Automate your savings transfers
Most mobile banking apps offer automatic transfers, which involve scheduling another bank account, like your payroll, to move money to your savings account every month. Use this feature to build your savings and avoid spending your income on unnecessary expenses.
You can also set automatic transfers for specific goals, such as building your emergency fund, saving for a vacation, or preparing for a major investment.
- Set short- and long-term savings goals
Your goals should motivate you to grow your savings and track your progress. As much as possible, be specific with your short- and long-term goals to manage your expectations and save based on your means.
Short-term financial goals may include creating an emergency fund or saving for a new phone. Meanwhile, long-term goals include saving for a house or car or building your retirement fund. Use a savings goal calculator to know how much you should save for each category for a specific timeline.
How to Grow Money
What better way to enjoy your savings than making them grow over time? You can still increase your wealth in many ways, even without saving millions monthly. Check the tips below to learn how to grow your money and make it work passively.
- Look for a high-interest savings account
To grow your savings passively, consider opening a high-interest savings account. Some banks offer as high as 8% interest when account holders reach an average daily balance for a specific period. Meanwhile, others give a bonus interest to users who haven’t withdrawn from their accounts for a month.
- Diversify your investments
Investing in different assets can also grow your wealth more quickly. However, investing solely in stocks or mutual funds is not enough. It would be best to diversify your investment portfolio, so it can continue earning even when one of your assets performs poorly.
For instance, if the stocks of the company you invested in decreased in value, pour your funds into real estate, precious metals, or rare collectibles since they appreciate over time.
- Seek the help of a registered financial planner
A registered financial planner can help you identify your financial priorities, consider profitable investments, and reach your financial goals. They can also recommend financial products and services that fit your current capacities, needs, and risk appetite. Since they play a critical role, you must choose a trustworthy and professional financial planner.
Certified financial planners have the knowledge and skills to help you. Find one who explains financial terms and calculations in lay terms. You need not only an intelligent financial planner but also an empathetic one. Lastly, hire a financial planner whose professional fee fits your budget.
Use Your Financial Resources Wisely
Improving your finances takes a lot of work. Still, it’ll be worth it in the long run. The earlier you become financially responsible, the easier it will be to manage your financial health.
Aside from the finance tips above, using a credit card responsibly can promote financial health. Contrary to popular belief, credit cards can help you become more financially secure if you choose the right one for your lifestyle. Luckily, RCBC offers a range of credit cards that can accommodate your lifestyle and goals.
For instance, RCBC credit cards have budget management features that can help you set your installment plans, monitor your transactions, and consolidate your bills. Apply for any of our credit cards to improve your financial health and achieve your goals for 2023 and beyond.