Many Filipinos aspire for financial stability -- whether it is building a retirement fund and retiring at an early age or living a comfortable life for yourself and your family.
There are plenty of ways to achieve these goals. This article will break down the five basic steps towards financial maturity and freedom and how you can achieve your goals.
Track your money
To attain financial stability, you first need to set concrete goals. An example is saving PHP 5,000,000.00 by the time you reach 40 years old. Having a financial goal allows you to work towards a definite destination while also giving you a sense of accountability. Remember to set both long-term and short-term goals. For instance, saving PHP 5,000,000 by 40 years old can be your long-term goal and then you can add the steps to reaching that as your short-term goals like saving PHP 10,000 a month.
Once you’ve set your financial goals, a good way to move forward is to know where your money goes. This doesn’t necessarily mean budgeting (though it will greatly help in saving up for your future), but more on keeping tabs on how much money you’re spending on food, transportations, and other needs and wants.
Tracking your money is necessary because it can raise flags in your spending that might be causing you to live paycheck-to-paycheck and unable to take that first step towards financial maturity.
For example, you might find that a significant chunk of your income goes to dining out in expensive restaurants. When you’re tracking your money, you can see this in your expenses and conclude that you should spend less on dining out if you want to save more.
Get out of debt
Before you can start building your financial independence, it’s important to start in a neutral base, not one that is racked with debt.
Think of debt and financial independence as building a house on quicksand: no matter how well you set the foundation for your building, the soft ground will always set you back. You don’t progress because your ground will always hold you back.
Before you can achieve financial independence, settle any personal debts you may have. Pay off any outstanding debt you have with banks and lenders. Once your debts are settled, or at the very least lowered to a minimum you can manage, you can move on to the next step towards financial maturity.
Create your emergency fund
Before you can turn to investments to grow your money, it’s important to have an emergency fund. All types of investments have varying degrees of risk, so it’s best to have the safety net of an emergency fund to soften the blow of an investment or income loss.
According to financial experts, your emergency fund should be three to six months’ worth of your current salary. A savings account is the ideal place to keep your emergency fund because of its safety of principal feature. Once you’ve reached your emergency fund goal, do not touch the bank account unless absolutely necessary.
Begin investing
You can start investing in passive investments like Unit Investment Trust Funds (UITFs). With a UITF, you can start investing to reach your financial goals or start building for your retirement for as low as PHP 1,000. UITFs can also help you achieve your long-term financial goals.
Metrobank has multiple UITF options for you to choose from, managed by investment professionals who can look after it to ensure you get the most from your investment.
Make saving and investing a habit
Continue to build your savings and investment until you’ve reached your financial goals. Make sure you research about various investment methods and your risk tolerance so that you’re aware of all your possible investment options.
You aren’t limited to investing in one instrument. Diversify your portfolio by putting some money in a savings account to grow interest slowly but surely. You can also place some money in a time deposit account if you’re looking for a low-risk investment. Or, if you’re opting for something riskier with higher rewards, invest in the stock market and watch the market rise and fall depending on various industry factors.
Once you’ve gotten the hang of investing and saving, you’ll soon find your money growing on its own. This is good as you can continue to invest or save the dividends you earn while still playing safe with an emergency fund ready.
Don’t forget to keep track of how much you’ve made through your investments and compare it with what’s on your financial goals. It’s good to keep monitoring how far or close you are to reaching your goals so you can adjust your investments accordingly.
At this point, you’ve finally achieved financial freedom as you’ve managed to upgrade your financial maturity and income sources! Saving and investing gives you an opportunity to further grow your hard-earned money and financially prepare you for the future.
Start your saving and investing journey with Metrobank. We offer a diverse choice of savings accounts and investment products to help you fulfill your goals. If you’re not sure where to start, we’ve got you covered. We'll be with you every step of the way. Download the earnest app or head to the nearest Metrobank branch to help you find the right investment for you.
