Just because you have money does not mean you have financial freedom. Financial freedom is much more than having a few bucks in your wallet, it is the ability to do whatever you want to do without being limited by money concerns. Sadly, financial management is not a subject taught in school that is why many people are clueless as to how to do it. Failure to properly manage your finances is very critical if want to achieve financial freedom, this is not exclusive to us, young adults because there are also those who are in their 30’s, 40’s and even 50’s who have endangered their retirement funds because of the lack of knowledge in handling their finances. Here are some signs that you need to start saving up.
1. You do not have a savings account.
Savings account (also known as Emergency Fund) is designed to cover a financial shortfall when an unexpected expense crops up. According to experts, you should keep between three and six months worth of your living expenses. The most common reason for the need of an emergency fund is due to a sudden loss of income (like you lose your job) but you still have bills to pay before getting a new employment.
2. Payday can’t come soon enough.
Only a week has passed after payday and you’re almost out of $$$, you are left with no choice but to ‘penny pinch’ in order to survive the rest of your working days with what is left of your salary. Instead of budgeting, you are using that money for frivolous things like expensive coffee and etc.
3. Unable to pay your credit card bill.
Here’s the scenario: Your monthly credit card comes and upon checking your finances, it seems that you’re out of budget. You decide to pay for the minimum balance. Not a good Idea. If your purchase is not affordable then you are also unable to pay credit card bill and also the rate of interest, therefore you must avoid purchasing such things.
4. Relying on mommy and daddy in case of emergency.
There is nothing wrong with asking for financial assistance from your parents, if you’re 16 years old or a student (it’s normal because you have no means of income) but if you have been working for more than a year… Isn’t it too much?
5. Retirement funds?
“I don’t need to get one yet. I’m still young, I have plenty of time to save up.” On the contrary, this is the perfect time to think about getting a retirement fund.
To sum it up…
If you find yourself in any of these situations, it’s not to late to reverse it. Try to control yourself from spending too much on things that you don’t really need.
Learn to budget by listing down all of your expenses, it should never exceed your income. If you cannot afford to buy that savvy new smart phone yet, wait until you have enough cash. And if you would just limit your ‘compulsive buying’, you would have saved a lot already!