March 3rd, 2014 / No Comments »
A few weeks ago, we talked about the first step in Personal Finance according to Verabear: Set your financial goals. I hope you’ve listed them down somewhere, if not, take a few minutes and do so, then come back.
Now that we’ve thought about our financial goals – or maybe even our life goals – we’re ready for the next step. Before we even talk about how we get from here to there, we must first determine what the here means.
Let’s take a look at the current situation – how are you doing, financially?
Take this short survey:
- How much do I have in my bank account/s? –
An Emergency Fund is vital for success. The amount or how much this fund needs to be varies from person to person. Think of it as a cushion that will help soften your fall in case of emergency. Let’s say you find yourself cut off from your income source all of a sudden. The emergency fund is what will help you get through your day to day life without resorting to debt.
Like I mentioned, the amount that needs to be in this fund varies, but typically, it’s three to six months’ worth of expenses.
For most of us, our savings account holds the emergency fund. But an accessible savings account makes it easy and tempting to spend that money for things other than emergencies. That brand new LED SMART TV on sale might sound like an emergency, but if you dip your fingers into your EF, then it may not be so smart.
Sadly, that has been the story of my life, and my bank account’s life. I bought my first iPad using money from my Savings account. When I’m short for the month’s expenses, I turn to my handy ATM and take from my Savings. As a result, I have an Emergency Fund that will probably only last a month if I find myself unemployed.
It’s a story I am now changing.
It makes sense to me to have a separate account for the EF, and one for short term saving. Short term saving is for big or small expenses I am saving up for. Depending on how big or small it’s going to be, it may make sense to setup separate bank accounts for each. Right now, I have my EF account, my payroll account (for my daily expenses, and short term savings too), and a Savings account for our Wedding fund.
- How much do I owe? –
Be honest. Your success depends on how honest you can be to yourself.
If you have credit cards, take at a look at your latest statement and list down how much you still owe. I do believe in credit cards being a convenient tool for financial success, but if no one tells us how to use them wisely, they end up becoming a tool that ruins us.
I have three credit cards – way too much. I will soon terminate one of them, but I’ve accumulated a shameful amount of credit card debt. Honestly, I thought that the interest rate for cards were small enough. But if you think about compound interest, and that it grows each month, you realize how important it really is to payoff your credit card bill in full, each month.
I’ll talk more about debts and repayment some other time. For now, let’s focus on inspecting our current situation.
Apart from credit card debt, do you owe anyone anything? I owed my Dad money for my car. I’ve got about 50k left to pay, but he;’s allowed me to put off payments because I now also have to pay for my medical bill from last year’s back operation.
Knowing how much you owe makes it easier to plan on how much money to set aside monthly to pay them off.
- How much do I have in investments? –
Have you invested on anything at all? Do you have a life insurance policy? Do you have property, or a business, anything?
Is this something you’ve thought about a lot? Or are you not interested in making any investments?
Investments can be an additional source of income, or it may be your passport to the future. It’s been said how keeping your money in the bank doesn’t amount to much anymore. All it is, really, is a secure way to keep your money instead of stowing them away under your bed. Investments, in contrast, grow your money. How are you growing your money?
How do you want to grow your money? What’s the best investment instrument for you?
I invest in stocks. I have a life insurance policy. The company I work for pays for my health insurance, and that of my parents’ too. They also took out a group insurance company for all employees.
I was supposed to take out another life insurance policy a few months ago, with a mutual funds counterpart. It fell through so it’s on hold for now.
- What are my sources of income? –
Most of us mortals rely on a salary that we receive fortnightly. How much is my take home pay? We all know by now that 18k on the contract doesn’t really mean 18k in the bank monthly. How much do I get after all government mandated deductions?
If you have a sideline, list it down too. Do you earn from blogging? Do you have an online shop? Do you bake cakes and sell them?
List down all of the ways you make money, and how much you expect to get regularly. List down when too.
- What bills do I pay regularly, when, and how much? –
Make a list of the bills you pay, how much you usually pay, and their due dates.
I pay the following bills regularly:
- Mobile phone
- Home phone
- Three credit cards
How much do those bills amount to? If needed, is there any way to lessen the expense?
- How much do I spend in a day/week/month? –
Unless you already regularly take note of every single expense, you will need time for this exercise. I used to write down all of my spending but I stopped it. When I decided to right some wrongs in my life again last year, I turned the habit back on.
No matter how big or small the expense, record it. You don’t only need to know how much your expenses are, but what you’re spending on.
My biggest expense, after the bills, has been on food. When I did this exercise I controlled my spending so I didn’t buy any clothes or shoes. Since then, I’ve had to account for budget for those things too. In the real world, I am still building a good wardrobe, clothes and shoes for my size cost a lot.
- What are my seasonal expenses? –
These are things you don’t spend on daily or weekly, but you know you spend on it – birthday gifts, Christmas, back to school, car maintenance, etc.
Though I don’t spend on these monthly, I need to factor them into my monthly budget so that money is set aside for the time they are needed.
I did this a few months back and realized how much is the minimum amount I need to go through one month of expenses. If I were to go into my own business, I know how much salary I will need to make in order to make ends meet. Or how much more the boyfriend needs to earn in order to support both of us.
My list may not be comprehensive. Basically, you need a very clear picture of what you have, right here, right now. Only then can you move forward with a solid plan to get to where you want to be.
How are you doing thus far? Let me know how else I can improve on this post, but rest assured another one is coming up soon!
February 16th, 2014 / 27 Comments »
Have you heard about it? I’m on Day 6 of my personal 100 happy days’ challenge. What is it all about?
Here’s what it says on the challenge home page:
We live in times when super-busy schedules have become something to boast about. While the speed of life increases, there is less and less time to enjoy the moment that you are in. The ability to appreciate the moment, the environment and yourself in it, is the base for the bridge towards long term happiness of any human being.
71% of people tried to complete this challenge, but failed quoting lack of time as the main reason.These people simply did not have time to be happy. Do you?
How? Plain simple!
every day submit a picture of what made you happy!
It can be anything from a meet-up with a friend to a very tasty cake in the nearby coffee place, from a feeling of being at home after a hard day to a favor you didto a stranger.
#100happyday challenge is for you – not for anyone else.
It is not a happiness competition or a showing off contest. If you try to please / make others jealous via your pictures – you lose without even starting. Same goes for cheating.
So I took up the challenge and began on February 11th. I think it’s important to note that for some people, happiness doesn’t come naturally. Which is why we must intend to be happy. It is my intention to be happy for a hundred days. That’s more than enough days to make happy a habit.
I’ve always said that I already am a generally happy person. It takes a lot to get me down. But it may also mean that being so leaves me highly prone to taking for granted those that make me happy. Hence the challenge to document and share the 100 little or big things that make me happy.
Please do join us! I share my photos via Instagram (@verabear) with the hashtag #100happydays. It can be shared in any way you choose – via Facebook, or your blog, Twitter, or if you choose to go private, you can just send them a daily email. If you’re already doing this, or are already done, please do link me up because I definitely would like to know what makes your days happy
February 13th, 2014 / 11 Comments »
Failure to plan, is planning to fail. Which famous person said that? I don’t remember, but there’s much wisdom in those seven words.
It applies to many things, financial matters included.
A few months ago, a newsletter at work carried an article on productivity and time management. The author talked about budgeting time, in the same rules espoused by YNAB – You Need A Budget for budgeting money. I got curious, so I ran a Google search on that system.
YNAB has four basic rules:
Rule 1: GIVE EVERY DOLLAR A JOB.
Rule 2: SAVE FOR A RAINY DAY.
Rule 3: ROLL WITH THE PUNCHES.
Rule 4: LEARN TO LIVE ON LAST MONTH’S INCOME.
We’ll discuss these rules at a later time, but let’s start the conversation with something even more basic.
Financial blogs, and other literature, would normally advise you to start your journey to financial freedom by either inspecting your current resources, or setting a budget. I know that it isn’t as easy as it looks like – at first. Budgeting really just became easier for me once I had decided what my financial goals were – both short-term and long-term. I guess it was easier to come up with and stick to a budget once I knew what I was doing it for.
Having a sense of purpose was what made it click for me, maybe it will have the same effect on you.
What are my financial goals? Here are some.
- Payoff debts – credit cards, medical loan, housing loan, car loan (from my parents)
- To truly live within my means – means being able to pay off credit card bills in full each month, or not having to pay on credit at all
- Build up my emergency fund
- To not have to worry if I or a loved one gets sick and medical expenses are high.
- Be able to fund my hobbies and various interests
- To fund a wedding without getting deep in debt
Being able to list my goals made it easier to decide on what to give up, or what to spend less on. I could easily make sacrifices because I knew what the sacrifice was going to be for.
Of course, proper goal setting is more than just creating your wish list. It’s a good start though. Honestly, that list above is really more like a wish list. What would make it a real set of goals? It’s to further examine each wish and be SMART about it.
SMART. As in -
Specific – How much of an Emergency Fund do I need? How long will it take to build it? Here’s where we determine the cost of that goal (or achieving that goal).
Measurable – This one is easy, we are talking about money after all. This can mean deciding how much needs to be What’s hard to measure are goals like “peace of mind” or “freedom.” We need to assign a value that can be measured.
Attainable (or assignable) – Self explanatory. It needs to be achievable in your lifetime. You shouldn’t have to defy physics or kill yourself to hit your goals.
Realistic – Again, if you’ll have to borrow money to accomplish your financial goals, then you’re not being realistic.
Time bound – What’s your target date?
So my SMART Financial Goals are still a work in progress. But examining them has allowed me to really start my journey to financial wellness. I still make mistakes, and I don’t always stick to the plan, but I’ve found it easier to get back on track.
What about you, have you decided what your financial goals are? Let’s chat!
February 2nd, 2014 / 12 Comments »
I feel so proud of this young lady, though I don’t know her and I never even heard of her cause until seeing this video early morning on Sunday. She sends a powerful message though – that we have it in all of us to effect change. When we make a stand–specially on a potentially controversial issue-it’s inevitable that not everyone will agree with us, but so what? Take a stand anyway.
Haters will hate.
So what did she campaign about? She had a younger brother who was really interested in cooking and so the family thought it would be great to give him an Easy Bake Oven. Now we don’t have those locally, so not everyone may know what it is, but I believe it’s a toy that allows kids to actually bake something. I would have loved one as a kid!
Photo credit: http://www.thecookinginn.com/easybake/easybakerecall.html
The problem was that McKenna’s brother was hesitant about getting an Easy Bake because it was “for girls.” All the marketing for the toy was aimed at girls.The colors were pink and purple, and the commercials always had girls. It was as if they were perpetuating the stereotype that the place for girls and women is at home and in the kitchen.
So she started a petition to ask Hasbro, the makers of this toy, to use gender-neutral colors for producing and marketing the Easy Bake.
Listen and watch her TED Talk here:
February 2nd, 2014 / 5 Comments »
I am borrowing this monthly review template from Life Less Bullshit.
Thinking back over the month of January, and looking ahead to February, I am…
proud of: consistently delivering on my commitment to drinking green smoothies daily. And prouder still of having influenced colleagues to do the same. I now make 2 to 3 batches of green smoothies and lug them to work for others to enjoy.
grateful for: the opportunity to teach and develop people. There are things to hate about my job, about any job really, but teaching and mentoring is one thing I am so grateful for. The results aren’t automatic, and a lot of times you’ll have to wait to see your investment bear fruit, but it’s all worth it.
letting go of: hmm. This is a tough one. Ahhh. Before December ended, the boyfriend brought out bags of stuff from our room so that I could sort through them and throw out anything that were no longer needed. I only did that last week and kept maybe less than 5% of that stuff. I let go of notebooks and readings from college. I kept a few of my papers that I’d like to publish on the blog someday, but I also let go of outdated textbooks and exam blue books (even the ones with 1 and 1.5 in them). It’s been a decade since I last went to school.
obsessed with: lists. I haven’t always been a list maker but I enjoy listing to-do stuff and ticking them off. Haha.
excited about: taking this healthy kick up a notch. I’m looking forward to even better smoothies, maybe a cleanse, and moving more!
committing to: documenting my life better. Blogging still hasn’t improved in the past month, even with an all-improved Internet connection. In the past, even when my scrapbooking goals never materialized, I’d always be able to look back at what happened through my blog. So let’s make it happen this February!
Action Steps & Thought-Provoking Questions
1. Review upcoming social plans for February – Hmm. I actually don’t have anything planned this month but I probably should consider hooking up with my BFF before she migrates to Australia next weekend.
2. Write and send one gratitude note by email or snail mail
3. Create my budget for February – Almost done. I already created a monthly budget and I just need to reproduce my monthly tracker on Google docs. I hope to share more about my own system soon. I admit though that I have overspent for January, but I don’t think this will set me back too much on my financial goals.
4. Plan something sweet that I will do for a loved one in February – I just gave my boyfriend a handwritten note. Can that count already? Haha.
5. Review the big goals I mapped out at the beginning of the year – I actually didn’t really map out big goals at the beginning of 2014. But getting healthier, and saving up for a big event later this year are definitely still a good fit for me.
6. Reflect honestly on whether or not my current habits support my goals – sleeping on the couch is definitely helping, so I gotta cut that habit. I’m sooo lazy to go up and down the steps to the bedroom, that’s why!