It's that time of the year for losing weight, diets, saving more money, and doing more or less of something. It's that time of the year when our social media news feeds are flooded with all these crazy resolutions.
But what really caught my attention are posts about saving more money. There are so many different variations! But, here is my favorite.
Will I do it? Not really. I already follow my own personal finance plan. It was just a very interesting idea and concept for me. If I didn’t already have my own plan, I would have followed it!
One of the best things I learned in this life is that there's usually more than one way to do something. There's usually more than one path to a destination. You just have to choose a path or do what works for you. Whether it's how you save money, how you earn money, or something else.
Since we're talking about finances, let me share with you my "personal" personal finance guidelines (it doesn't get more personal than that). Again, these are just my guidelines. If you think they'll work for you, feel free to apply them in managing your own finances. If not, that's okay too! Do what works for you.
Carlo's Five "Personal" Personal Finance Guidelines:
Keep it simple
There are so many things I need to think about (like how to serve through my blog more and coming up with useful articles for the blog's readers) that I decided not to make my finances one of them. So, I kept my financial plan and principles very simple.
I don't keep a spreadsheet of my expenses. I used to do that, but it took a lot of my time and energy. I would rather focus on thinking of ways to make more money than ways to save money. But again, if keeping a spreadsheet works for you, keep doing it!
Also, when something isn’t simple enough for me to do, I usually fail to follow through. I usually stop doing it after a month or two. (I’m really lazy. Or am I?)
That's also why I follow a very simple 10-20-70 principle of managing money that I earn through my day job (Thanks, Bro. Bo!). Ten percent goes to God through the community I'm serving with. Twenty percent goes to my long-term savings. Seventy percent is what remains for all the other stuff I want to do with my money.
From the money I earn from this blog, I also follow a simple 10-20-70 principle. Again, ten percent goes to God, twenty percent goes to charity (not exactly to a charity, but feeding and educating the next generation and other causes that I deeply care about like animals and the environment), and seventy percent goes to everything else (including my long-term savings, my dreams, investments in the blog, and daily expenses).
Don't buy what you cannot afford in full
Last year, I made a huge mistake of taking up a loan to buy a lot of land. For my parents, relatives, and other people around me, it's not a mistake. It's an investment.
Honestly, I also think it's an investment...from time to time. But most of the time, it doesn't feel that way.
I always feel anxious and worry about repaying my debt that I no longer enjoy the work I'm doing. I'm always worried about where to get the money so I won't default on my debt and lose my tiny piece of land.
It takes a lot of energy and positivity from me. And that's not how you live the life you want one day at a time. Each day should be filled with energy and positivity!
The stress of paying my land outweighs the joy of having something to call my own. It's more than a million-peso lesson that I needed to learn.
Keep in mind that it's not really about not getting out of or avoiding debt. It's more about feeling good every day and not worrying about anything else than to live each of your days to the fullest.
“Do not worry about tomorrow; tomorrow will take care of itself.” — Matthew 6:34
Don't spend money because of pride (it's really expensive)
Let me explain further why I'm trying to sell my piece of land. When I think about it, I bought my little piece of land out of pride. I wanted to have something to call my own not because I needed it or my family needed it, but because I was feeling left behind by my peers. Some of them already have properties of their own. At my not-so-young-anymore-adult age, I was feeling a bit pressured to have something to call my own as well.
During the past few months, I realized that it's more important for me to simply have a roof above my head and a happy and loving family beside me. It doesn't matter whether we actually own the place or just rent it. In substance, it doesn't really make a difference.
I know this mindset might change when I get married or when I finally have a family of my own. But for now, I really don't need to own the place I'm living in.
Go back to the basics. Most of the time, enough is more than enough.
When we visited a home for the elderly last December, the reality of getting old hit me. I realized that there will come a time when I can no longer work or make a living.
Yes, getting old is a reality we all must face.
That's why you should also prepare for it. You should prepare for the time when you can no longer work or make a living. You should prepare for retirement no matter how old you are right now.
You should think long-term.
Save for the rainy days. Better yet, invest some of your money so it can grow! Personally, I invest 20% of what I earn in the stock market. (Although, for the past few months, I haven't been able to do so because I need to pay my debt first. When I sell my lot, I'll invest all the proceeds in the stock market.)
Also, don't just earn enough for yourself or for your family. Earn more so you can continue to give even when you are already retired.
When I started investing in the stock market three years ago, I invested more than 20% of my income. In fact, I invested at an average rate of 40% of my income. I was too focused on preparing for my future and enjoying my retirement.
However, life doesn't begin at retirement. It begins now. You have to enjoy your life now!
Spend your money on what gives you deep happiness like family, relationships, experiences, or service. It's different for everyone.
You can also spend a little bit for fun. Again, it's not the same for everyone!
For example, while I don't like short-term travels, I love playing video games! I don't mind spending a bit to buy new games! Of course, I still try to keep my video game spending to a tiny bit.
Spend more on what gives you deep and lasting happiness. Here's a clue as to what gives you deep happiness: it is centered on love.
Although having some money really helps, I still believe that the best things in life are free. Enjoy your life, your family, your relationships, and your work no matter how much or how little you're earning right now!
My favorite international author, Chris Guillebeau, says he "focuses on experiences, not on stuff."
My favorite local author, Brother Bo Sanchez, says to "focus on people, not on things."
My suggestion: The moment you receive your income, give 10% of it automatically to God as your tithe, invest 20% for your future, and enjoy the remaining 70% now. Learn how to live now and stay in the present.
That's it! Those are my five simple “personal” personal finance guidelines! Again and again and again, those are what work for me. You can have your own guidelines! Follow the guidelines that work for you.
You can follow the guidelines I made, but you can also come up with your own! In case you do, feel free to share them with me and our small community of remarkable World Changers on the comments below!
PS. Since we also talked about crazy resolutions, I just want to say that I don't make new year's resolutions. Instead, I set annual goals. It's what works for me.