When I quit my job in 2019, I became smarter when it comes to handling my finances. As a freelancer, I don’t have a stable income anymore, so I have to be responsible with my money.
The best part about being self-employed is that my income now is scalable. Yes, it is quite scary at first because it is unstable but unlike a normal job, I can increase my income now if I continue to learn more and work harder. I’ve learned a lot over the past years and I’m continuously learning.
Moreover, I’ve experienced hitting rock bottom financially before, so I can say that when it comes to money, I’ve learned my lessons the hard way. From getting out of debt to becoming better at managing my money.
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As a traveler, I also have to be smart when it comes to my expenses and income. In this blog post, I will share with you my tips on how to handle your finances efficiently. Lets’ begin.
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Be debt-free first
I’m serious when I said that I’ve hit rock bottom financially before. It happened when my dad passed away because of liver cancer. Being the breadwinner of the family, I had the responsibility of paying the hospital bills and everything that needs to be settled when my dad died.
That left me completely broke and in debt. It took my 3 long years before I was able to pay off all my bank loans. Imagine this, I was working for 3 years and almost all my salary will just go straight to loan payments. Those 3 years were hard but I managed to survive.
My point here is if you’re in debt, whether it’s bank loans, credit cards, etc., you have to pay it off before we can even talk about savings and investment. This is your ultimate priority. If you need more readings about this topic, there is a great article about the most effective ways to manage your debt. You can read it here from Debt Consolidation.
Know your expenses and stick to your budget
You have to be honest with yourself. If you just go on with your life, without even knowing how much your expenses are and how much should you earn to be able to pay the bills, you’re in big trouble.
First, you have to sit down and write all your monthly expenses. When you already know your total monthly expenses, write down all your income in one month. If your expenses are bigger than your income, you got to do something. Either you lower your cost or increase your income.
The easier way is to lower your cost. List down all your expenses and decide which are necessities and give up some of the luxuries. After that stick to your budget, and in case your income increases because of having higher pay at work or by adding a new income stream, make sure that you still maintain your simple lifestyle. Don’t upgrade your lifestyle just because your income increased a little. Any surplus earnings can be saved or be put on future investments.
Save money
This is the basic concept in handling your finances. Save money! Set aside money for your savings and emergency fund. We don’t know what’s going to happen in the future. Emergencies can happen anytime so we have to be prepared.
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Always make sure that your income is larger than your expenses so that you can have something to put for savings or investment. Maintaining a simple lifestyle even your income increases is the key.
Learn to invest
When it comes to financial education, you should never stop learning. One thing that we should learn more about is investment. Aside from earning, we should learn how to make money work for us.
Yes, this is actually easier said than done because it takes an enormous effort of reading and learning before you can do well in investing. There are many options now for investments like stocks, bonds, and cryptocurrency. But always remember the good old saying – never invest in something that you don’t understand. So it pays that you read and educate yourself before investing your hard-earned money. Overall, when it comes to handling your finances, you have to continuously study and learn.
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Have insurance and make your health a priority
When emergencies and health problems happen, it can deplete your savings. That’s why insurance is so important. Insurance serves as protection from these untoward incidents. Many will not see its value until something bad happens, like huge hospital bills.
It is also important to study the insurance policy before buying one, and buying from someone you trust can also help. The point is to make sure you know and understand the policy well before spending money. It is a fact that many insurance advisors are just there to sell and make money and do not genuinely care that much for your well-being.
Also, during this time of the pandemic, it is an utmost priority to take care of our health. During this trying time, we all realized that indeed, health is wealth.
