Money resolutions: Save money in 2010
Here are some of Duplito’s New Year’s “money resolutions” that could help put you on the road to financial prosperity.
1. No more wanton spending. How many times last year did you purchase something you don’t really need? The unwanted things scattered around your house or gathering dust in your shelves are proof of wanton purchases. The trick is to determine whether you need or want something
Before splurging or indulging in a shopping spree, ask yourself first, “Do I really need this?” and “Will I use this in many years to come?” It is only a matter of choosing your purchases and spending wisely on worthwhile things.
2. Always read the fine print. Before investing in a credit card or securing a loan, you should always read the fine print before you find yourself in a financial sinkhole. For example, some credit card advertisements encourage card holders to pay for a fraction of their monthly expenses without being labeled as an errant client. In truth, paying only the minimum charge for your credit card (a fraction of the cost of the total monthly expenses) would actually result in more debt from interest componded in the long run. Ask questions, seek second opinions and do some research before making any long-term investment.
3. Build a maintenance fund. A maintenance fund is money required for the upkeep of your home, car, or your household operations in general. Building this fund means saving about 1% of the total assessed value of your house and land every month. When something goes wrong with your plumbing, appliances, or fixtures; you can tap into this fund.
4. Budget big expenses (like tuition) for next year. You can never go wrong by planning and saving ahead of time, especially for big expenses like tuition, mortgages and/or loan payments. Compute how much you will need next year then portion that amount for each month this year. That way, you will know how much to set aside in the bank every month you get your salary and you break down a formidable cost into smaller, more manageable amounts.
These can be as simple as forgetting your credit card payments and having to pay for late payment fees, or making ATM withdrawals from machines other than your bank’s. In either case, you have to pay for what seem like small surcharges. For example, $3 to $5 is deducted from your account every time you withdraw from another bank’s ATM. When added up, these seemingly small surcharges amount to a lot of money. If you withdraw from your ATM 5 times in a week, then you spend about $25 a week on just surcharges!
5. Increase savings by 30% of gross salary. Assuming you’ve been good and you have religiously saved up 10 to 20% of your income last year, why not hike it up a notch? “You can start at 5% then go up to 10%. But the main thing is that your savings each year should be increasing and not decreasing,” Duplito says. If the temptation is too high for you to spend instead of save, program your saving scheme instead.
Don’t touch all bonuses. Instead of touching your Christmas bonus or your 13th to 14th month pay, use it for investments. “Most of us do fine every month with the income that we get. These bonuses then, are additional income. So actually, you can live without it,” Duplito said. Set your bonuses aside and look for investments that can make your money grow faster. If your expenses are programmed and planned out, you can also budget the extra money accordingly.
Quick Tips
Teach your children proper spending by controlling their wallets. Don’t give them too little, but don’t give them too much. Ask them to make a budget plan so you can figure out the appropriate amounts they need. Give the allowance in 10 peso coins instead of whole bills so they can budget better and bring only the amounts they need.
In conclusion, Duplito says a good goal this year is for you to be on top of your finances and have a budget plan ready, so you don’t use your ATM like a wallet and withdraw every time you need money.
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