The 7 Ways on How to Take Control of Your Finances and Achieve Your Goals

Written by: Richie A Bongo 

Do you feel like your finances are out of control? 

Are you struggling to make ends meet? 

Are you worried about your future financial security? 

If so, you're not alone. Many people feel the same way.

The good news is that there are steps you can take to take control of your finances and achieve your goals. In this blog post, we will discuss some of the most important steps you can take.

 Taking control of your finances and achieving your goals can be a daunting task, but it's definitely possible with some hard work and dedication.

 Here are some steps you can take to get started:

1. Create a budget.

This is the foundation of your financial plan. It will help you track your income and expenses so you can see where your money is going. There are many different budgeting methods out there, so find one that works for you and stick to it.Creating a budget is a great way to manage your money and achieve your financial goals. There are different methods and tools you can use to create a budget that suits your needs and preferences.

 Here are some steps and tips to help you get started:

- Calculate your monthly income: This is the amount of money you have left after taxes and other deductions. Include any extra income from side hustles, freelance work, or other sources. If your income varies from month to month, use the lowest amount as a baseline.

- List your expenses: These are the things you spend money on every month, such as rent, utilities, food, transportation, entertainment, etc. You can use your bank statements or online tools to track your spending and categorize it into different groups. Some expenses are fixed, meaning they stay the same every month, while others are variable, meaning they change depending on your usage or behavior.

- Subtract expenses from income: This will show you how much money you have left over after paying for your essentials. Ideally, you want to have a positive number, meaning you spend less than you earn. If you have a negative number, meaning you spend more than you earn, you need to find ways to reduce your expenses or increase your income.

- Allocate your money: Once you know how much money you have left over, you can decide how to use it. A simple and popular budgeting method is the 70/20/10 rule, which divides your money into three categories: needs, wants, and savings/debt repayment. According to this rule, you should spend up to 70% of your income on needs, such as housing, food, insurance, etc.;  and at least 20% of your income on savings and debt repayment, such as emergency fund, retirement account, credit card bills, etc.; and 10% to tithes and offerings.

- Track and adjust your budget: A budget is not a one-time thing; it's a living document that needs to be updated and reviewed regularly. You can use online tools or apps to help you monitor your spending and savings progress. You can also compare your actual spending with your planned spending and see if you need to make any changes. For example, if you find that you're spending too much on groceries, you can look for ways to save money by buying in bulk, using coupons, or cooking at home more often.

2. Save Regularly:

   Is a phrase that means to put aside some money on a consistent basis, such as every week, month, or paycheck. Saving regularly can help you achieve your financial goals, such as building an emergency fund, paying for a vacation, or retiring comfortably. Saving regularly can also help you avoid debt and reduce stress. 

Some tips to save regularly are:

- Record your expenses and create a budget that includes a savings category.

- Find ways to cut spending on nonessential items and fixed monthly bills.

- Set savings goals for both short-term and long-term needs and wants.

- Choose a savings account that offers a good interest rate and automatic transfers.

- Track your progress and celebrate your achievements.

3. Build an Emergency Fund.

Building an emergency fund is a smart way to prepare for unexpected expenses or financial emergencies. An emergency fund is a cash reserve that's specifically set aside for unplanned costs, such as car repairs, home repairs, medical bills, or a loss of income³. Having an emergency fund can help you avoid debt, reduce stress, and achieve your financial goals.

Some experts recommend that you have enough money in your emergency fund to cover three to six months' worth of household expenses. However, the exact amount may vary depending on your income, expenses, and personal preferences. You can use a [debt payoff calculator] to estimate how much you need to save for your emergency fund based on your situation.

To start building your emergency fund, you need to have a budget that includes a savings category. You can find ways to cut spending on nonessential items and fixed monthly bills, and put the extra money into your emergency fund. You can also set savings goals for both short-term and long-term needs and wants, and track your progress. Whenever you get a bonus or cash incentive, make sure to also set aside a part of the extra money for your emergency fund.

You should keep your emergency fund in a safe and accessible place, such as a savings account that offers a good interest rate and automatic transfers. You should avoid putting your emergency fund in risky or illiquid investments, such as stocks, mutual funds, or real estate. You should also avoid using your emergency fund for anything that is not an emergency, such as travel, shopping, or entertainment.

4.Invest Wisely:

  Investing wisely is a skill that can help you achieve your financial goals and secure your future. There are many types of investments that you can choose from, depending on your risk appetite, time horizon, and objectives. 

Here are some tips and resources to help you get started:

- Before you invest, make sure you have a clear idea of why you are investing, how much you can afford to invest, and what kind of returns you expect. Having a financial plan can help you align your investments with your goals and track your progress.

- Learn the basics of investing, such as the difference between stocks, bonds, mutual funds, ETFs, and other investment vehicles. You should also understand the concepts of risk, return, diversification, compounding, and inflation. These will help you make informed decisions and avoid common pitfalls.

- Choose the type of investment that suits your needs and preferences. For example, if you want to have ownership in a company and benefit from its growth, you can invest in stocks. If you want to lend money to a company or the government and earn interest, you can invest in bonds. If you want to have exposure to a basket of securities without buying them individually, you can invest in mutual funds or ETFs.

- Manage your risk levels by diversifying your portfolio across different asset classes, sectors, industries, and countries. This way, you can reduce the impact of market fluctuations and volatility on your overall returns. You should also review your portfolio periodically and rebalance it as needed to maintain your desired risk-reward ratio.

- Decide whether you want to invest on your own or with the help of a professional or a robo-advisor. DIY investing gives you more control and flexibility over your investments, but it also requires more time, effort, and knowledge. Professional management provides you with expert advice and guidance, but it also comes with fees and commissions. Robo-advisors are online platforms that use algorithms to create and manage your portfolio based on your profile and goals, but they may not be able to cater to your specific needs and preferences.

- Take advantage of compounding by starting to invest as early as possible and reinvesting your earnings. Compounding means earning interest on your interest, which can significantly increase your returns over time. The longer you invest, the more powerful compounding becomes.

5. Plan for Retirement:

   Retirement planning is an important part of financial planning. It involves determining retirement income goals and what's needed to achieve those goals. Retirement planning includes identifying income sources, sizing up expenses, implementing a savings program, and managing assets and risk. Future cash flows are estimated to gauge whether the retirement income goal is possible. 

There are many retirement plans available in the Philippines. Some of the best retirement fund methods in the Philippines include:

- Pension plans: Pension plans provide you with monthly allowances or a whole lump sum amounting to your total contributions. One of the most accessible pension plans in the Philippines is facilitated by the Social Security System (SSS) or GSIS for government employees.

- PERA: The Personal Equity Retirement Account (PERA) was fully implemented by law in 2016. PERA is a type of retirement investment plan that can only be availed through banks, insurance companies, or any other administrator accredited by the Bangko Sentral ng Pilipinas (BSP), the Insurance Commission, and the Securities and Exchange Commission (SEC). PERA is a voluntary retirement contribution plan that gives you the freedom to save and invest up to P100,000 annually; married individuals can contribute P100,000 each; OFWs can contribute up to P200,000. Also, the returns are completely tax-free. PERA contributions may be withdrawn when you reach the age of 55 and having made qualified contributions for at least 5 years (55 and 5 rule) in lump sum or monthly pension.

- VUL: Variable Universal Life Insurance (VUL) is a life insurance policy that provides both a death benefit and an investment feature. It allows you to invest your money in various funds such as equity funds, bond funds, or balanced funds. VULs are flexible and customizable according to your needs and preferences.

It's never too early or too late to start retirement planning. The general rule is the sooner you start, the better. 

6. Educate Yourself:

* Take a financial literacy course.   This is a great way to learn the basics of financial literacy, such as budgeting, saving, investing, and credit. There are many financial literacy courses available online and at community colleges and universities.

* Read books and articles about financial literacy.  There are many great books and articles available that can teach you about financial literacy. 

* Talk to a financial advisor.   A financial advisor can help you create a financial plan that meets your specific needs and goals.

* Join a financial literacy club or group.  This is a great way to learn from other people and get support for your financial goals.

* Take advantage of online resources.  There are many great online resources available that can teach you about financial literacy. 

Here are some additional tips for educating yourself in financial literacy:

* Be patient. It takes time to learn about financial literacy. Don't get discouraged if you don't understand everything right away.

* Be consistent. Make a commitment to learning about financial literacy on a regular basis.

* Be practical. Focus on learning the skills and knowledge that you need to manage your own money.

* Be open-minded. Be willing to learn new things and change your financial habits.

Financial literacy is a lifelong journey. By following these tips, you can start your journey today and improve your financial well-being for the rest of your life

7. Insurance Coverage:

Insurance can play an important role in financial management by helping to protect you from financial losses. Some of the most common types of insurance coverage that can be helpful for financial management include:

* Health insurance:   This can help to pay for medical expenses, such as doctor's visits, hospital stays, and prescription drugs. Health insurance can also help to protect you from financial ruin if you become seriously ill or injured.

* Life insurance:   This can provide financial assistance to your loved ones if you die. Life insurance can help to pay for funeral expenses, outstanding debts, and living expenses for your dependents.

* Disability insurance: This can help to replace your income if you become unable to work due to an illness or injury. Disability insurance can be a valuable source of financial security if you become disabled and unable to work.

* Homeowners insurance: This can help to pay for repairs to your home if it is damaged by fire, theft, or other disasters. Homeowners insurance can also help to pay for the cost of living expenses if you are forced to temporarily relocate due to a covered loss.

* Auto insurance:   This can help to pay for repairs to your car if it is damaged in an accident. Auto insurance can also help to pay for medical expenses and property damage if you are at fault in an accident.

In addition to these common types of insurance, there are many other types of insurance that can be helpful for financial management. The specific types of insurance that you need will depend on your individual circumstances and financial goals.

Here are some other ways that insurance can help with financial management:

* Tax benefits:   Some types of insurance, such as health insurance and life insurance, can offer tax benefits. This can help you to save money on your taxes.

* Asset protection: Insurance can help to protect your assets from creditors in the event of a lawsuit or bankruptcy.

* Peace of mind: Insurance can give you peace of mind knowing that you are protected from financial losses. This can help you to focus on other aspects of your life, such as your career, your family, and your hobbies.

If you are looking for ways to improve your financial management, it is important to consider the role that insurance can play. Insurance can be a valuable tool for protecting your financial security and peace of mind.

In conclusion, taking control of your finances is a crucial step toward achieving your life goals and securing a stable future. By following the principles outlined in this blog post – setting clear financial objectives, creating a budget, saving wisely, investing wisely, and staying disciplined – you empower yourself to make informed financial decisions. Remember that financial success is a journey, not a destination, and it requires dedication and consistency. With patience, resilience, and a well-thought-out financial plan, you can pave the way toward realizing your dreams, whether they involve buying a home, starting a business, retiring comfortably, or pursuing any other aspiration. So, take charge of your financial destiny today, and watch as your goals turn into achievable realities.