Now that you have finished college, you probably feel a little more relieved and looking forward to experiencing more freedom and independence. But not so fast – you have to work towards being smarter with your money to avoid tough financial strains in the future. After all, the last thing you want to happen is to have a college degree, yet a ton of debts and barely any savings in the bank. The goal is experience a sense of stability with your finances, which of course, requires a certain degree of discipline, careful planning, and hard work.
So, to guide you on how to become financially independent, here are some tips that may come in handy.
1. Become well-informed
You have to start somewhere! If you have a goal in mind, this means being equipped with sufficient amount of information and advice from professionals on how you can save money and start growing your bank account for a more comfortable future. This is why it definitely will not hurt to surround yourself with reading materials and resources on how to invest, manage your money, and become self-empowered to attain financial freedom.
Steven Pressfield, Robert Kiyosaki, and Benjamin Graham are among the well-known authors who have published several books that will fuel your desire to invest and manage your finances well. Build a library of these informative and inspiring books that will motivate you further towards achieving your financial goals.
2. Be your own person
It can get a little tempting sometimes to look the other way and compare yourself with others, only to feel insecure and inadequate. Always remember that you are not walking the same path as the other person, which means you have your own set of goals and unique situation in life. So, you cannot expect to achieve what the other person has attained in life because of certain circumstances that set you apart from them.
Of course, it is good to have role models and mentors to guide you towards managing your finances. You can look up to these people for professional advice and inspiration, but never expect your life to turn out EXACTLY as theirs because we all have our own paths. Most importantly, do not give in to envy, insecurity, or lack of confidence just because your friend from college seems to be more well-off than you. Just remain consistent with trying to achieve financial goals by taking one step at a time, and you will realize that all your efforts will surely pay off.
In addition to avoiding unhealthy comparisons, you should let go of the desire to “keep up with the Jones'”. So, you have noticed that your colleague at work is sporting an expensive watch or driving a luxury vehicle. Does that mean you have to do the same? Live within your means, put your needs ahead of your wants, and your bank account will soon grow significantly over time.
3. Put away 15 percent of your salary to your savings account
Aside from growing your CPF account, you should make an effort to save 15 percent or even more of your monthly income. This is why instead of giving in to the temptation to splurge during payday, you should be more conscientious when it comes to spending your money. Do you REALLY need to buy that designer bag? Is there a sense of urgency in heading to the mall to shop for 3 pairs of shoes?
Sometimes, people act on a whim and spend every cent of their income on unnecessary items. But this materialistic mentality is exactly what puts them into difficult financial situations. In the end, these “stuff” that you accumulate only end up being stuck in the storage room or your closet and not even being used at all. The next time you have that urge to shop, ask yourself if you really need to go to the mall. It also helps to come up with a list of your needs and stick to these items. Then, it should help you stay on track with meeting your financial plans.
4. Save for the rainy days
You may have a high-paying job right now, but you can never tell what tomorrow might bring. The economy is so unpredictable, which places so many people in deep water once they get laid off unexpectedly. It is even worse if you are the breadwinner in your family since your household members are counting on you to cover the recurring expenses.
How can you have a sense of security from risks of being unemployed? The best thing to do is to develop a mindset that focuses not just on the present, but the future as well. You have to be aware of the fact that there is no such thing as permanence in this life. There is always a possibility to someday lose your job or even your business, which is why you need to build your emergency fund. Save about 6 months of your income and eventually grow this sum of money to give you a greater sense of security. Also, think twice if you find yourself tempted to take out large loans with fixed repayment schemes that go on for a number of years. You would not want to burden yourself with the recurring payments once you are unemployed. If you ever land yourself in any monetary trouble, you can always find licensed money lender Singapore to tide through this temporary as they offer personal loan and payday loan if you manage to get a stable full time job in times to come.
5. Understand the value and weight of money
One of the reasons why people end up to be big spenders is the lack of understanding of money’s true worth and value. They think that it is something they can easily earn, so they have no problem or second thoughts about spending it as fast as they can. But this mentality is the very thing that gives them serious issues with their finances in the future.
If only you realize that money is the fruit of your labor, you will think twice before you go out and let go of it just like that. Try to reflect on the amount of energy and time that you have spend just to earn your income. Plus, always have a reality check that you are living in one of the most expensive places on the planet. These should be sufficient reasons to embed in your mind the value money has – and that you must make it a priority to save it instead of spend it mindlessly.
This goes without saying that you should avoid splurging just for the sake of experiences. There are some people who go to expensive trips without even thinking that they do not have any savings in the bank to back them up during future money problems. The main thing for them is to go to adventures and trips that will only cause them to barely have anything left during emergencies. Aside from not having emergency funds, they may not even have anything saved for their retirement. The possible ending – if this trend continues until you are in your 40s or 50s, then you are bound to have a tough time in your old age.
You see, life after graduation is not at all just partying and games. Sure, you may feel the need to unwind and recover after the stress you have gone through in college. Indeed, you have every right to enjoy life and live it to the fullest. This is something that you should never let others take away from you.
But at the same time, you need to prepare for what tomorrow might bring. Since we are living in a material world, nothing comes for free. You need to pay for your rent, food, and other basic needs. And to be able to live a comfortable – or at least a decent – life, you need to have sufficient money to cover all your needs and even your wants. So, the importance of saving and managing your finances makes so much sense after college. You do not want to end up being overwhelmed constantly about your finances (or lack of it), which can cause you so much stress, anxiety, and depression. This is the reason why you should start the soonest possible in building your savings. The earlier you begin growing your finances, the easier and more pleasant life will become for you.