Personal Finance

The future will always be uncertain, no matter who you are or what you do (dun dun duuuun!). It is always comforting to know that you can turn the tables by identifying what the problem is in the first place. Erase your doubts and fears away by learning your setbacks first before formulating a plan to retire rich (and maybe even famous). Solving financial problems always begin with asking the right questions.

Will I ever retire rich?

Will I ever get out of debt?

Will I ever have enough money to open a savings account?

1. The paycheck to paycheck slave

Compensation payout is usually in the 15th and 30th of the month. If you are a corporate slave employee, still in the ruckus of setting work-life balance because of debt or duties for a relative's schooling, then you are probably under the paycheck to paycheck category of financial problems.

You receive the bi-weekly salary on the 15th and spend a third on groceries, a quarter on rent (because no way I'm living under my parents' roof!), and another quarter on allowance (food and transportation). The bulk of your salary is spent on credit card debt or paying for your mom and dad's hospital checkups.

Sometimes, it's not how many expenses you have; it's also about your spending habits. When payday comes, the urge to spend it is officially the most intense day because, for some reason, it usually coincides with sale or huge discounts spree in the malls.

2. The independent kid with potential financial problems

Sure, you have a nine-to-five job now and sharing the rent with friends to ease the burden of boarding away from home. You've also found your go-to carinderias in the neighborhood for cheaper home-cooked meals, maybe even know Aling Betsy and Mareng Cora who manages these small diners. But are you sure, you've got it all covered? If the answer is "yes, with reservations," then it's time to think more about the future to avoid financial problems.

Emergency situations are your best examples when you realize that when life turns upside down, suddenly you’re spiraling into a financial problem. The landlady wants to sell the house and you need to find a new place to shove your belongings in (think: new deposit and advanced payments), you need to extract your molar tooth and the company's dental benefits does not cover surgery, or your mobile phone of three years just died down on you.

Would you ask for money and leave yourself in more debt? Well, there's always mom and dad who can loan me this and that. To be fully self-sufficient, and to avoid having "utang na loob" debt with your parents, you must have money allocated especially for emergency situations like these.

3. No savings account yet

It's hard. Yes, we feel you. Saving up is a tough battle. But there is a one-sword-fits-all weapon: discipline.

From the day you receive your paycheck, make sure you pull out money for a savings fund. It can start at ₱1,000 per payout, which equates to ₱2,000 a month and ₱24,000 a year. By the end of the year, you can open a savings account. If possible, open a passbook account instead of the ATM card. The more hassle it is to withdraw, the less frequently you go to the bank.

Budget allocation is easier said than done. But if you know how much you spend on each expense category every month, it will be easier to allocate and set limitations on spending. That way, you can get out of debt, and stay that way.

Know how to settle your financial problems with tips from GoBear Philippines — the only meta-search engine for financial products like credit cards and travel insurance.