No one wants debt – may that be owing money or owing a feeling of gratitude for a favor. While the latter can be hard to cut off since it somehow stems from our culture, we can at least free ourselves from financial debt in order to reclaim our full savings. But how can someone who is earning “just enough” be able to save and get themselves out of debt – including family debt, school debt, and medical debt?
Here are some tips which can help when combined with prudence and persistence:
1. Pay your bills on time
Never let your bills accumulate nor put everything you consume on credit. It’s easy to live off of credit system from stores but that is not a good practice if you have a steady income. May that be an electrical bill, a phone bill or a water bill, set time and money to pay them before the due date. Set alarms or monthly reminders and use online payment portals so you can also save time.
2. Set a monthly budget for spending
There’s a huge difference between NEEDS and WANTS. Allot budget for the things that really matter like food, transportation, bills, and existing debts. If you manage to earn a little extra, spend but don’t splurge! You can also schedule your shopping during sale days. Before buying, check if there are offers online vs in-store to make the most out of your budget.
3. Save at least 30% of your salary in a separate bank
The percentage would depend on what is doable, but in my case, I try to save at least 30% for rainy days. Never touch your savings account unless it’s an emergency! It’s also best to pick a bank where you can get the highest interest out of your savings. You can also keep the ATM card of your savings bank at home or safely stashed away where you won’t be tempted to reach out for it during a purchase.
4. Pay Pag-IBIG and SSS monthly for your retirement fund
Pag-IBIG Regular Savings entitles us to claim annual dividend earnings once we’ve retired, while SSS enables us to claim funds in case of death, disability, old age, maternity, disability, and sickness. Funds for both are normally deducted from our monthly salary, but for freelancers, you’ll have to pay on a monthly basis in order to save up for your future.
5. Invest in credible companies
When picking a financial advisor, pick those who are representing global companies and will really look after your earnings over those who are just selling investment plans for the sake of reaching their quota. You’ll be able to notice which is which during pitches!
6. Talk about debts in your family
In the Philippines, debts of parents are usually passed on to kids if they cannot pay for it during their lifetime. Although this shouldn’t be the case, the custom of utang na loob obliges the children to inherit this without a choice. To stop this toxic cycle, open the topic of debt in your family and ensure that those get sorted out by the right people before anything else.
7. Request assistance from organizations for medical debts, if needed
We have benefits from Pag-IBIG and PhilHealth that we can claim in case of medical emergencies. If you badly need assistance in bringing outstanding hospital fees down, you can also ask for help from organizations like Philippine Red Cross, DSWD Medical Assistance, and Hope from Within, to name a few.
8. Do not gamble
The thrill of gambling games can be addicting. Never put your hard-earned money in a place where it can disappear in a matter of seconds. Best to just save it as an investment or keep it in your bank account in order for it to gain interest over time.
9. Use credit cards on things that matter
Luxury items are off the table if it won’t give you an ROI. Use your credit card for things that matter like appliances that can help you with household chores. Always ask yourself how often will you be using an expensive item and why you need it.
10. Claim ALL your work benefits
If you’re working for an employer that offers reimbursement benefits for eyeglasses, load, medical, transportation, food, and even referral fees, make sure to make the most out of it. Most of these things are part of the contract that you signed prior to joining the company so you have every right to claim what is due. You’d be surprised at how much it can help you further increase your savings for the year.
While following these tips, also consider taking on part-time jobs or selling things on the side for extra cash flow. You can also get advice about financial matters here.