Money resolutions para sa bagong taon

11 for 2011 (Money Resolutions)
By Alvin T. Tabañag
Another year begins.  And like in years past, most Filipinos greet the new year with a lot of hope.  But if you overspent during the holidays and now find yourself staring through a hole in your pocket or feeling anxious about getting your next credit card bill that hope will probably be gone in a flash.  Here are 11 money resolutions you can make in 2011 so that you will welcome succeeding new years with genuine hope and optimism for a better and brighter future.
1.  Invest in knowledge. Educate yourself about personal finance.  Knowledge is power.  The more you know, the more effective you will be in saving and managing your finances.  People who are well-informed can also spot a good investment opportunity and are not easily scammed.  Also, enhance your skills and learn new ones so you can be more effective in your work or find a better paying job. Know more, earn more!
2. Set clear and specific financial goals and prioritize.  Without clear goals you will not know where to go or what to do.  Classify goals into short-term, medium-term and long-term goals and prioritize them.  Split huge or long-term goals into smaller sub-goals.  Focus your attention (and your resources) in completing the sub-goals first so you don’t get overwhelmed. 
3.  Assess your financial condition and take time to organize your financial documents.  You can’t manage what you do not know.  Taking stock of your personal finances will help you figure out what you need to do to accomplish your goals. You can also avoid missing loan or premium payments if you organize your financial documents.  Start the new year by finding out how much you own and how much you owe.
4. Start paying yourself.  Make it a habit to set aside 10-20% of your monthly income as your regular savings.  Regardless of how much you are earning right now you can start building wealth today if you learn to save consistently.  Achieving long-term financial security is not just about how much you earn, but more importantly how much you save.
5. Cut down your expenses.  Learn to spend money wisely.  Don’t buy too much stuff that you can live without.  Create a spending plan (aka budget) and do your best to stick to it.  A budget can help you keep your expenses under control and ensure that you will be able to save regularly.   It is also an essential tool for achieving your financial goals.
6. Use your credit card wisely and responsibly.  Get rid of excess credit cards.  All you need is 1 or 2 at the most.  Try to pay your credit card bills in full every month so you can avoid paying excessive interest charges.  Leave credit cards at home if you are easily tempted into buying.  Reckless use of credit cards has put many cardholders in serious financial trouble which could take many years to recover from.
7. Curb impulse spending.  Observe a waiting period before buying anything that costs more than, say P500 or P1,000, especially if it is not an essential item. The more expensive the item, the longer you should wait.  Impulse spending will mess up your budget and you could end up saving nothing each month.
8. Pay down your debts.  Getting rid of debt will help you maximize your savings. Aim to cut your debt down to a more manageable level. For example, you can resolve to reduce it by 25% - 50%, if not completely wipe it out, by the end of year.  Follow the Rule of 20 which says that the amount of money you’re paying every month for debt should not exceed 20% of your monthly income.
9. Get insured.  Sickness, accidents and untimely death can turn a family’s finances upside down pretty quickly.  Savings can dissipate in a jiffy when a financial crisis hits.  Insurance will help the family keep its head above water when a financial disaster strikes.   If you are not yet insured, now is a good time to get covered by a life insurance and a medical insurance.
10. Start investing.  It’s not enough to save and keep your money in low-interest-bearing savings deposit accounts.  You will have to learn how to grow your money so that you can attain your goals faster.   Investing your money carries a certain degree of risk but you will have to take on some risk to maximize the growth of your funds.  Deposit accounts may be safer but with very small returns you will have to save a lot more to reach your financial goals.  Learn about investing in bonds, mutual funds, UITFs and the stock market.  You can also consider investing in a business.
11. Teach your kids about money and savings.  Children who understand the value of money and are responsible in handling their own funds will not keep on bugging their parents about buying them expensive stuff that they don’t really need or can live without.  Starting them early with responsible money management will provide them with a much better chance of achieving a brighter, more secure financial future.  Instead of giving your children’s school allowance on a daily basis, give it weekly (for grade & high school students) or monthly (for college students).  This is the most effective way to teach them how to budget and manage their own money.
(These money resolutions were first discussed by the author last December 27 in the ANC show “Shoptalk.”)