Tips on how to gain financial freedom in the Year of the Wooden Dragon
MANILA, Philippines — These days, when pandemics just happen and catch you unaware, you simply cannot be too prepared. Life can be quite unpredictable, and nothing can help you overcome its hurdles more than being financially prepared for any eventuality.
Financial preparedness has become not just a goal but a survival skill that you must learn, and there is no better time to start your journey towards financial freedom than now that another Chinese New Year is upon us.
This is particularly true since, according to the Chinese Zodiac, 2024 is the Year of the Dragon, a year that astrologers describe to be interesting and unpredictable, with never a dull moment. Thus, Chinese New Year, which falls on February 10 this year following the Lunar Calendar, can serve as an auspicious time for new beginnings and positive life changes.
Here are some practical Chinese New Year-inspired pieces of advice or tips that can help you not just manage your finances but attain financial freedom, as suggested by Rizal Commercial Banking Corporation (RCBC):
1. Settle your debts and build an emergency fund.
The Year of the Dragon is said to be a year of moment and unpredictability, so it’s wise to put some stability into your finances at the start of the year, and the best way to do that is to sort out your debts and build an emergency fund.
It is important to invest to increase sources of income. The idea is to be able to live a life where you don’t depend on just your day job. But before you invest, you should consider your personal financial status first. How much debt do you have? You need to pay off your debts first. Pay more than the minimum required and, if possible, pay more often so that you will be able to finish paying earlier than scheduled.
If you have several debts, choose to pay the most expensive loan first, as it is likely to be the one with the highest interest rate. Once you have paid off your outstanding loans, save up a decent amount for your emergency fund. It should be able to cover at least three months’ worth of your expenses. But it depends on your financial capacity and personal circumstances.
Should you finish paying your debt first before you start building an emergency fund? Ideally, yes, because the longer it takes you to pay off your loans, the higher the interest rate and other related fees could be. Yet it’s more practical to save a bit of your monthly income for emergencies even as you pay off your debt. Having funds ready for those unforeseen events and tight spots can help get more loans.
2. Diversify your income.
Create more income sources for yourself. Many think this means investing in property, bonds and stocks, among other financial products. While this can be a good way to diversify income, investing isn’t the only way — especially when your financial circumstances won’t allow you to go big on investments just yet.
Expanding income sources can also mean taking on a side hustle to supplement your regular income. It means monetizing that hobby you’ve been working on for years. The main point here is to make sure you are not vulnerable to economic fluctuations or major financial hurdles (like a huge hospital bill or a sudden loss of a job) that you may unexpectedly encounter.
3. Automate savings using your banking app’s features.
Have trouble building that emergency fund? If you believe in the Chinese Zodiac, this will be common in 2024 due to the Year of the Dragon’s restless energy. You can, however, offset this restless energy by building a practice of stability and constancy.
Create or open a separate savings account just for this purpose so you won’t be tempted to dip into your “savings” when you get that sudden urge to go on a shopping spree or out-of-budget night out. Take advantage of your banking app’s fund transfer feature; make sure a specific but reasonable amount from your monthly salary or income goes straight to your savings account, so you can resist the temptation to spend it.
RCBC’s digital app, now known as RCBC Pulz, is one of the most comprehensive banking apps in the country. It is equipped with features that empower its clients to manage their funds anytime, anywhere. You can open a savings account using the app to get your started.
4. Prepare for the future.
Financial freedom is not just about the now; it’s also about the future and securing a stable and comfortable life for yourself several years from now. This means securing investments, life insurance plans and private health insurance (for when you are already retired and can no longer depend on insurance provided by your employment). This also means making sure you have a pension and retirement fund source. This means having a passive income stream.
RCBC Trust, for one, can help you manage your investments, with a team of portfolio managers dedicated to providing you with expert financial advice to help you realize your funds’ potential through a variety of investment products and services such as Unit Investment Trust Funds, Investment Management Accounts (IMAs) and Personal Management Trusts, among others.
Wouldn’t it be great to start working on these steps this year? There is no better time to reach for your financial dreams than now.