Tuesday, September 22, 2015

Financial Literacy is Detachment

Flashy cars, big houses, top of the line phone models, signature shoes and gears, these things are what usually capture the attention of those who get hooked and schemed by shady types of investments. And there are lots of them. Warnings are provided by the government authorities but many are still falling victims to them. Ignorance is one reason that it happens. But there are many who are supposedly smart people but still get caught on this trap not because they are not aware of the possibility of being scammed but due to a great attraction of a possible quick chance of a home run. Greed got into them and it is a far more dangerous black hole that pulls people strongly into the depths of poverty compared to ignorance.

It is also one thing that scares people away from legitimate investments. And many of those who got victimized couldn't move on and thought that everything else are the same. Whenever they hear someone talking about money and finances, they move away. Though it's really so easy to know whose professing real financial literacy from who's not.

If someone's teaching against materialism, showing you the way to detachment from worldly riches and becoming good stewards of what you have, then that is FINANCIAL LITERACY. It is really that simple. And that's also the only solution to work on your financial woes. The more you crave for more money without the correct mindset, the more financial problems you'll have. The more you detach yourself from material things, the more content and happy you'll become.

Monday, September 7, 2015

Budgeting Basics

I lost a lot of money before but not because someone stole it but then, I didn't exactly know what happened that I just wished that I knew it was indeed robbed. And there were days that it felt like I got more stuff than what I could afford. It is like magic. But it's also called budgeting.

There are many techniques out there that offer ways of budgeting your hard earned money. For sure that many of them work since they are mostly based on experience. I tried using some of them. Some worked, some did not. But I noticed that it's not the technique that is causing me to fail or not in managing my finances. It's what I did first before applying the technique that gave better results. Or maybe it's just about it. I prioritize.

Budget consists of 2 major parts, money at hand and the things you need to pay for. Those which you are not capable of buying because of lack of money are categorized as out of budget. Therefore you allot your money only for the things that you need to make sure you are within your budget.

It's basic and I'm sure you know about this already. But there are still a lot of us that find budgeting too difficult even for those who get paid a lot higher than the average earners because we are not being honest with ourselves. Sometimes, you get confused with the things you really need from those you just think you deserve to have. There are things that you buy that you can't afford though there are cheaper options where quality is not sacrificed. And there are things you buy that you think you should have though you don't really need. There's also this tendency to upgrade just because you earned a bit higher even if it's not necessary.

Let's also not fool ourselves that we are "investing" on unnecessary clutters as discussed on this blogpost. These are the biggest killers of budget. We tend to justify buying the things we just like and then later on wonder what happened to our budget. 

Bottomline is, you don't need to do any other budgeting technique when you only buy what you need which you are financially capable of including your savings and investments. By having the familiarity of your cash flow and the discipline to buy only the things you can't live without, you don't have to do budgeting any more in your entire life.