May 23, 2019
Congratulations on officially crossing into the wonderful world of adulting! It’s going to be a wild adventure and there are a lot of big changes that are coming in the next few months. A major one is your transition from having an allowance to earning your own money, which you have to manage on your own.
Strangely, you can rarely find a subject in school that teaches you how to manage your finances. Thankfully, there are great biblical principles about money and a couple of useful things you can learn to jumpstart your financial management life.
A good principle to remember is that God has a purpose for your life and even your money is meant to serve that purpose. It’s your responsibility to steward every peso you earn toward the many aspects of that purpose.
Think of it this way: You’ve been tasked as the group leader in a project and your hard-earned pesos are your group mates. It’s your job to assign a role to each of those bills so that your team can do what it needs to and hit certain milestones during this first “sem” of adulthood.
As the group leader, you have to start with a plan, and that plan is your budget. A budget can vary uniquely from person to person, but here are some sample “assignments” you can give your money, listed in order of priority:
Two constant assignments that are always a certain percentage of what you earn: tithes and taxes. Your tithes and offering is what you give to God, which serves as a reminder of how faithful and loving God is. On the other hand, your tax is your civic duty as a citizen of this country.
This is the money that you assign toward hitting your financial milestones, which we’ll talk about later.
The money that’s meant for the basics (e.g., rent, groceries, utilities, transportation).
You have been blessed to be a blessing. It’s a good practice to assign money in order to bless those around you.
Life is meant to be enjoyed, so go ahead and spend on that milk tea, movie, or new pair of shoes. God wants you to enjoy the fruits of your labor. You can freely assign a portion of your money here.
The idea here is that every time you receive your income, every single peso must already be assigned to a “task” even before a single penny is spent.
Now there’s a lot of variability in life. That’s why Lifestyle is your jack-of-all trades group mate. When someone else needs help, it should be ready to swoop in and lend a hand. For example, you ran late for a meeting and needed to take a Grab instead of a jeepney (from your Essentials), that could mean bye-bye to a pricey cup of milk tea.
The last thing about your plan is that it has to lead somewhere. It’s hard to assign roles to your team if you don’t know where you’re going. As a fresh graduate, there are a few financial milestones that you can work toward in your first few years:
Your first goal is to complete your emergency fund. Every peso in your Savings budget should work toward hitting this target. The idea is that if there’s an emergency, maybe a sudden hospitalization or you have to stop working for a while, you have enough to keep you going without having to go into debt. Don’t touch this fund except during emergencies. This should be around three to six months worth of your Essentials. For example, you allot PHP 18,000 monthly for rent, transportation, and food, multiply that by six, so once you reach PHP 108,000, you have just reached your first financial goal. Congratulations! Make this accessible. If part of it gets used because of an emergency, work on replenishing it to the full amount again.
Once you have your emergency fund, you can think about assigning some money for insurance. Try to get life insurance because it’s relatively cheap while you’re young. You should also apply for medical insurance, since medical bills are never cheap and you’ll never know when you’ll have to pay them. This is particularly important if your company doesn’t provide you with a medical card/HMO. (This is going to be really helpful for your parents, too, especially since they might be more prone to needing visits to the hospital.)
If you already have insurance, it’s a good idea to start investing. There are multiple reasons to invest, such as retirement, child’s education, the reality of inflation, and others. Also, there are multiple ways to do it. You may invest by buying stocks, investing in mutual funds, starting your own business, or buying properties. You can explore these options depending on your needs and personality.
All of this can seem overwhelming at first, and it’s okay if you can’t do it all. Do what you can with the little that you have. Now is the best time to practice this discipline of managing your finances.
Even in times of lack, it is by faith that you can be a good steward of what God has given; and it is also by faith that God will bless you abundantly. When that time comes, you’ll have an idea of how to use every one of those blessings for their purpose.