Wealthy and successful people are often sources of inspiration. It takes strong willpower to pursue life goals even when things don’t always go as planned. Focus, drive, and passion are some of the key drivers that can propel your success. Alongside this, it is also important to develop a positive mindset and financial wisdom to stay empowered no matter what.
What is financial wisdom?
Financial wisdom is the collective knowledge, insights, and principles that can guide you in managing your personal finances, so you’ll be capable of building wealth in the long run.
The road to financial independence has its obstacles. However, with the right approach to money management and investment, you can look forward to a brighter and financially free future. To get you started, here are some nuggets of wisdom to live by.
1. It's not how much you earn, but how much you save.
Saving is one of the important values that has been taught to many. It is a way to ensure that money is set aside for future use so you can meet your life goals. Saving should be non-negotiable. Regardless of how much you earn now, make it a habit to save.
According to the 50/30/20 budget rule, 50% of your after-tax income should be spent on your needs and obligations, 30% on your wants, and the remaining 20% on savings and debt repayment.
2. Avoid and quickly eliminate high-interest debt.
High-interest debts are more difficult to manage and will affect your financial well-being. They can derail your plans and keep you from achieving your financial goals. If you cannot eliminate debt at once, pay off high-interest debts first.
- Rank your debts and pay the ones with the highest interest first.
- Pay more than the minimum payment required.
- Ask for a repayment scheme such as balance conversion.
Achieving a financially free future is living debt-free. Start managing your debts now and avoid living beyond your means to stay in control of your finances.
3. Build an emergency fund to prevent wiping out your savings
Financial wisdom involves recognizing problems before they become emergencies. The Ruhr University World Risk Index 2023 report ranks the Philippines as the most high-risk nation for significant and lasting damage from natural disasters. Heart diseases and cancers remain the leading causes of mortality, and the economy remains unpredictable as inflation soars and job automation becomes a trend.
An emergency fund will help you and your family cope with unforeseen events, such as floods, job loss, and medical emergencies. It will allow you to avoid homelessness and high-interest loans while you get back on your feet.
4. Cultivate INVESTING as delayed gratification.
Investing is delayed gratification in practice. Gadgets, cars, and tickets to a new tourist experience are best enjoyed if you’ve also prepared well for the future. Financial wisdom allows you to enjoy these lifestyle perks guilt-free through the power of compound interest.
Sun Life offers a broad range of products for investors of every stripe.
- Our affordable mutual funds allow first-time and conservative investors to pool their money with other stakeholders, minimizing risk at the individual level.
- Our balanced products, like the Achiever Fund 2028, offers a manageable level of risk for better returns, suitable for a long-term milestone, like a car or education fund.
- Our aggressive offerings, like the World Equity Index Feeder Fund, allow investors to forego short-term access to capital to maximize returns from local and international indexes.
5. Discover financial literacy with a knowledgeable advisor.
Financial literacy is having the knowledge and confidence to manage, save, and invest money effectively. In the Philippines, being financially literate is still a work in progress.
In 2022, BSP Governor Felipe Medalla said that only 25 percent of adult Filipinos are knowledgeable on basic financial concepts, according to the World Bank. Furthermore, a global study shows the Philippines at the bottom 30 out of 144 countries surveyed on financial literacy.
Financial literacy is broad. It involves budgeting, debt management, buying insurance, exploring investment opportunities, and preparing for retirement. There is no better route to achieving it than with a knowledgeable financial advisor who can provide valuable expertise and personalized guidance.
Sun Life Philippines is committed to uplifting the lives of Filipinos through financial literacy. We can match you with a financial advisor who can help you navigate the complexities of personal finance.
Financial wisdom can guide you in managing your personal finances and achieving a life of independence. Live by the principles that can help you develop the right mindset and habits for long-term financial success.
ALSO READ: Why Being a Financial Advisor is Your Next Big Gig
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