Entering the Philippine workforce as a fresh graduate presents unique challenges in the face of a tough economy. For those fortunate enough to secure a job in their field or those daring enough to venture into successful entrepreneurship, the priority shifts to preserving and expanding their hard-earned income.
While the journey toward financial freedom may seem daunting and intimidating, this digital economy offers more efficient and secure savings and investment avenues than the traditional, meager returns of a standard bank account.
Today, young adults are no longer confined to earning less than 1 percent interest annually on their savings deposit. If you are willing to learn and adapt, here's a concise guide for young adults like you who are aspiring to attain financial stability in the Philippines.
Learn About Financial Literacy from Reliable Sources
Financial literacy is the foundation of effective money management. To set yourself on the right track from the get-go, learn about basic financial concepts such as budgeting, saving, and investing.
That said, be cautious about following advice from so-called “financial gurus” who may lead you astray. Instead, choose to read inspiring books with excellent reviews, enroll in reputable online courses, and attend seminars offered by credible institutions. By equipping yourself with knowledge, you'll be better prepared to make informed decisions about your finances.
Choose High-Yield Savings Products
Maximize the growth potential of your savings by opting for a digital bank that offers high-yield savings accounts. As one of the best digital banks in the Philippines, for example, Maya offers a Maya Savings account, which has a base interest rate of 3.5% p.a. That said, users can boost this interest rate all the way up to 14% interest p.a. credited daily (starting July 1) simply by buying airtime load, paying bills, or using your Maya Wallet or Maya Easy Credit to pay via QRPh, online, or with your Maya Card.
These competitive interest rates on your deposits can significantly boost your savings, enabling you to build up your emergency fund and investment portfolio so much quicker. Therefore, be sure to compare interest rates and fees when selecting your preferred bank.
Be Smart about Your Spending
Practicing smart spending habits is essential for effective money management. You can start by creating a monthly budget that outlines your income and expenses. Then, track your spending to identify areas where you can cut back. For a more convenient way to budget and track your expenses, consider using apps or simple spreadsheets.
Another basic yet crucial lesson in spending is differentiating between needs and wants and prioritizing essential expenses over unnecessary purchases. When you live within your means, you can free up more funds for saving and investing.
If you do need to spend, such as on utilities, rent, and groceries, ensure that you use your digital banking app that rewards you for every transaction. With Maya Savings, you can earn up to 14% interest p.a. credited daily by using your Maya Wallet and Maya Easy credit to pay for all your spends. That’s why every time you spend on necessities, you earn money back to add back to your savings.
Allocate Budgets for Your Short and Long-Term Goals
Setting clear financial goals is crucial for staying motivated and focused on your financial journey. Allocate budgets for both short-term and long-term goals, such as building an emergency fund, saving for a vacation, or investing in further education. With each payday, you can divide your income into such goals. This ensures that you're consistently making progress towards your objectives.
For the purpose of setting financial goals, also consider using the Maya Personal Goals feature of the Maya app to set aside money for up to 5 different big-ticket goals, no matter if it’s a want or a need. You’ll even earn a guaranteed 4% interest p.a. monthly for each goal.
Consider Opening a Low-Risk Investment Account for Passive Income
Diversifying your investment portfolio can help you build wealth and generate passive income over time. As a beginner investor, you can start with a safer instrument. Consider opening a low-risk investment account, such as a time deposit, to supplement your savings and kickstart your investment journey. Time deposits offer guaranteed returns and secure your money for the duration of the chosen lock-in period. With a generous rate, your money can grow and fight inflation. For example, Maya Time Deposit Plus allows you to earn as much as 6% interest p.a. monthly depending on your chosen term (you can choose a tenor of either 3, 6, or 12 months).
Look for Opportunities to Earn Extra Active Income
In addition to saving and investing, actively seek opportunities to increase your income. Explore freelance work, part-time jobs, or online businesses that align with your skills and interests. For example, if you're a graphic designer, you can offer your skills on a per-project basis. After completing your day job, utilize your downtime to work on freelance gigs. By diversifying your income streams, you can accelerate your wealth-building journey and achieve your financial goals more quickly.
Managing your finances effectively is a journey that requires diligence, discipline, and continuous learning. Through these essential strategies, you can start your journey right so you can achieve your financial goals much quicker than you anticipated.
