An Easy 3-Step Guide on Finances From a Millennial Who Was Able to Purchase Her Own Condo Unit at 23
It's only the second week of the new year, and we can already feel the difficulty of keeping track of and keeping on all the resolutions we intend to keep.
Possibly one of the most common New Year's resolutions of all time is to be able to save a particular amount by end of the year — or to stop living paycheck to paycheck.
Saving money can sound simple, but it's actually a challenging concept that requires an awful lot of will power and self-discipline.
Anywhere on cyberspace, there are tips and tricks on budgeting and "achieving financial freedom." But the more info there is, the more confusing it can get.
So let us offer our help with this three-step basic guide — for millennials, by a millennial.
1. Don't just "save." MANAGE your finances.
Sure, lots have been said over the effectivity of the 80/20 rule where you have to save, non-negotiable, 20 percent of your earnings. Other variants include 60/40, or 50/30/20.
But the truth is, if you save and save but still spend and spend, the expenditures just cancel out everything else, right?
The goal is to be able to "manage" your finances. This means knowing how much you're earning every month, less taxes and other deductions. Let's start from here.
Then, be aware of how much of your money goes where. This will take some time. We do go over-the-budget once in a while. When we know how much we're spending, then we'll know how much is left for us.
If you're like me when I was just starting out in this "adult" life, then you probably are getting a negative sum. That's fine, too.
Point is, we now know where the problem lies so we can do something about it.
I was only 23 when I purchased my condominium unit. I am still paying for it, sure, and some of you may think it's not something to brag about. But it is. Because it's a major investment that I paid for all by myself, earning only a little over P20,000 per month as my take-home pay.
I was able to do it — to have just enough in my bank account for the screening process and to eventually afford the down payment — because I knew how much I was saving and spending every pay-out, how much of it goes to food, rent, phone bills, and other expenses.
By knowing how much I spend on food, I learned to keep track of my eating habits. When I started paying more for my monthly phone bill than what was in my contract, I realized I had been making calls more often than is necessary without availing promos.
2. Do not show off. Show up.
I do not usually eat out, unlike most of my peers who regularly dine in restaurants with their friends. I would rather eat a 30-peso budget meal in a nearby carinderia than buy sumptuous meals priced at half a thousand pesos.
I do not have Palladium boots or even Uniqlo shirts. I don't show up at work carrying a Prada. I don't intend to purchase something worth a thousand pesos when I can buy something similar at a much lesser price. I wear a decent smart casual that's comfortable enough for me to move around and run when I have to.
What I do, however, is to show up at work. I am quite lucky that I am not required to report for work at an exact time every day, but this is the case for some of us.
It helps to always be on time. Aside from not having any deductions, it also shows professionalism. Who knows when the boss is looking for someone to promote? As a bonus: Calm mornings usually lead to productivity for the rest of the day.
3. Ask for help and take risks.
There's a saying that goes like this: Grind in your 20s, build in your 30s, and chill in your 40s.
It sounds realistic and practical enough. But we don't have to follow the rules all the time.
When I was still deciding on purchasing my condominium unit, my father thought I was too ambitious. I was working in my present company for only less than a year back then.
Had I waited for seven years when I'd be in my 30s to make that big investment, I'm pretty sure the price will have bloated and the discounts that were available to me at the time wouldn't have been there anymore.
Just so you know, I was paying P4,500 for my monthly rent before, which means I'm spending P54,000 a year for something that won't even belong to me in the long run.
I had my doubts, too, for sure. So I asked for help.
I discussed my financial situation with my accountant friend, and she said if I was positive that I can live with a hefty cut from my take-home pay then I should go with my purchase.
I also asked a friend who works in the banking industry. She said that condominiums aren't exactly what one would say a good investment since their value depreciates over time. But because the one I was eyeing for stood in a strategic location, I can easily have it rented out if I ever decide to move out.
I was already coordinating with an agent, who by the way was so insistent on my making the pruchase and paying a non-refundable down payment immediately that it made me uncomfortable.
So, I asked my college classmate, who used to be a real estate sales agent herself, to explain to me the process. Eventually, she introduced me to her friend who's an agent at the real estate company of the condominium unit I wanted.
Transferring my account to hers made the process easier for me. My new agent was able to give me some buffer time before I paid the down payment, an amount which, of course, wasn't easy to fulfill. I had to withdraw and pay with my eyes closed. But the buffer did help a lot. I had a discount, too, because she decreased her commission in the sale to accommodate me.
Buying a condominium unit is a big risk, especially for someone as young as I am. But the independence and pride it brings cannot be compared.
We hope our guide helped give you some direction towards financial freedom. For more comprehensive tips, check out our money-saving guide here!