***I want to share with you the essay that I wrote for my English Composition class. We were given the freedom to choose our own topic, so, naturally, I chose personal finance– a topic close to my heart.***
Imagine yourself having cocktails and an early dinner in a restaurant somewhere in Torino, Italy while viewing the beautiful crimson sunset. Or lying on the grass with your special someone in front of the Eiffel Tower in Paris. Alternatively, if you are the adventurous type, hiking to Machu Picchu in Peru or riding the elephant in Phuket. Traveling the world is just one of the many benefits of good personal finance. Sound financial management, which can be achieved through saving, getting out of debt, and planning for retirement, opens many doors of possibilities and options in our lives.
Saving money is the core foundation of good personal finance. It has never been the right time to save money given the current economic turmoil that we are experiencing. Savings provide us peace of mind and security. Suze Orman, the financial guru and my inspiration, recommends that, if possible, we all should have at least eight-month worth of an emergency fund. It is kind of overwhelming to save that amount of money but if you look at it, she is right. We need it for our safety net so that we won’t resort to credit cards or any other form of debt if hard times hit us. Saving can be difficult but it is not impossible. There are proven ways on how to save money. One is to cut unnecessary expenses. If there are expenses that you can live without, cut them and direct that money into your savings. You can also create a budget and try to stick to it. Having a structure or a plan to follow makes it easier to save. You have a clear direction as to how much you are going to spend in each expense category.Another one is to track your spending by writing them down in a notebook or a spreadsheet. This way, you know where your money is going and what you are spending on. Furthermore, you can find cheaper alternatives to the stuff that you are already using. You will be surprised on how much you can save by doing this. With a positive attitude, patience, determination, and a dream, anyone can save.
Getting out of debt is another important factor in sound financial management because it frees you from financial obligation to anyone. Debt is like a prison. It restricts you from doing what you want to do. You are obligated to pay it off. Some people buy things that they cannot afford. As a result, they go into deep debt. I was once like these people. I received my first credit card twelve years ago. Upon receiving it, I immediately went into the store to buy stuff. It was addicting. I could not stop spending because of the credit card. I even maxed out my first card. And debt just kept on piling up. I was on a downward spiral. I was not proud of it. I got depressed and stressed because of the debt that I had. Fortunately, I snapped out of it, thanks to the financial blogs and books that I have been reading and the Suze Orman’s T.V. show that I have been watching every Saturday afternoon. I found inspiration. It was not easy to pay down the debt. I learned the hard way. However, I was able to pay off all my credit cards and car debt in the end. I got emotional when I made the last payment to my debt. It was indeed, liberating. The experience left a scar. A scar that will always remind me that debt is a prison.
And finally, planning for retirement is just as essential as saving and getting out of debt because this will outline how your financial health is going to be at old age. This is long-term planning. If you plan early, there is a high probability that you will have a comfortable life when you retire, financially speaking. People invest their money for retirement. Among the popular types of investments are stocks, mutual funds, and bonds. It is ideal to start early because of the principle of compounding, which is the process where your money and the interest that it gained earns another interest. It is an interest on top of the interest, and it keeps on compounding until the money is withdrawn. The truth of the matter is, we are all going to retire someday, and we want to be as prepared as we can when it happens.
Sound financial management is not a rocket science. We just need to know the basics, have the discipline, and the vision of what we truly want in our lives. Through saving, getting out of debt, and planning for retirement, we will feel secure financially. And not only that, it also feels good inside when we know that we are prepared, and our options are not limited. Lastly, managing our finances properly is the right thing to do.