5 ways to optimize your finances for young professionals and fresh graduates

Disclaimer: I am not a financial advisor. Always do your own research when it comes to financial decisions.

As a fresh graduate or young professional still new to the "adulting" world, you might still be overwhelmed by all these new choices and opportunities open for you. You must have just gotten your first paycheck and are not sure wha to do with it. As early as now, it pays to be financially knowledgeable. 

Here are some useful suggestions on how to make the most of your money and build good financial habits.

Digital banking

To keep your hard earned money, one of the first things that new professionals must do is open a bank account. Banks keep your money safe and and offer many financial services for your needs. 

With digital banks, signing up for an account is easier. As the name suggests, a digital bank is fully operating online and there is no need to go to a physical branch just to sign up. Digital banks usually just requires you to download an app and upload your documents. I personally use ING Bank and have been satisfied as a customer so far.

Here in the Philippines, digital banking is fairly new. BSP-accredited banks currently operating in the country include ING, CIMB, Tonik, and Komo. They usually have higher interest rates than brick-and-mortar banks because of the lower cost of operations (no physical branches to maintain, for example). On average, digital banks offer around 2.5% interest subject to tax. 

Digital banks are convenient since you do not have to waste time lining up at a bank for your transactions. Customer service is done online. Most digital banks also offer debit cards so you can withdraw your money at your convenience on any ATM. There are digital banks such as ING where there is no transaction fee for withdrawals. 

Track your spending

Have you experienced feeling like you don't know where your money went? This 2022, one of my new year's resolutions is to track where every peso of where my money goes.

I personally use the Bluecoins app on Android (developed by Filipinos) to track my finances. It is easy to set up categories for your expenses and track my bank accounts and investments. Keeping track of my spending habits makes me more conscious of where my money goes and encourages me to save.

Build an emergency fund

The COVID-19 pandemic has taught us that many unexpected things can happen. You may lose your job for several months or even permanently, you may get sick, and you may be short of cash for unforeseen expenses.

Before you start investing, an emergency fund is important. This is your backup money in case life hits you hard and finances get tough. It is recommended that you save for 3-6 months (or even more) of your living expenses for your emergency fund.

I personally have a separate bank account that I don't touch just for this fund. 

Look for other possible income streams

Even if I have a regular job, I still look for other sources of income. I have sold books and things I don't use anymore on Carousell and Facebook Marketplace. I recently opened a Pag-Ibig MP2 savings account. I earn a bit through blogging and my online platforms. It doesn't hurt to have some extra sources of income. 

I try to learn as much as I can about money and finances. This year, I want to learn more about stocks and other possible income streams. I'm dreaming of having a business someday.

I think it is important to learn valuable skills and invest in educating yourself. I feel like we can't just rely on one source of income (like a job), since who knows until when will that be?

Avoid bad debt

There are times that we do need loans for important expenses such as a house, car, medical issues, or education. But don't let them accumulate to debt. Having debt can be stressful. Unpaid debt also has financial repercussions for your future.

We may be tempted by the latest sales on Shopee and Lazada, and get the trendiest gadgets and clothing. There's nothing wrong with treating yourself from time to time, but too much can be dangerous for your finances. 

I still use the same mobile phone since 2017 and the same laptop since 2015. If it is still functioning, I don't see the point of buying the latest model right away. With the fast release of new phones and gadgets, your 'latest' gadget today may be outdated next year.

Always pay your bills in full. If you have any debt problems, Debt Consolidation offers information resources for managing debt. Click here to learn more.

Lastly, avoid scams. There have been a lot of news about bank scams and accounts hacking. Avoid suspicious emails or calls asking for your bank accounts, card numbers, and OTPs. Always transact through the bank's official channels and keep your accounts secure. 

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