How To Achieve Financial Stability (Even As An Employee)
Last week, I had the opportunity to speak at the Feast Conference. I got to talk about the different ways people can pursue financial wellness and fulfillment without leaving their 9-5 jobs.
I also shared the stage with my Shepherd friends, Chanel and Bea, who gave short but inspiring insights on how they were able to live rich lives as employees.
If you’re curious about what these tips are, you are in for a treat. In this blog post, allow me to impart 5 things you can do to be financially well, even as an employee:
1. Don't spend more than what you earn
The first thing you can do to live a rich life without quitting your 9-5 is to live within — or even below — your means.
For example, if you earn P50,000 per month, then you should be spending less than that. This way, you can put away enough money for savings, investments, and other long-term goals.
Remember: it’s not about how much money you earn — it’s about how much you keep. If you are earning 300k per month but are spending 500k just to keep up with appearances, you are not rich.
Yes, there are people who earn 6 digits per month but still live from paycheck to paycheck. Because of their lavish lifestyles and ballooning expenses, they struggle to build financial stability.
On the other hand, if you honestly evaluate your lifestyle and live within your means, you can build strong financial benefits that can compound over time.
2. Track your expenses
My second tip is to track your expenses. I was pleasantly surprised when I found out that most of my audience at Feast already do this. Tracking your expenses helps you visualize where your money is going. It allows you to create a realistic budget and set savings goals.
Categorize your expenses into different buckets. For example, I’ve sorted my expenses into categories like:
Utilities
Travel
Charity
Entertainment
I’ve since hired an accountant to help me keep track of my expenses, but there are simple and free ways for you to do this.
How to track your expenses
Use expense trackers. There are lots of useful apps that help you keep track of your spending. Some even generate graphs to help you visualize where your money is going.
Keep your savings account separate from your spending account. This way, you’ll be less likely to dip into your savings. Also, by sticking to a separate spending account, your bank statements can show a clearer picture of your cash flow.
List them down. You can also use a journal or your notes app to track your spending.
Don’t be in denial. If you spent it, track it.
Whichever expense tracking method you choose, be honest and diligent. Create a habit of tracking your expenses consistently.
3. Stick to a budget
You know what they say:
“If you fail to plan, you plan to fail.”
Just like tracking your expenses, sticking to a budget is crucial in building financial success as an employee.
I used to do the envelope method to budget my expenses. In this method, I had separate envelopes for bills, travel, charity, and the like. I also had a special envelope for bigger expenses like new gadgets and traveling.
Today, I’ve moved on from traditional envelopes to digital wallets. The concept is pretty much the same as putting cash in different envelopes. It’s just that this time, I use a specific debit account or digital wallet for certain expenses.
For example, when traveling as a digital nomad, I use my “travel” debit card instead of my credit card or savings account. I deposit a set amount of money to the travel account and stick to that whenever I travel.
Budgeting hot tip
When you have excess budget from sales, discounts, or an unexpected cash inflow, put it in another digital wallet. At the end of the year, you’ll be surprised at how much money you’ve saved.
4. Invest!
You don’t need to be an entrepreneur to start investing. If you’ve got some extra funds (like those sales savings), you can put them in an investment vehicle like mutual funds or stocks. Research the type of investments best suited for your lifestyle, risk appetite, and long-term goals.
Invest in yourself
Aside from financial investments, you can also use your extra funds to invest in self-improvement. Enroll in a course to improve your skills. Maybe you can join a class or a paid community of experts in your niche. You can also put it towards your health and wellness. These are investments, too!
5. Delayed gratification
Delayed gratification means resisting the impulse to obtain certain things instantly. For example, when you see a new phone and resist the urge to purchase it immediately with a credit card, you’re delaying your gratification.
Learning how to master these impulses often leads to better financial health. Money and spending always come with an emotional aspect. That’s why we experience impulse buying, FOMO, and buyer’s remorse, right?
You can’t always avoid these things. But when you practice delayed gratification, your decisions will not be dictated by emotion. Instead, you’ll be able to think clearly and maybe even set yourself up for better things.
How to practice delayed gratification
Before making a purchase, decide if it’s a want or need. Be honest with yourself and your budget.
Instead of automatically purchasing your online shopping items, let them sit in your cart for about a week. If you still want those items, that’s when you should consider buying them.
Be smart with your credit card! Left unchecked, credit card debt can pile up. I personally did not get a credit card until I was already running a business because it was too much of a temptation. Make sure you’re emotionally and financially responsible when using credit cards.
Don’t buy items just because they are on sale. A 20% discount is an 80% expense if you don’t need the item.
In conclusion
Contrary to popular belief, you don’t have to be an entrepreneur to live a rich life. By being wise with your money habits, you can also live a financially fulfilling life.
If you’re an employee who’s achieved financial stability, what other tips would you add?
