Here in the Philippines, it’s part of our cultural upbringing to help support the family after we graduate. For young professionals who want to be “young, wild, and free”, this responsibility becomes an enormous pressure and a battle between saving for the family and spending for one’s wild happiness.
If you’re on this boat, know that you are not alone – many of us are with you. And it is still possible to reach your financial freedom even when you have a family to support right out of college. It won’t be easy, but these 3 financial teachings can help move you towards that goal.
Financial Teachings #1: “Short-term Gain For Long-term Pain Is A Bad Tradeoff”
For many young professionals — especially those who have just started work– payday is a highly celebrated day. Terms like “Friday Payday” and “Petsa de peligro” show just how much payday means for us young professionals.
While splurging your hard-earned money on payday isn’t all bad, young breadwinners and providers need to be very watchful: that splurge could be the difference between financial freedom and a lifetime of debt.
How to apply this teaching: The best way to apply this teaching is through the principle “pay yourself first.” This means setting aside something for yourself (and your family) first before you spend on other things. I generally follow a 20-80 savings rule: I save 20% of my income, and spend 80% on everything else. This rule doesn’t hurt the budget much and you have something saved for future goals or emergencies. Remember, emergencies can happen at any time. And if you don’t have anything saved up, you’ll be in deep trouble.
Secure that 20% as soon as possible.
Financial Teachings #2: “Live Below Your Means”
Because of social media, FOMO (Fear Of Missing Out) has become very difficult to manage. Many young professionals desire things that are beyond their means because their favorite social media personality was able to do it. Giving in to FOMO is like giving in to the dark side of the force.
How to apply this teaching: Living below your means does not mean you need to live like a poor person or deprive yourself of things you like. It means spending on things and experiences that are valuable to your growth instead of “it’s trending on social media!”. You don’t have to worry, if you invest in “value” now, you’ll afford those “trendy” things later on.
Financial teaching #3: “Smart Work Trumps Hard Work”
Growing up, many of us have been told that we need to work hard so that we can one day be pillars of our families. This is especially true for young breadwinners who have been conditioned to support the family after graduation.
But hard work isn’t really the way to go; in reality, not all our hard work pays off or yields significant results. According to the Pareto Principle (An economics principle by Vilfredo Pareto), only 20% of our daily work affect our lives significantly. It’s important to find that 20% and focus on that.
How to apply this teaching: Using the Pareto Principle is difficult if you don’t know what is important to you. So the first thing you need to do is figure out what your goals are. Clearly and specifically define the top three mid to long term goals you have for you and your family (like buying a car, buying a house, getting life insurance, etc.) then see what are you doing now that help you move towards those goals. Once you have those down, see how you can improve on those tasks and move closer to your goals.
Final Note
Being a breadwinner is no easy task. Most of the time, you’re carrying your family on your shoulders and have little time for yourself. But investing in yourself will benefit both you and your family, so you should never forget to give time for self-improvement and your financial independence.
