Spending Habits Young Professionals Make and How to Solve Them
Currently the Philippines have a mean age of 23 years old– the working class ones, the energetic ones, the explorative ones. People in this age group undergo a critical period where they transition from young adults to mature adults. This is the time where they come into terms with responsibilities they need to face in the future. But with this generation’s YOLO mindset, future plans take the back seat and seizing the moment leads to money spent haphazardly. You have the right to enjoy your hard earned cash but when do you draw the line on over spending? Don’t worry. We got you covered. Here’s a list identifying some of spending mistakes yuppies make and how to solve them:
1. The “I-need-to-be-in-the-loop” habit
“I have to buy the new iPhone since all my friends has one already.” “Everyone is wearing a Nike Roshe. I’ll buy then I can also upload shoefies on Instagram #newkicks.” Do these sound too familiar? It’s not a crime to buy things that would make you happy but spending beyond your means in the name of trends will cause you a financial setback. Millennials are very concerned in keeping up with the trends and missing out is simply not an option. The flip side of these desires is anxiety – about not fitting in, not being up-to-date, and being an outsider. Various industries exploit on these negative emotions and people succumb to their marketing ploy every day.
The fix: Develop your “Should I buy this?” test before purchasing an item. The items on the list should be fit with your spending habits and what parameters you use in deciding to get an item but here are some examples you can use:
- Why do I need this?
- Am I buying this only because of the trend?
- If I won’t buy this, would it make any difference?
- How would this affect my finances?
- Is this purchase worth my money?
This list can help you control all your impulse to buy trends and distinguish your needs vs. wants. If the answers to your questions are acceptable to your buying principle then you are making a smart purchase.
2. Yehey-it’s-payday-let’s-play syndrome
The young professionals have the tendency to overspend when their pay check comes because it gives them the illusion that they are rich. Yuppies spend their money right away on sales (which malls strategically schedule during paydays) only to realize they already have a significant decrease in their inflow and finally end up broke.
The fix: Make a budget and stick to it. List down all the necessary things you need to spend your money on such as food, transportation, utilities, rent etc. This way, you’ll know how much you need to allot for your revolving funds and the amount you can spend on your leisure activities. Remember also to deposit at least 20 percent of your income to your savings just in case of an emergency.
3. Prioritizing spending than saving
Those who recently got a job (usually) are excited to reap the benefits of their hard work and would want to itemize all the things they want to acquire once pay day comes. They maintain this attitude of what to buy rather than how much to save.
The fix: Learn to delay gratification. Condition your mind that you don’t always need to buy new things. If you are on Instagram or Facebook, block out shops that display items that would trigger your desire to buy something out of a whim. Also if there’s an on-going sale, control yourself to not go inside the store so you won’t end-up purchasing an item just because “it’s on sale”.
4. Filipino habit of pakikisama.
If there is an achieved milestone or a positive event in our life, we tend to give in to requests like “Hey boss really liked your presentation kanina, treat mo naman kami” or “Wow first pay day so sayo na first round, right?” Whether it’s out of peer pressure or due to the innate generosity, it’s still an unexpected event and thus, an unexpected expense.
The fix: Learn to say no at times. It’s okay to treat your loved ones once in a while because you’ve received your bonus. However, it is not your obligation to treat everyone in the office if you’ve closed a sale or published your first article especially if you are undergoing a financial strain. The value of pakikisama is not only shown through free meals. It comes naturally and not pressured upon a person.
Realizing which spending habits you need to change now is key to achieve early financial security. Buying a home or starting up a retirement plan doesn’t seem like a priority in your early 20’s but as the years fly by, you’ll be facing an uphill battle. You’ll be thanking yourself ten years later for your early financial head start. Remember that life happens quickly so it’s important to start saving early.
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