It’s not what we earn but it’s what we save and invest (Part 1)
Have you ever known people who really work hard and we know that they earn a lot? But at the end of the day they don’t have savings? It’s normal that if our income increases our expenses will increase as well. You may see that they have latest high-tech gadgets, branded shoes, clothes, amortization of the house and car, eating at fancy restaurants, travelling here and abroad, and a lot more. I’m not saying that it is not good to enjoy our hard-earned money, what I’m saying is that we have to have a financial plan. Not to the point that we will borrow money just to buy things that we want and to impress people that we can afford or just to be in. In our world today, CONSUMERISM is prevalent. I want it now! Get it now and pay later. It’s like having your own credit card is cool, thus, when the pay check comes in, most of the salary will simply go to pay all the bills. We have to practice delayed gratification than instant gratification. I have a friend told me that his salary is just like onions, “Pag pinag-hatihati mo na ay siguradong maiiyak ka”. It’s a sad fact that most of us do not value savings. I have a classmate before in one of my classes at MBA, she told me that she doesn’t have savings and she’s kind a proud about it. As if it’s an accomplishment. I told her that what if she lost her job, what if she gets sick, what it there’s an emergency that you have to pay something? How about your funds in the future? We are not going to work for life. Are we? She simply said, “Bahala na”. This is a statement of a person that does not have a financial plan. We know the fact that life is full of risks like death, sickness and retirement. As they say, if you fail to plan, you are planning to fail.
We Filipinos should value savings, as a Financial Literacy Advocate, I always tell to my clients, friends, loved ones and relatives that we have to live only at 80% of our income and 20% should go to saving and investing. Ideally, we should have at least 6 months of our monthly income at the bank for the emergency fund and on excess of that we have to start investing. I always believe that it’s not about how much income we have because it is about our attitude in handling our finances. We can always have ways how to be frugal in our lives. My lovely wife shared a story with me about her officemate that is always come to work late. What she does is she always takes a cab from her house to work. You can imagine how much would be her transportation expenses everyday, it would cost her at least Ph150.00 a day, so in a month, she will spend for about Ph3600 (Ph150 x 26 days) for her transporation just for one-way trip going to her job. What if she just shifts her mind that she leaves early from her house going to work? What if she wakes up earlier? I believe she can save. Probably if she will take FX going to her work , it will cost her less than Ph60.00. She can save Php90 per day, and if you compute that in a month, she can save Ph2,160 per month (Ph90 x 26 days). We have to start somewhere to set a portion of our income that will go to savings. Pag gusto may paraan, pag ayaw may dahilan. If you can’t start at 20% savings, start it with 10%, if it still not comfortable, you start it with 5% until you create a habit and eventually you can increase your savings through disciplining yourself. We are creatures of habit, once it will be our habit, we will be used to that. Create a habit that will be beneficial to us. It is all about our attitude about handling our finances, as the bible say, if we can be trusted in the small things, we can also be trusted in big things. There are ways if we change our minds and set priorities in saving. If we develop the habit of saving, we can now have funds to start investing… to be continued
Thank you for reading my blog.
Let’s spread Financial Literacy to our fellow Filipinos.
Contact me if you would like to know more about Financial Literacy Program of Insular Life:
Archie M. Yuki
Associate Unit Manager
Licensed Financial Advisor
The Insular Life Assurance Ltd., Co.
Mobile Number: 0917-5769607.
E-mail address: firstname.lastname@example.org