Now, let’s talk about… this: 🏧💱
Who wants a new bag or a pair of new shoes? Who wants to go places and travel the world? Who wants to spend your still-warm-from-the-ATM-machine bill to buy newest gadgets? Of course, everyone.
Let me share what I learned about managing your personal finances from a seminar last February 6, 2016 conducted by a few of TGFI (The Global Filipino Investors) group members and officers. One topic is all about Personal Finance by Mr. Eric Domingo.
We love to spend on things that can make us happy and satisfied, to reward ourselves, to pay ourselves for our hardwork from the past weeks (Yes please! Because I did great, right?). But… are we really happy? Are we really satisfied? For the meantime, yes. But, how are we gonna be tomorrow? We are so-called the one-day-millionaires who are not really millionaires. Now, let me ask you, who among you wants to become a millionaire for real AND for the rest of your life and not just for a day? I am raising my hand right now.
From being a SPENDER, why don’t we be a SAVER? And eventually, an INVESTOR? Difficult? Time consuming? You do not know anything about money-making things except for your job, except for being an employee? I’ll tell you this: Educate yourself to things you do not know and you will live with it for the rest of your life instead of becoming stagnant and ignorant until you die. Take baby steps into learning then put it into action and you will see results.
Here are the STEPS to Financial Wellness:
1. Improve Cashflow.
Make money, spend less. Aside from your job which pays you enough, but still a never-enough income, why don’t you look for other sources? Or investments that can improve your income or the money that comes in your pocket? Go on, think of a way. Use your coconut shell, darling. It is time to put your mind into serious thinking for your own future. Do not just live for today.
Needs vs. Wants. Learn the difference and delay gratification. Isn’t it a more satisfying feeling to wait until the fruits are ripe before you eat one compared to eating it now and regret?
Form a HABIT! You are absolutely aware about labeled money jars and envelope system, right? But why don’t you do it? Start doing it now until it becomes a part of your everyday life… to divide your hard-earned money to everything, most especially savings.
INCOME – SAVINGS = EXPENSES
Create a cashflow. Of your expenses and income or incomes if you have several. Make a balance sheet of every penny that comes out and comes in so you know where to adjust to be able to save something. Because SAVING is PAYING yourself.
What is a HEALTHY CASHFLOW? It is the successful control of your own finances and being able to save at least 20 to 30% from your income. The higher percentage, the better. It is difficult, yes, in the beginning. But then again, you just have to adjust your unnecessary expenses, keep doing it every month, gradually save a small portion of your income until you reach your goal of saving a third. It still depends on you and how you want to handle your money, all I am saying is… SAVE now because SAVING is investing in and for yourself.
2. Get out of DEBT.
Who wants debt? No one, of course. So what do you have to do then? Make sure you pay your old debts and avoid new debts. Start paying your credit card debts now, your neighbors, the sari-sari store where you “utang” last night’s beers and chips. And if you want to start a small business or invest in the stock market or mutual fund, please, never ever borrow money for it. Produce the amount before you invest into something. Okay?
3. Set up Emergency Fund.
An emergency fund is your savings only intended for, obviously, emergencies. It is worth 3 months of living expenses or for some it is 3 months of salary. It doesn’t matter which one you follow as long as you have at least three months. Some also believe it must be 6 months. Again, it doesn’t matter, as long as you have an emergency fund… and don’t touch it if possible. And please, sale until tomorrow is not an emergency!
4. Get protected from life’s risks.
I am talking about insurances here. Ensure proper protection by getting an insurance plan mainly to secure your family’s future if something happened to you, I hope not. What are the things that we must protect particularly? They are: Life, Health, and Wealth. Go visit your agent now and understand more about insurance plans (does that include memorial plan? 😁 ).
5. Invest for your future.
Invest as early as you can. Investing is a long-term process, it is not an overnight gain. Remember, success only comes to those who wait. So when investing, always put into your mind that you may not be winning today, but by being consistent, you will soon reap the fruits of your labor. Last month, market went down and beginners panicked. So another tip before putting money into it, fill your mind with knowledge about what you are about to enter. Fund now and you know nothing, that is gambling. Definitely an easy loss overnight. Start learning now. Educate yourself first so no matter what the trend will be, you know what you are doing.
Factors to consider before investing:
A. Investment Objective. What are you investing for? Set up a goal. In that way, you won’t be lost because you know you are investing for something important to you be it children’s education, retirement, or total financial freedom.
B. Time Frame. Know when you will need it. 10 years from now? 20? 30? Just make sure that whatever time frame you set, you will religiously follow it.
C. Risk Tolerance. The trend in the market is unpredictable, even experts can’t say when it will go up a little or go steep down. So you have to make sure that whatever happens to the market price, you can take it. This is not for the impulsive people. Use your head when something happens to the market. That’s why you have to study first so your tolerance will be pretty better.
At TGFI, they will teach you a wide span of knowledge you never heard in school whether it be investments, business, and real estate. Attend their seminars and you will come out “malaman ang utak” (meaty brain??). So come out from your shell and explore the possibilities of being rich maybe not as soon as you want it but in the near future so better wake up those cells and kickstart your wheel to financial literacy and financial freedom! (coffee please!)
Speaker: Mr. Eric Domingo, TGFI volunteer speaker
Event: TGFI SG Newbie Session