Always Think---SAVE FIRST!

Do not play with your future. You are neither a seer or a prophet to know what the future holds. Many have come to realize that life's ironies can have disastrous effect to our best laid plans; often times it is already too late when they arrive at this realization.  As I keep on saying, "Walang nagsisisi sa una."

If you have a job, you can easily earn money through hard work. You an also easily spend it all on non-essential stuff that make you "happy". Well, it is not bad to enjoy the fruits of your labor but within reason. Many folks enjoy spending too much and end up broke before the next cut-off is even there. And what do they usually get our of it?  Short term enjoyment which usually ends up with a throbbing headache and a hang over; or, a gadget which is almost always already outdated after a few months.

Filipinos fall under three financial behaviors.  Let me tell you about them.

1.  The Accidental Saver.  These people are always raring to splurge whenever payday or a bonus day comes.  They are always planning where to eat,      drink, have a good time and what new gadgets to buy.  After all the merry making and shopping---lo and behold---there is still something left in            their ATM cards.  For the more hedonistic types this is another reason to spend some more.

2.  The Plastic Mindset.  People who fall under this category are those who spend their salary/bonus even before it even gets deposited in their ATMs.        They do this through their credit cards.

In itself, using your credit card is not bad.  It actually gives you more buying power especially in terms of critical needs.  However, it must be          kept in mind that what the credit card company declares as your credit limit is a HONEY TRAP.  As a rule, you should not spend more than a third of your credit limit.  So If your credit limit is Php 15,000 your REAL credit limit should only be Php 5,000.  Going beyond this is a bad spending habit that would eventually get you into a bad debt situation.

Sadly, a lot of Filipinos are under this behaviour.

3.  The Skillfull Planner.  This is the behavior that we want to be in.  The thing is, this cannot simply be dictated.  The decision to be in this kind of behavior remains with each and every individual.

In this kind of behavior a person's top of mind is how much to set aside for savings.  No matter if the amount is big or small the more important thing is to develop the HABIT of always setting aside a portion of your salary reasonable enough for you to start your way towards a life of financial freedom.   

Ideally, one should save a maximum of 20% of his salary and 80% to live up on.   Now, if you're a good Christian, you will alot 10% to the church, 20% on savings, and 70% as daily expense.   However, this may vary depending on a person's income and lifestyle.

Many of those that I have spoken to would say they can't save even 5% but upon further probing they are just but a lifestyle change away to jump start their savings initiative.  For instance, a person with a Php 15,000 salary, 5% is equal to Php 750 a month or Php 375 per payday.  if you're a smoker who smokes 10 sticks per day, that would be spending Php 50.  Multiplied by 15 days, that would be Php 750 worth of cigarettes.  In a month, you're actually spending Php 1,500 on this vice.  If you cut your cigarette consumption by 50% you can actually save Php 750.  Now if you're a Starbucks aficionado earning Php 25,000, 5% is equivalent to Php 1,250.  If you go to Starbucks twice a week for coffee and pastry, you would be spending Php 170 for a venti Caramel Macchiato (because going grande is just a Php 10 difference to venti as the barista would always remind you) and Php 120 for a slice of Blueberry Cheesecake .  That would accumulate to Php 580 a week or Php 2,320 a month.  If you abstain from visiting Starbucks one time a month, you can save Php 1,160.  In other words, KAYA NAMAN KUNG GUGUSTUHIN, DI BA?

If you've worked for more than five years and have yet to build an emergency fund (equivalent to 6 months of your monthly salary) you should be concerned. Murphy's Law affects everyone.  Again, walang nagsisisi sa una.

Do away with the hedonistic lifestyle and start saving NOW!

(Next Note will be about Money at Work.)