The story of a finance advocate in Qatar

In 2013, a group of dedicated finance advocates took an extensive financial planning program and a comprehensive examination that allowed them to be certified as Associate Financial Planners. Here’s a post by one of the distinctive graduates of the program. She is not only a dedicated advisor, she is also a dedicated advocate who has helped a lot of OFWs in Qatar become financial enabled.  I am proud to share the story of my good friend Ellen Labastida!

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AFP Graduate Personal Story
“It’s not what you earn, it’s what you keep”

I have come to grasp the reality of old adage “It’s not what you earn, it’s what you keep” six years ago, during the 2008 global financial crisis that hit the big financial institutions, banks, governments, stock markets around the world and of course our family.

At the start of 2006, a 300 sqm. lot compound with two modest houses in it was offered to us for half a million, so we grab the opportunity. A year later, we bought another lot offered to us. Back then, I and my husband were in Dubai, working hard for the money and spending hard too. We acquired those properties through a bank loan in Dubai that my husband has taken for a repayment scheme of five years. He had several credit cards too because it is easy to receive one (I don’t have any as he has too many for our use). For credit cards in Dubai, the bank agents will chase you and apply for you without difficulty, all you need to do is say yes to the agent, comply few documents and voilà: you suddenly need a bigger card organizer for your wallet.

My husband has a good paying job as an engineer and he moved from one company to the other as opportunities to get higher salary were ample. Then financial crisis of 2008 came, the time when our spending hit high. The real estate and construction industry took the beating; there were massive suspension of projects and layoffs. It was October, a month after we took the car loan, my husband and 90% of his entire colleague engineers in the same department all got termination letters in one day. They were ordered immediately to hand over IDs, laptops, security pass, company phones and sign the redundancy letters and asked to leave. The end of service benefit was fair enough to sustain the family expenses for three months, this without considering the loans and credit cards of course!

The certainty of loss began to sink and I started to feel dreaded fear. Unemployment in the construction industry was so high that my husband’s competitors for some of the job interviews were used to be his seniors in the work place. I used to contribute 40% from our combined income and was confronted with the problem where would we get the remaining 60% in order to pay our debt obligations, remittance back home and our expenses. The agony has taken its toll on our relationship, so stressful that it took me countless sleepless nights crying. Yet I have to be strong for my husband as he was counting on me to understand the full scope of our situation. If it was difficult for me, it was more difficult for him as a man and as the main bread winner. No job opportunity, emergency fund exhausted, two huge loans, several credit cards and a family to feed.

He found a job that would separate us physically. He was assigned in Doha, Qatar as mainly no projects running in Dubai. We have to deal with the physical separation and for the next two years, my budget list every month was consisting mainly of paying off the debts. Every payroll means going to banks to deposit our hard earned money ironically into our savings account but only to be taken away immediately. We have agreed to drastically cut our individual food trips to the restaurants, box office cinemas, gadgets, jewelries and no more sale purchases except for food and basic groceries. These were two agonizing years of pure payments.

Being alone, I started reading financial e-books. I was inspired by financial author Dave Ramsey’s advice on getting out of debt – snowballing. We took the strategy and knocked off smaller balances first and every time I removed a bank name from my excel list, I always feel a bit closer to freedom!

After two years of paying debts off, my husband could now afford to travel few times in a year to visit me in Dubai, the same period we attended financial literacy seminar through our friend. The trainings indeed made a profound impact on our lives and finances. We learned the 70-10-20 prosperity formula in managing our income and how to establish the solid financial foundation. We learned the X curve concept of responsibilities as against savings, the rule of 72(compounding interest) and investing. We have faithfully structured our finances and built solid emergency fund at last. For the next four years, we were able to increase and diversify our savings and investments. We have our plans written on paper and keep ourselves in the associate of really positive, inspiring and investment savvy people. Finally, I was able to join him in Doha with our kids!

We embrace the advocacy and share our experience with OFWs through the Overseas Filipino Investors and Entrepreneurs Movement- an OFW association accredited by the Philippine Embassy in Doha, Qatar.

To solidify our cause, we studied and acquired financial planning accreditation through RFP’s Associate Financial Planner Program brought for the first time outside the Philippines. We were amongst the historical international first batch. The AFP course made me understand more that we cannot change our financial challenges in the past but because of it, we were able to determine that behavioral change is the key solution to many of OFWs financial problems.

We learned that there are also three basic things we should consider essential for financial planning – 1. Money 2. Self-discipline 3. Right information. It would be pointless if you will not balance these three. You may have the money, but lacking self-discipline will lead you nowhere but struggling. You may have both the money and self-discipline but no right information may lead you to either scammers or become a flat liner fiscally.

We learned the hard lessons and we believe God always have his miracle hand in our life as He taught us to become in control with our finances. We were humbled and God was only our anchor during those difficult times. Whenever we need something, it is beyond my understanding how we were able to sustain it, only I know He answered our prayers. In those two years, He taught us the value of patience; discipline and become responsible stewards of His blessings. To this day, we speak of our past and share it so others may learn.

While a lot of people six years ago were pointing their blaming finger to the Lehman Brothers for the situation, we held ourselves accountable. You may wish Lehman Brothers have sisters perhaps to suggest a different history but that part of world history has put me and my husband into the right perspective. Our ultimate message for OFWs in debt – no matter how unsure you will be in keeping your head above water, there’s always a way out and running away from debt is not one of them. Start with a behavioral strategy, stick with it and develop the habit.

Indeed it is not about how much you earn, it is how much you keep and where you keep it.

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Be part of the next AFP-certified Filipinos in the Middle East:

Two-day certification course

Doha, Qatar: Oct. 3-4, 2014. for inquiries: ofiem.events@gmail.com
Dubai, UAE: Oct. 10-11, 2014. for inquiries: afpdubai@yahoo.com

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Ellen B. Labastida
Certified Associate Financial Planner – RFP Institute
Certified Financial Educator – Heartland institute of Financial Education, Colorado, USA
OFIE-M advocate, trainer
Pinoywise International trainer

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South Korea financial literacy event

Annyeonghaseyo!

Catch me for a financial literacy event in Seoul, South Korea this September 7, 2014!

For inquiries, please contact Marlon Albao at albao.marlon@gmail.com

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Catch me in Tokyo, Japan!

If you are an OFW based in Tokyo, Japan and you want to be financially empowered, join my event there on August 23 or 24, 2014 and be free!

This is a personal-finance seminar that will surely a life-changing one so don’t miss the opportunity to be part of this event.

For inquiries and to register, send an e-mail to artsylar@gmail.com

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UITF, stock market, wealth formula and more!

Here are 5 questions that I got regarding personal finance. I kept the answers short and practical.

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1) Monica wants to know what are UITFs?

UITF stands for Unit Investment Trust Funds, it is a kind of investment that is being offered by the trust departments of big banks. UITFs are pooled funds, where investors put money in a fund and there is a fund manager that will invest for them according to the objectives of the fund. Depending on where it is invested, UITFs can be conservative, moderate or high-risk investments. UITFs are good investments for long-term objectives such as retirement or the college education of young children. Though they are not guaranteed investments, they have proved themselves to be a good way to grow your money in the long-run. Remember that UITFs are long term investments so if you plan to use your money in the short term, do not put them in UITFs.

2) Should I invest my money in business or in the stock market, Christine wonders.

Comparing a business and stocks is difficult, like comparing apples and oranges. While both are investments and both are risky ones at that, they operate and function differently. Owning a business means you are operating it yourself and you are on top of the company. You have a direct involvement on how the company operates. The benefit of having your business is that you own all the profits and the gains of the business. The downside is that should the business fail, you will bear all the losses and you may not have the competence and experience to make a business succeed. Stocks are fractional ownership of businesses, big ones at that. Buying stocks lets you have a part of a successfully big company or several companies and you stand to earn dividends or capital gain of your shares when you trade them in the stock market. Downside of stocks vs. business is your gain, an issue of scale. You stand to get a much better return for your money when your business succeeds as against stocks.

3) Patrick wants to know what the risks are in investing your money.

Well Patrick, the biggest risk involved in investing is capital loss. While some investments are guaranteed, the good ones where you can earn more are never guaranteed. Returns are always a function of the risk you take – the higher the risks are, the higher the potential returns. Some investments like stocks and mutual funds are fluctuating – they do not appreciate in a straight line and expect them to be fluctuating constantly. But if you invest over a long period, like over 5 years, the chances of loss of money is minimized as investments fluctuate up over the years. Low risk investments are not necessarily free of risk – the biggest risk for guaranteed or low investments is inflation. Low risk means low return and they are often below inflation rates.

4) John asks who should be in charge of the money, the husband or the wife?

Our Filipino custom dictates that the wife should be in charge of the finances. However, our customs are not always right. Finances are conjugal and how to manage money should likewise be conjugal. I don’t think only one spouse should
be given the sole responsibility on how to be in charge of the money – both should discuss and agree as to what to do with their finances. The operation of the family budget like payment of bills, balancing of the check book and the like can be delegated to the husband or the wife. Which spouse? Well, the one who is more financially disciplined should be the one – whether a husband or a wife.

5) Bianca is wondering if there is a formula to be able to build wealth.

Yes Bianca, there is a formula — a fundamental process that you can follow that will allow you to build your wealth. Let me first say that achieving wealth is a process and there are no short cuts to wealth. In my book No Nonsense Personal Finance, I outlined 5 steps for wealth. First step is to increase cash flow; you can achieve this by earning more money and spending less money. Step 2 is getting out of debt – as debt will prevent you from achieving your goals. Step 3 is building your emergency fund – 3 to 6 months worth of your expenses is a good measure. Step 4 is getting insurance for your protection. Finally, the 5th step is learning to invest for your future.

Got more questions? E-mail me at randellt@gmail.com

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When to invest, inflation, VUL and more

Sharing with you 5 basic personal finance questions with 5 simple and straight-forward answers.

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Julian sent me a question; he asked when the best time to invest is.

Well Julian, the best time to invest was yesterday and the next best time is today. You see, investing is more about time and less about timing. Time is a big factor in investing so I recommend people to start investing as early as they can. Investing is best when is done for the long term especially if you are investing in properties, the stock market or mutual funds. Start investing early and give your investments enough time to grow. Remember, as far as investing is concerned, time is your greatest asset.

Gerald asks what inflation is and how it will affect us?

Simply put, inflation is a measure being used to track the rising costs of general goods and services. Because of inflation, the purchasing power of our peso will actually deteriorate. Countering inflation is done through an increase in income– as long as the increase in income is equal or higher than inflation, things will be ok. The case for your savings is a different one. If your savings do not appreciate faster than inflation, the real value of your savings will go down in terms of what goods and services it can buy. The solution to this is investing your money where it can grow faster than inflation.

Glenda wants to know what a VUL insurance is and if she needs it.

VUL stands for Variable Universal Life insurance. It is a kind of financial instrument that has both insurance and an investment component. It’s like having insurance and mutual funds in one product. VUL will give you insurance benefits but it will also have a fund that is being invested according to your objectives, risk profile and other preferences. If you need both insurance and investment, you may consider having a VUL – but if your sole objective is purely investing, then this may not be the right instrument for you at this time.

Joey is wondering if investing in real estate is still a good idea.

Many of our parents preferred way of investing was through properties and for a good reason. Experience has proven that the value of properties goes up over many years. Personally, I still think real estate investing is good way to grow your money but the issue here is time. In general, for you to see substantial growth in your investment in property, it will take you many years. There also are other costs involved in real estate like association dues, property taxes and transfer costs which should be added in the cost of your investment. One of the big attractions of property investing is that you can also earn from rental income as well. If you have the resources and you are willing to wait for a long time, consider investing in real estate but always remember to consider other investments too as there is no such thing as the best investment.

Should we have a lot of money before we invest? Jesse asks.

There are investments that do not require large amounts of money. You can actually invest your money in the stock market, mutual funds or UITF for as low as 5 to 10 thousand pesos. Some banks even offer auto-debit arrangements that allow you to invest for as low as 1 thousand a month. However, before you invest, I recommend that you build your emergency funds first. An emergency fund of about 3 to 6 months worth of your expenses will be sufficient. To maximize your investments you need enough time for them to grow and it is not a good idea to pull it out whenever you have a need for it, which is why I recommend having an emergency fund first. Once you have your finances in order, start investing in small amounts to get your feet wet. Happy investing!

Got more questions? Ask and let’s see if I can be of help.

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OFWs and their Financial Future

I have been busy going to different places to speak to our OFWs and teach them financial education. Although this is a tiring task and despite what other think, traveling all over teaching people is not as glamorous as what others think. There are times that I want to decline invitations already because it takes out a lot of time for me but I never decline because I know that the little I do impacts our OFWs. Studies shows that the OFWs today are saving and investing more than before which is a great development. I also noticed that OFWs respond to financial education more positively and quicker than those in the Philippines. More and more reason why OFW Financial Education is an important advocacy for me and many others.

The growth in the financial literacy for OFWs is largely because of the efforts of many OFWs who are financial educators themselves. My work is such a blessing because I get to have more and more OFW friends who are finance advocates themselves… they have become heroes amidst other heroes.

I am honored to be featuring an article written by a good friend, Rex Holgado — an OFW in Singapore. Rex is one of the most active OFWs in Singapore in financial education and has been instrumental in the amazing growth in financial literacy among Filipinos in Singapore. It is because of OFWs like Rex that there is much hope for the OFWs of the future. I am looking forward standing as a Ninong in his wedding in the not so distant future.

I will be posting may of their articles soon in this website.

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OFWs and their Financial Future
by Rex Holgado

1426595_10202001155286540_580898324_nYo friends ‘zup? I assume a lot you do not know me yet, so allow me to shortly introduce myself first. I am an OFW based here in Singapore for over 6 years now. I came here hoping for a greener pasture and help my family back home. And I guess majority, if not all, of the 10 to 13 million overseas Filipino workers (OFWs) around the world have the same reason as mine.

But do OFWs really able to improve their lives after their stint abroad?

The Past: Financial Trouble

OFWs leave their families and loved ones to look for better opportunities abroad to make their lives better. But more than 2 years ago, Social Enterprise Development Partnerships Inc. (SEDPI), a microfinance non-governmental organization in the Philippines, revealed in a study that 10% of OFWs end up broke even after years of working abroad. And the same study also showed that most or around 80% of Filipinos working abroad overspent and did not really have enough savings.

“Ate Rose”, a house help for 2 years in Kuwait said, “At first I really wasn’t able to save because there were a lot of debts to pay to in the Philippines and I don’t really earn enough to get through it.” But then I asked, “What if you will get a pay increase do you think you can then able to save?” She then replied, “Actually, I don’t know… My expenses seem already hard-wired with my income, if my income increases same goes with my expenses. At some point when I was able to save a small amount of money I tried my luck in networking business hoping to earn extra. So far ayun, hanggang ngayon wala paring extrang kita.”

Ate Rose and her husband do not have a healthcare and insurance, they have two children and currently in high school. Her husband is a full time house husband to take care of the kids. As much as I don’t want this to sound as morbid as you all might think but what if there’s something happened to Ate Rose and she passed away? Oh, my heart aches.

“John”, a technical professional for 3 years in Dubai said, “I have a very small amount of savings but currently no investments because around 80% of my income already goes to loan payments.” I asked, “Can you live with the rest of 20%? What are those loans for?” “My wife helps me with the family expenses. My loans are for the construction of our house.” he replied.

John and his wife are both insured though but they don’t have any investments, no emergency fund and no healthcare other than what the company currently provides. They have one 3-year old kid. And what if John or his wife get retrenched/lose their jobs? Can they tell their child, “Baby, huwag ka muna kumain kasi wala pang trabaho si papa/mama ha? Oh, my heart aches again.

Last month, I’ve been in a Personal Finance seminar of a Christian group’s outreach program for OFWs here in Singapore. I found out that out of the entire crowd of around 80 people (where around half are professionals), only 3 have savings that can sustain their 3-month worth of monthly expenses, only 1 invests—in real estate, no one from them invests in pooled funds nor in stocks. Nobody talk about money or family’s finance in their households or by any mode of communication—unless they are already in a bad situation. But there’s one individual who’ve said she is confident enough that she won’t depend on anyone once she retire. Large part of their income goes to remittances and their remittances do not contain any amount for savings & investments. When I asked who among them have debts, majority of them raised their hands and said, “Kami!” And believe me, everyone were still able to bursts into laughter even they are aware they’re debt-ridden. I confess, I laughed too. Why not?! Laughter is said to be the best medicine. And that time we thought maybe after we laughed all people’s debts will get paid! But you wouldn’t like how our happy faces changed into after realizing that those debts will not ever get paid by mere laughing. Oh here are the sad faces again… So again, if your sickness is borrowing money ‘till you get into financial trouble, laughter can really help to ease the pain but it is not really the cure.

Kidding aside, OFWs might have their own reasons why they were not or cannot able to save. But if we would take a look deeper at those reasons and find their root causes, it would all surely end up with financial literacy and core values.

The Present: Financial Literacy

Six years in abroad I have witnessed a lot, if not enough, how most OFWs struggled in their finances and have seen how they have wasted their hard earned money into unnecessary expenses and worse into the hands of opportunists or those people with no moral compunction. So I joined in the advocacy of financial literacy to help Filipinos, especially OFWs, to get out of the financial pitfall I once got almost trapped too.

Two weeks ago, I was invited to do a personal finance talk in one of our friends’ friend’s house and there was someone who asked that if he would invest in Mutual Funds how much will he get after. Do you see what the usual problem is? Most of us, not just OFWs but all Filipinos especially those who are new to investing, always ask for the “how much would I get” question. Guess why a lot of Filipinos still get scammed?

Here’s a short thought for OFWs out there to not get into bigger financial trouble, “There’s no shortcut to financial freedom.” None that I know of that would work for everyone of us. So go and reflect back on your ultimate goal—to make your and your family’s life better. Save. Do your due diligence and understand very well your investment options. Invest in investment vehicle that would fit your goal. Communicate with your family to discuss and plan well family’s financial matters. And never forget that money is just an instrument to make your goal(s) happen. Never forget that your family, your relationships, and your future are still what really matter most. Be clear with your core values and use them to have a happier, healthier, and wealthier life.

While I have observed that a lot of OFWs are now getting into something they believe they could make their money grow, here are what our financial experts and advocates can say about some financial instruments that OFWs could choose from to invest in for their brighter future:

1. Mutual Funds: “Investing in mutual funds is the easiest way to participate and earn in our country’s economic miracle. Your investments are being professionally managed while you still can attend on things like your work as an OFW and the thing that matters most—your family life.” —Alfonso Gonzales, Mutual Fund Investing Advocate, Mutual Fund investor for almost 16 years

While it is true that this could be one of the best instruments to grow our money still many of us, including OFWs, are still afraid to get into the stock market. But what can a financial expert tell us about it:

2. Stock Market: “The Stock Market is now in a position that it is now available for anyone and everyone who would want to use it as a tool to gain financial freedom. The stock market is one of the greatest equalizers to give the Filipino a fighting chance to be financially free. Do not be scared to brave the unknown. Study. Study. Study. And when you have developed your own winning strategy and conviction you can ride and trade the markets and win not just now but for the long term. My desire for you is to prosper and use money as a tool that it works so hard for you and become financially free. —Marvin Germo, RFP

Some of the OFWs might like to get into business but according to a statistics 50% of businesses might fail in the first year and 90-95% might fail within 5 years. So here’s a simple advice from a very successful entrepreneur:

3. Entrepreneurship: “Anybody can have the mindset of an entrepreneur, but not all can be entrepreneur. OFWs can try entrepreneurship but it is also important that they have the knowledge, passion, right mindset and attitude to become a champion entrepreneur. ” —Paulo Tibig, Entrepreneur and Entrepreneurship Advocate

I and my friends in the advocacy of financial literacy are now stepping up to help more OFWs understand what they are getting into. Instead of falling prey by those who would like to take their hard earned money and lack of financial education for granted.

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OFWs Financial Future

If we take a look in Consumer Expectation Survey of Bangko Sentral ng Pilipinas (BSP), we will see that there was a consistent uptrend in OFW allotments in “savings” since 2007 to 2010 but the problem is there was also a consistent uptrend in OFW allotments in “consumer durables” like: gadgets/consumer electronics, appliances, furnitures, & the like, we know that these are not our basic needs—and this could be one of the reasons why less OFWs were really able to save. If OFWs would really understand the importance of saving, they won’t get into this financial pitfall.
Lo and behold! OFW households’ allotments in savings and investments increased in the latest report of Consumer Expectation Survey of BSP. OFW households’ allotments in savings and investments have not just increased but reached the all time high in annual average and in the average of the first two quarters of each year since 2007. 46% of OFW households now have allotments for savings and 8.55% have allotments in investments. OFWs are responding to financial literacy. I believe OFWs are now getting the right financial education. I just hope we can able to sustain this for long term and decrease the numbers of OFWs going back broke.

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Finance events in Paris

Bonjour!

Catch me for personal finance events at Paris, France on July 5 and 6, 2014. My events in Paris are for the OFWs based in Paris and they are FREE!

July 5, 2014 (Saturday) at Novotel; organized by DoubleDragon Properties & the Philippine Embassy in France.

July 6, 2014 (Sunday) at Gourmet Grill Restaurant; organized by OFW Usapang Piso and the OFW Entrepreneur Club.

See you in Paris! La liberté financière pour les Philippins!

 

 

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Savings and the Bible

Did you know that there are 2,350 verses in the Bible about money and possessions? People are asking me why I often quote scripture whenever I talk about personal-finance and now you know why. The Bible is not only a historical and devotional book; it is also an instructional book for successful living. And yes, money is often a subject matter in the bible.

Money is a subject matter that is important to God because He knows how we handle money will affect and reflect our relationship with him.

One of the important topics with regard to money and the Bible is on the subject matter of savings. Many believe that savings is not important to a believer of the Lord – that is not entirely correct. It is not money that separates us from God, it is the wrong understanding of money that is (1 Timothy 6:10). Money is a tool, what we do with it will determine if it will be a snare for us to sin, or something we can use to worship the Lord.

Savings is important to us and what does the Bible say about savings? Read on…

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Precious treasure and oil are in a wise man’s dwelling, but a foolish man devours it. – Proverbs 21:20 ESV

Wealth gained hastily will dwindle, but whoever gathers little by little will increase it. – Proverbs 13:11 ESV

A slack hand causes poverty, but the hand of the diligent makes rich. He who gathers in summer is a prudent son, but he who sleeps in harvest is a son who brings shame. – Proverbs 10:4-5 ESV

A good man leaves an inheritance to his children’s children, but the sinner’s wealth is laid up for the righteous. – Proverbs 13:22 ESV

For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it? – Luke 14:28 ESV

On the first day of every week, each of you is to put something aside and store it up, as he may prosper, so that there will be no collecting when I come. – 1 Corinthians 16:2 ESV

The point is this: whoever sows sparingly will also reap sparingly, and whoever sows bountifully will also reap bountifully. – 2 Corinthians 9:6 ESV

Go to the ant, O sluggard; consider her ways, and be wise. Without having any chief, officer, or ruler, she prepares her bread in summer and gathers her food in harvest. - Proverbs 6:6-8 ESV

During the seven plentiful years the earth produced abundantly, and he gathered up all the food of these seven years, which occurred in the land of Egypt, and put the food in the cities. He put in every city the food from the fields around it. And Joseph stored up grain in great abundance, like the sand of the sea, until he ceased to measure it, for it could not be measured. - Genesis 41:47-49 ESV

However, be careful with your heart with regard to saving money…

For where your treasure is, there your heart will be also. – Matthew 6:22, ESV

No one can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money. – Matthew 6:24, ESV

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FIT events in Davao and Cagayan de Oro

Want to be financially FIT? Join me for FREE events in Davao and Cagayan de Oro this July! Let’s talk about how you can be truly financially free from engaging topics of money management and investing.

CAGAYAN de ORO - July 19, 2014, 1pm at Limketkai Luxe Hotel 1pm. To register for free, call Bing Confersor at (088) 8574824

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DAVAO – July 26, 2014, 1pm at Seda in Abreeza. To register for free, call Nancy Ortiz at (082) 2275629 loc. 302.

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This event is for FREE but there are only limited slots on a first come, first served basis. This event is being brought to you buy Sun Life.

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Spend properly to save properly

A lot of emphasis has been made towards growing your wealth by investing it, something I totally agree with. Investing properly can maximize your savings and when properly undertaken, it should amount to something substantial in the future.

However, the issue on saving money has always been relegated as something that is so basic that it is assumed that everyone knows how to save… but do we? Us Filipinos continue to have very low savings despite that drastic improvement of the economy and our income. In my travels to teach Filipinos not only here but abroad, I am a witness on how low our savings are and how little emphasis we put on savings. When you ask people if saving is important, everyone will agree with you that it is – however, their bank accounts will say otherwise.

Why is it so hard for us Pinoys to save? The culprit is the way we spend. Unfortunately, we have developed a liking towards too much consumerism that many of us have developed a spending problem. People do not save because they spend more than what they should. I know that it may be an overly simplistic statement but that is the hard truth! While I agree that many of us are finding it difficult to save because of low income, there are also many of us with above-average income who still find it difficult to save.

Proper spending will lead to proper savings. When we take charge on the way we spend, savings will automatically follow. Not all retail-spendingspending are the same and we often hear about needs and wants. Yes, that is a very basic concept but it is truly fundamental. Spending on needs is hardly pleasurable – do you know anyone who is excited paying his or her bills? However, spending on our wants will always give us the warm feeling inside, even if it is momentary. Without proper control, our spending on wants and not on needs often causes us a lot of financial problems and in most cases, it can cause us to be in debt.

Here’s a simple tip to get those spending in check –- create and stick to a budget! Again, an overly simplistic approach to personal-finance but it is so important that the foundation of all our financial goals should start with our ability to control the amount of money that leaves us. A budget will do wonders to our financial future because if we are aware of our spending, we can control it better. Dave Ramsey says “before spending paper, spend it on paper” – that’s what budgeting is all about. It is best for you to identify your expenses and start allocating for them properly. Include your want spending in your budget too because everyone needs to spend on something that will give us that warm feeling inside too. Just make sure that your ‘want’ spending has a limit and that you do not go over that limit.
When you know how much you need to spend, including your ‘wants’, you can save better and more consistently. When preparing your budgets, make sure that there is enough money left for savings – you can use a certain percentage as a minimum for savings, like 20% of your income and build on from there.

For those of us who have a difficulty of setting aside an amount of money for savings regularly, I suggest you enroll in an auto-debit arrangement with your bank and make sure that you do not touch that account, otherwise your savings will not grow. When you have built up enough savings, which you can also use as your emergency funds, you can now begin to invest your money to build on your wealth.

Precious treasure and oil are in a wise man’s dwelling, but a foolish man devours it. – Proverbs 21:20, ESV

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