If you feel that the prices of goods you are able to buy is increasing; you are not alone. This is the effect of inflation. While most of us don’t really understand how it works; we feel it whenever we notice that our monthly income doesn’t seem to cover all the expenses we had as it did before. That is why you have to care about inflation so you can do something to reduce its effect on your finances. Prices are always rising but your income is not following that trend. So how do we deal with inflation? Here are 4 ways you can deal with rising inflation and maybe even beat it.
1. Reduce Your Expenses
Of course, the first thing you can do to beat or keep up with the rising cost of goods and services is to try to find ways to reduce your expenses. Inflation is a silent budget killer. It is a money leak that you have no control over. Thus, it is important to take the time to go over your budget and review your expenses as well as your financial strategy. See which of your regular expenses you can reduce spending on, replace with a less pricey option, or eliminate entirely. This way, you can still afford to pay for your regular expenses without having to dip into your emergency fund or savings account.
2. Increase Your Income
Increasing your source of income is always a good idea with or without inflation. Of course, the fastest way is to get a promotion in your current job. You can also create a business out of your hobbies or accept projects related to your job or expertise as a side hustle. Collaborating with other people on projects can also help. If you have non-performing assets just lying around; these are also good sources of minimal income. Try to declutter your space or declutter your entire home. See which items you have in your closet and cabinets that you’re not using and you can sell for some extra cash.
3. Keep on Saving
A good savings fund will not only give you peace of mind that you can survive inflation; it will also be a good buffer if you do need to spend more on important things. You might have to pause on some of your big-money savings goals until your income is more stable again to support your lifestyle. But you should not stop saving for your future while you’re struggling with inflation. You might need to pause for a while to review and renew your financial strategies and to adjust your budget. But don’t quit on saving.
4. Diversify Investments
Just as you continue saving; you should not stop investing as well. Learn more about other investment instruments that can help you diversify your portfolio to help you beat inflation. That means opening up new investments in stocks or industries that might be less risky to ensure long-term investment growth. This also means being open to investing in instruments that are more risky for short-term gains that you can use to fund your long-term investments. Depending on your money personality; choose what investments you are more comfortable with. Learn as much as you can about them so you can reduce your losses and maximize your earnings.
Inflation is always going to be around so the best way to prepare for it is to keep increasing your income and learning and adjusting your financial strategies. This way you can maintain the lifestyle that you want to enjoy and be able to keep up with rising prices without too much of a dent to your budget.
Modern technology has allowed us to do much more than when we didn’t have our electronic gadgets and devices. These devices have become a necessity in our daily lives and we have many options to choose from.
Initially, these gadgets are major expenses. But with a little research, we can make the right gadget choices so we can still enjoy their convenience while saving money in the long run.
Here are 10 gadgets that can help you save money. Some of them will cost you a big chunk of your budget initially when you purchase them, but they will make-up for their cost with the money you save for the months, and even years that you will be using them.
1. Rechargeable Batteries or High-Capacity Power Banks
We all know the inconvenience of running around with a gadget low on power. Having rechargeable batteries or a high-capacity power bank while on the go saves you the hassle of looking for an electrical outlet just to make an important call on your mobile phone. You can also use these devices to charge your gadgets even at home so you don’t need to suck up electricity each time you need to charge your device. The good thing is; there are high-capacity power banks that can power-up more than one device at a time, even your laptop. Some of them even have designs that are cute or sleek so you won’t be too embarrassed lugging them around.
2. LED Lighting
LED lighting are designed to last longer while consuming less electricity. So gradually replace your old light bulbs or fluorescent lights with LED lighting to enjoy a brighter home without the added cost. LED lighting is also available for other home fixtures such as desk lamps. Some even have dimming functions so you can switch between day light and night light; or white light for working and yellow light for reading.
3. Energy Star Appliances
When buying new appliances, be sure to check for the Energy Star logo. According to their website:
ENERGY STAR products are independently certified to save energy without sacrificing features or functionality. Saving energy helps prevent climate change. Look for the ENERGY STAR label to save money on your energy bills and help protect our environment.
This goes for kitchen appliances such as oven toasters, microwave ovens, refrigerators, even washing machines, as well as lighting fixtures like Christmas lights. So be sure to check the labels on the appliance or ask the sales person for products and brands certified with an Energy Star logo. This is one way to save on electricity in your home.
4. Smart Power Strips
One of the biggest energy leaks in the home and office are gadgets that are plugged in but not in use. Many of us often leave our mobile phone chargers still plugged into the electrical socket even if we are not charging our phones.
A smart power strip allows you to turn off the power for a particular gadget without having to pull it out of the socket. So you can just click a button to turn it on again if you need to use your kitchen appliance or to charge your device.
5. Tablet
Tablets can save you energy as well as money. Many of your favorite books have digital versions so instead of carrying around the actual book, you can have easy access to a ton of books as well as audiobooks with just your tablet. This means being able to carry more books with you on a lighter load. You even help save on paper and conserve trees! Plus, you can also carry scanned copies of your important documents with you and do many other things with your tablet that you can do on a desktop and your mobile phone.
6. Laptop
Just like a tablet, a laptop can also help you save money. It can do many of the things that a tablet can do but in a greater volume and capacity. Nowadays, when our busy schedules don’t allow us to sit in front of a TV screen to enjoy our favorite shows, a laptop is a great way to download your favorite videos and watch them later on. Newer laptop models also feature longer battery life and a ton of upgraded functionalities to help you work faster and accomplish more tasks throughout the day.
7. Vacuum Sealer
If you hate wasting food, then vacuum sealers are your best friend. Together with a ziplock bag and your refrigerator, you can extend the life of your favorite foods. You can cook a big batch of home-cooked meals and freeze them for future meals. This is one way to stretch your food budget.
You can also use a vacuum sealer for bagging your baon or bento to work or school. This ensures that you keep your food fresh and lessens the possibility of food spoilage due to bacteria build-up especially in warm temperatures.
8. Blender
Blenders are a great way to cut down on chopping veggies. You can also use a blender to make your morning smoothies for breakfast-on-the-go or to make soups out of your veggies.
You can also preserve food with a blender. For example, you can place a small amount of water into the blender and put in your peeled garlic. Blend for a bit for a course consistency or blend some more for finer pieces. Then store everything in a jar and keep in the fridge. You can just pull-out the jar and scoop out the required amount of garlic for your recipes. Also works with other spices like ginger, turmeric and onion. You can also use olive oil instead of water for herbs like basil, parsley, and other herbs.
9. Food Processor
For even more variety to your recipes, a food processor is a great kitchen companion. It can chop food finer than a blender and mixes ingredients better. You can also use it to make purees of fruits and veggies for baby food, chop vegetables finely as well as some meats for making veggie balls or meat balls and a host of other foods including ice-cream! It’s especially helpful for baking recipes.
10. Efficient Shower Head
You can also save money even as you shower! When shopping for a shower head, make sure to ask the sales person for a low-flow shower head. This type of shower head can save you gallons of water use per year and thus lower your water consumption bills in return.
Start saving more money now starting with these gadgets. There are many more gadgets that can help you save money; just do your research. They will cost much more but the initial investment will be worth the savings in the long run.
Updated. First published on Pinoy Smart Living on 2018.09.26. Feature Image: Original Photo by Brooke Cagle on Unsplash.
It is important to track our spending so we know how to adjust our budget. Sticking to a budget takes a lot of discipline and determination. It will also help us reach our financial goals faster. With this description, budgeting may sound like a dreary process. With mostly people’s budget going to expenses, is there a more rewarding way to budget our money? Actually, there is!
While most of our income goes to our living expenses, we should also make a budget for fun and play. A “play fund” or “fun money” is what you use to indulge in things that you enjoy. This includes purchases that you do on impulse without ruining your monthly budget for the important things.
We Shouldn’t Deprive Ourselves
Sticking to a budget can be difficult at first. You may feel like you’re just working to pay off bills and life is no fun at all. Have you experienced craving for a specific food item but you can’t find it anywhere? Then you ended up overeating on other food items instead? The same thing will happen if you deprive yourself of some fun; you will feel so deprived that you end up over indulging in whatever takes your fancy at the moment. Setting aside fun money in your budget ensures that you don’t go overboard with indulging yourself. Think of it as a little reward for sticking to your major budget goals.
Guilt-Free Spending
Another advantage of having fun money or play money in your budget is that you don’t feel guilty about it. This is because you know that you’ve taken care of the major, more important stuff already.
Most of the time, we regret buying something on impulse. We know we have to make up for it on our next paycheck. We end up having to scrimp on the other items on our budget to seal the money leak. If you’re spending on what you like without the guilt, then you can truly enjoy the experience to the fullest.
Setting a Limit, Encouraging Discipline
Having a budget for everything means that you also set a limit on your spending. That’s why it is important to put everything in your budget including fun money. It makes it easier to track your spending. It also ensures that you don’t spend over what you can actually afford to pay with your actual income.
There is a saying that goes, “If you can’t buy it twice, then you can’t afford it.” So if that favorite pair of sneakers (even though you already have several pairs) has a price tag that’s way beyond your fun budget, then you need to discipline yourself to assess if you really need it or to save this month’s budget and add it to next month’s fun budget so you can afford the price.
Remember though that fun money in your budget is not your emergency fund. Household items that you actually need at home do not go under this budget. A fun budget is for things that you don’t indulge in regularly; things that you only do when the mood strikes you. These include experiences that you want to enjoy from time to time. Your fun budget can include a manicure and pedicure, a massage, trying out a new restaurant, or getting yourself coffee from your favorite cafe.
Of course, not everybody’s budget is the same. For some people, their fun money may be used for travel or gadgets to supplement a hobby. Your fun budget should just be enough to allow you to have fun experiences without living beyond your means.
Do you have fun money in your budget? What would you like to spend it on?
Updated. First published on Pinoy Smart Living on 2019.10.23. Feature Image: Original Image by StockSnap from Pixabay.
Money has always been a top source of stress for most people. If not addressed, too much worrying about money can lead to serious physical and emotional problems. It can even result in a breakdown in relationships. How to solve money problems then? There are tons of financial advice that people probably already heard or read about. In fact, most of these advices are simply common sense yet one the greatest mysteries about life is that no one really follows them. It sounds so easy to do but for most people, it is very difficult to follow. Here are some of the common sense money advice that people don’t follow:
1. Spend Less Than You Earn
This rule is so simple. Just live within your means. Obviously, if you spend more than you earn, that will only spell debt. Even a grade schooler knows that if you subtract more than you add, you will end up with a negative number. You need to have financial discipline; otherwise, it will be very hard to create wealth. Avoid keeping up with the Joneses.
There are many ways to reduce your monthly expenses. It helps to have a budget. The money jar budgeting system is a good money management technique because it not only helps keep your spending in place, it also helps slowly build your wealth. If spending less is really not an option, then you need to look for ways to earn more money.
2. Understand How Credit Cards Function
How many people are buried in consumer debt simply because they do not understand how credit cards function?
Credit cards are very useful. With credit cards, you don’t always need to have cash. You can purchase anything without having to worry of paying them immediately. However, if you don’t have a basic understanding of how it works, credit cards can turn into your worst nightmare. Always remember that you are not using your own money when you purchase items using your credit card but rather you are borrowing the bank’s money.
Credit card companies use the power of compound interest to their advantage. Compound interest is a very powerful mathematical concept that you can use to increase your wealth. Unfortunately, it is a two-edged sword. If used against you, it is a sure way to financial bankruptcy. That is why understanding how credit card functions is a necessity if you have a credit card.
Unless you know how to manage your credit cards, it is better for you to refrain from using your credit card altogether. Use credit cards only in emergencies. Buying because it is on sale even though you don’t really need it is not a valid definition of an emergency.
3. Automate your Savings
One of the lessons of this pandemic is the importance of having a savings account. Life is unpredictable. Saving money can ensure financial stability in case of emergency.
Pay-yourself-first has always been the initial advice that wealth managers will tell you as the first step towards building your wealth. Unfortunately, most people would rather spend or pay everyone else first before themselves. Savings always comes last. Usually, people save using whatever it is that is left (if there is any).
The best strategy to avoid this scenario is to automate your savings. By regularly setting aside a fix amount through automatic savings, you will soon be able to build up your emergency fund. One of the wealth rules of the richest man from Babylon is to always save 10% of income.
4. Seek Help from Qualified Persons
If your financial woes are already big enough for you to handle on your own, then it is time to seek help from other people. If your problems are about money, ask a professional in financial planning to help you. If you cannot afford your own financial planner, then ask a friend who is an expert in handling money.Don’t just ask any friend.
The problem with most people is that they normally seek advice from friends or relatives who are close to them. However, they fail to consider if these people are also having financial problems of their own too.
Think of it this way, if you are in school and you are having problems with your Math subject, obviously, you will not ask your Filipino or Science teacher to help you. Instead, you will seek the help of your Math teacher or a fellow student who is good in Math because they are the ones who can help you.
Remember to always ask the correct persons for advice.
So, If you want to have a better financial life, it is best to follow the common sense money advice that people don’t follow.
First published in Pinoy Smart Living on 03.26.2019.
There are 3 types of expenses you need to manage in order to be successful in your financial goals. These can be applied to any items you have on your monthly budget. Identifying these kinds of expenses helps you schedule your expenses. In this way, you don’t fall victim to little money leaks that can ruin your budget.
1. Fixed Expenses
Fixed expenses are the types of expenses that you incur in predictable amounts and in consistent intervals. These usually happen monthly such as utilities, rentals, loans, insurance, subscriptions and credit card payments. These can also include your tithes, savings and investment funds if you add to them monthly.
Since these expenses occur on a regular basis, you can schedule them automatically. This one of the 3 types of expenses that is the easiest to manage in your budget.
With a fixed amount and schedule, it is easier for you to decide which expenses to reduce or remove. This allows you to maximize other items in your budget. For example, you can downgrade your mobile plan subscription. Then, you can add more to your savings or investment fund.
2. Periodic Expenses
Periodic expenses are similar to fixed expenses but they occur less frequently. These kinds of expenses can also be scheduled quarterly (every 3 months), bi-annually (every 6 months) or annually (every year).
The dilemma with periodic expenses is that they are usually necessary. That’s why it is hard to remove them from your budget. These expenses usually include maintenance costs. Examples include oil change for your car, car registration fees, annual membership fees and annual tax fees for a business.
Unlike fixed expenses, we tend to forget periodic expenses. This results in paying penalty fees which ruins your budget. It is very important to include these types of expense in planning your budget. The advantage is that you have more time to prepare for them.
3. Variable Expenses
The trickiest type of expense to manage are variable expenses. These types of expenses don’t occur regularly but they are still important. Variable expenses can be subcategorized into necessary and discretionary.
An example of a variable but necessary expense is gas for your car. This does not occur regularly but you have to budget for it when it becomes necessary. A discretionary, variable expense includes a new pair of shoes or travel funds. These don’t occur regularly but they are important for your well-being.
Discretionary expenses are usually items that you reward yourself with. Sometimes, they can be impulse buys which you incur because you are feeling down and you want to feel better. Your behavior and priorities will define what variable expenses you cut out or save up for in your budget.
There are little money leaks that can sink your monthly budget. Most of them are unnoticeable unless you track your spending. If you’re already budgeting but still end up overspending, then check out for these money leaks in your spending habits.
1. Transaction Fees
Late payment fees and other financial transaction fees can leak money out of your budget without you noticing it. These are small amounts that you don’t think will affect your budget that much. Once they accumulate, that’s when you realize they already ate a huge chunk out of your monthly budget. This applies to credit card fees, insurance fees, loan fees and online money transfer fees. Check your monthly statements so you can plan ahead.
TIP: Make it a habit to always check your transaction receipts for any hidden fees or charges. Also, pay your bills on time to avoid incurring late payment fees and other penalty charges.
2. Impulse Buys
Little purchases that you make several times a month won’t be little once added up. Especially if these items are just trendy for a time or they’re for one use only. That one cup of coffee a day can eat a big chunk of your budget. This is one of the little money leaks that can sink your budget. It can be avoided if you plan and list down what you’re actually going to buy in a supermarket, for example. The best way is to set aside a budget for it so you’re prepared for it. You can set aside money for fun that you can spend however you want.
TIP: Make a wish list of big and small items that you need and want to buy and set aside money for them. Don’t buy it if it’s not on your list and it’s not covered in your budget yet.
3. Discount Buys
Just like impulse buys, discount purchases are also a common cause of overspending. Sale items are often packaged attractively and the festive spirit of the “sale day” event makes it even more enticing. Making transactions online only makes things easier to splurge. Not all discounts are great buys though. If you’re buying an item only because it’s on sale or because you have a coupon, then you might be wasting your money.
TIP: Having a wish list and the budget to buy the item on that list is one way to avoid spending on discounted items that you don’t really need. If you get an item on your wish list at a discounted price, then consider it as savings.
4. Wasting Products
Sometimes we buy in bulk because of the huge discount. Then we find out that we’re not really fond of the product so we end up giving them away or disposing of them in the trash. Or they expire before we can use them so they end up in the trash. This is why a list of what you need to buy is important. It is also important to list down exactly how much you need so you maximize your use of the items. Subscriptions to services that you don’t actually use regularly is also a leak in your budget. So review your subscriptions and see which ones you don’t need or you can downgrade.
TIP: Preparation is key to ensure that you use up perishable goods before they expire. Meal prepping is one way to ensure that you don’t end up throwing away produce. It also allows you to control what you eat so you can choose to eat healthier meals.
Do sometimes feel that you are living beyond your means? These money leaks could be part of the problem. To ensure that you don’t fall victim to these little leaks that can sink your budget; become more aware of your spending habits. Learn how to discipline yourself so you can figure out how to spend your money wisely.
Consider these online shopping tips for a better shopping experience and less headaches. Online shopping is the norm nowadays. It is a time-saving way to get your goods to your home or office. From food delivery, personal care items, fashion and home essentials, even fruits and veggies; online options abound. You might even think this is one of the fun things you can do, while stuck at home.
1. Shop in Private
Don’t go online shopping using a public wifi network. It’s safer to shop at home using your personal wifi subscription or your own mobile data. If you need to shop using a public network, stick to doing so in well-established and reliable stores.
You may find the need to use your laptop or mobile phone to shop in a public network. Only shop in online stores where you’re already registered. This way, you don’t need to type in your personal details and credit card information. You never know when prying eyes are looking at your screen as you’re typing sensitive information. Doing your online shopping at home is one of the most important online shopping tips for a better shopping experience.
2. Check Your Shop Address
Make sure to bookmark your favorite shopping sites. This way you don’t have to search for them online again or retype their address on your browser. Pharming scams is where online sites are made to look like a popular online store. They might have a similar address only with an additional letter. Maybe the address will have a missing letter or a misspelling that’s not too noticeable. These fake sites are designed to steal your information.
These sites usually have juicy deals that lure you in to login to the site. This is how they get your sensitive information and use it for their own ends. You might find out later on that your credit card was used to purchase an item that you never ordered. Make sure that you are shopping in the right store with the right online address or URL (Universal Resource Locator).
A site address that starts with “HTTPS” and not just “HTTP” is a good indicator of security. In some browsers, an icon of a locked padlock is also displayed beside the URL. The browser bar may also turn green when you go to the online store’s home page. Look for these indicators before you sign-up for an online shop.
3. Secure Your Personal Data
A strong password is a good way to secure your personal data. It’s better to use different passwords on each site you register to. But if you want to remember just one password, having a strong password is one of the most important online shopping tips for a better shopping experience.
Don’t overshare your personal data online. When you register to an online shop, they only need information that concerns payment and delivery of goods. They won’t need your social security number or your birthdate, for example.
If an online shop requires information that is not related to your online shopping transaction, this should be a red flag for you. Check your shop address as you might be registering on a scammer’s duplicate site instead of the legitimate one.
Help prevent more people from being victimized by warning people about fake sites. Some browsers also allow you to flag a site and block it so you don’t get redirected to it again.
4. Research and Read Reviews
Do your due diligence and research about the products you want to buy. This way you can contrast and compare their information with what’s being offered on a shopping site. Most shopping sites also allow customers to leave product ratings or reviews so pay attention to that too.
Word of mouth is one of the best ways to gauge the reputation of an online shop or seller. Sometimes, small vendors and startups offer great products that only a few people know about. Social media has made it possible to search for public information about the background of any business. So check around and ask your tech-savvy friends and relatives too. Just because a vendor is small doesn’t mean they don’t offer good quality products.
Pay it forward as well. If you’re satisfied with a product, give a good rating. Post a good review on the shopping site where you bought it from. This will help other people learn more about a good product. It will also boost the reputation of the shop. This means the shop can attract more sellers whose products you might be interested in.
5. Keep Your Devices and Emails Secure
You also need to keep your own devices secure. Make sure that your laptop is protected from malware. Keep your anti-virus program and your laptop OS (Operating System) and apps (Applications) up to date. Observe the same for your tablets and mobile devices. If a shop has a mobile app for their online store, then use that instead for more secure transactions. This is one of the most frequently neglected of online shopping tips that provide for a better shopping experience.
You will frequently receive emails from shops that you have registered to. However, the most secure and reliable websites have been hacked many times. Hackers usually use the information they get to scam other people. One way is to send them emails that look like they are from a legitimate website or company. The emails ask you to share sensitive information or click a link that allows them to get your sensitive information.
Be wary of emails that have dreamy discount offers or sudden announcements that you won a major prize or gadget. If an offer is not in the style of an online shop’s regular email offers, don’t click the link provided. Don’t sign-up for any of the offers either. Don’t click on suspicious pop-up ads as well. It’s better to be safe than sorry. Make sure to flag these types of emails as spam as well so you don’t get them again.
6. Learn and Use Reliable Payment Methods
Credit cards are one of the most secure ways to shop online. Different shops offer many payment methods that not only use a credit card. There are also many different payment gateways to choose from. If you’re shopping on an international seller’s site, PayPal is usually offered.
For local sellers, try to learn about local payment methods. Electronic wallets (e-wallets, digital wallets) are a convenient way to pay for goods online. These are for people who don’t have a credit card or don’t want to use their bank account. Most of these have mobile applications and online stores are adopting them into their payment options as well.
Not tech-savvy enough to try out new payment methods? The safest route is to stick to what you’re familiar with. Make sure that you are on the right website and shop thru a secure, private network as much as possible.
7. Read the Terms and Conditions
Some of us don’t read labels when we shop in a physical store. We do the same when we shop online. Special promo offers and discount offers usually have terms and conditions attached to them. This is another of the most frequently unpracticed online shopping tips that make way for a better shopping experience. Be sure to read this part of the special offer. This way, you know what you’re getting and you know what to expect.
Terms and Conditions also provide information on what you can do if you encounter an issue with a particular transaction. It also gives you information on the duration of a particular promo or specific details about a discount offer. Many people end up complaining only to find out that their complain is not valid. They didn’t read and learn that their concern was covered in the terms and conditions of the offer.
8. Reach Out The Right Way
As customers, we have every right to complain when we are not satisfied with a particular product or service. Negative feedback always have a big impact not just for the short term but also for the long term. It won’t only affect the business but also the people working in that company. So think before you share and when you do share, do it the right way. Reach out to the other party directly first before peppering your social media feed with rants bout them.
You should only shop in stores or with sellers who make their contact details public or easily accessible. Sending an email is still the best way to give the seller specific information about your concerns. Keep in mind that each seller has a process for verifying and taking action on your concern. So be patient and don’t fret. The important thing is that a seller is responsive to you and takes the time to address your complaint.
Also, try to be polite in your emails. This way, people at the other end will feel more receptive to reading your message and acting on it. It’s also less stressful to write a more polite message than one with an angry tone.
Try to keep these online shopping tips in mind for a more secure and pleasant experience. Online shopping makes it easier to not be distracted. As long we focus on what we need to buy and limit our shopping time, we won’t ruin our budget.
Have you ever thought of why you should invest in the stock market? Maybe you have heard of stories from people getting rich from investing in stocks. There are also horror stories of people going broke from risking too much in stock investments. We all have financial anxieties and investing in stocks is one way to ease our financial burdens. Most of us only lack the knowledge on how to do it.
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Common Financial Situation
The chart of expenses below compares the expenses of the regular employee to that of their house helpers. This may seem like a funny comparison but the situation also tugs at reality in a major way.
ITEMS
MS. OFFICE WORKER
MS. HOUSE MAID
Salary
12,000 / month
5,500 / month
Tax
1,000
None
Food
3,000 / month
FREE, from groceries bought by Ms. Employee
Transportation
100 / day or 3,000 / month
FREE ride w/ Ms. Employee
Mobile Phone
1,000 / month
500 / month
Freedom of Time
Need to complete 8 hours of work
Can relax when all household chores are done
Personal Care (e.g., shampoo, soap, toothpaste, etc.)
500 / month
FREE, bought by Ms. Employee
Bills
3,000 / month (Rent + Utilities)
FREE
TOTAL EXPENSES
11,500 / month
500 / month
SAVINGS
500 / month
5,000 / month
Need to save up some more before she can send financial aid to her family in the province.
Has enough savings to send monthly financial aid to her family in the province.
Financial Situation of Ms. Employee vs. Ms. House Maid | Original Source: Flickr
“Ms. Employee” represents all of us who struggle to make ends meet with our monthly salaries. “Ms. House Maid” represents the household helper that we employ to help us manage our households. Not many of our household helpers may be able to save this much of their actual salaries. Most of us are also unable to maximize our savings because we have to take care of our expenses first. That’s why our first lesson is actually to prioritize our investment fund.
In his book My Maid Invests in the Stock Market and Why You Should, Too!, Bo Sanchez shows us that his household helpers do invest in the stock market and they can look forward to a brighter financial future by doing so. Here are some of the lessons Bo Sanchez teaches his maids which we can use so we can start investing too.
Take Charge of Your Finances
In the first part of his book, he encourages us to take charge of our financial future. Most regular employees including household helpers and OFWs do not have this initiative. We are all preoccupied with addressing our family’s present financial needs. We often forget that we should also prepare for our own future.
This is an all too common scenario outlined in his book that often happens to employees.
“They send most of their salaries back home. They send it to their parents, siblings, nephews, nieces, aunties, uncles, cousins, including their pet carabao. Sometimes, I feel my helpers are supporting entire civilizations. Without their monthly stipend back home, the economy of an entire barrio will cease to exist. People will loiter on the road aimlessly. Children will die of starvation. And the world will come to an end.”
We are all burdened by the financial needs of our families. This puts a lot of pressure on us to send them all that we can. We even end up giving them all that we have. Then, we shelve the thought of our own futures for pondering on another day.
Bo says that everyone ought to be rich but not everyone knows how to do it. This is why we should learn to invest in the stock market — to start building our wealth. In his book, he shows us the basic strategies he teaches his maids for planning their budget and what each fund is for.
Budget Your Income
If you have an income, you need to make a budget. Be sure to include investments in your budget. For his helpers, Bo suggests this simple budgeting system. The first fund for him is the tithe fund.
You’ll grow in abundance thinking, when you give beyond your family’s needs. This will make you think rich and feel rich. And when you change your thinking, you change your living. Soon, you’ll become very rich and you’ll have more to share.
Tithe Fund – Having this fund helps you grow in abundance thinking. He recommends allocating 10% of your budget for this fund.
Expenses Fund – This fund is where you will get all your spending for your daily needs.
Support Fund – What you regularly send for your family’s needs.
Emergency Fund – A savings fund that you use for when emergencies come up.
Retirement Fund – Your real savings.
Because you don’t have a business, the best way for you to grow your money is to invest in the stock market.”
This is a good budget plan to start you off on allocating your money. If you want a more sophisticated budget plan, you can also try out the money jars budgeting system. Of course, if you have loans and debts, such as credit card debts, then you need to pay off those first.
Have a Powerful Vision
Bo encouraged his helpers to follow the budget plan monthly by showing them the best and worst case scenarios that they could find themselves in if they don’t take care of their financial futures.
We should all have a clear vision of what we want to achieve when we have improved our financial situations. This will keep us motivated to stick to our monthly budget goals and help keep us disciplined to spend our money wisely.
Create a powerful vision for yourself in the future. This is where the discipline of delayed gratification can be used to your advantage. Disciplining yourself to live within the limits of your current budget will enable you to enjoy the comforts you want in life in the future, when you are not working anymore and you have all the time and the money to do what you want.
If you don’t own a business, then concentrate on doing great at your job. Then, use the money you earn to invest in the stock market. This is another reason why you should invest in the stock market.
Many people fear the stock market but Bo states that “trading” is the riskier side of the stock market and there is a difference between trading and investing.
Trading is speculation.
In trading or speculating, you don’t look at how strong the company is. Any company is a game–even what they call “penny” stocks. These are companies whose stocks are worth centavos. Because they’re considered very risky. So leave the trading to full-time traders–the people who do this full-time, studying about it 8 hours a day.
Investing is where the investor “invests only on the great companies. Because we’re in for the long haul. Through your business or job, you create the money necessary to invest in the stock market.”
Money Cost Averaging
The best strategy to invest in the stock market is money cost averaging where you buy stocks of great companies, little by little each month. The important thing is to do it regularly. When you adapt this strategy, “you’ll be buying stocks without much thought to the bouncing of the market prices.”
He follows Warren Buffet’s strategy: “Be fearful when others are greedy, be greedy when others are fearful.” This is a simple strategy that anybody can use. This is also another reason why you should start investing in the stock market.
You Can Start Investing Online
Bo recommends that you invest online through Citiseconline, now COLFinancial using their Easy Investment Program (EIP). He states that he is not sponsored by the company but he recommends it because it allows people with smaller budgets to invest since only Php5,000 is required as the initial investment amount.
Each month, or every 3 months thereafter, you can deposit your investment fund to the different branches of these banks: BDO, BPI, Security Bank and HSBC.
These are just some of the lessons from the book My Maid Invests in the Stock Market and also the reasons on why you should invest in the stock market too! Remember though that before you start investing, you should try to eliminate all your current debts first. You should also start learning about the different investment types.
Bo Sanchez’s book definitely gave me a new perspective on how to manage my finances. The budget plan he recommends is a good plan to follow if you are just starting out earning your own money especially if you have no current loans to keep your budget tied up.
There are many resources that you can get your hands on online to help you get started on investing. In the meantime, start growing your investment fund so you can make your initial investment as soon as possible.
Here’s to a brighter financial future for all of us!
If you want to discover the Seven Success Principles from the Ancient Book of Proverbs for your money, work and life; click here to get a free copy of the Ebook from Bo Sanchez entitled Nothing Much Has Changed.
Updated. First published on Pinoy Smart Living on 04.16.2019. Feature Image: Original Photo by Austin Distel on Unsplash.
The current crisis has not only negatively affected the people’s health and wellbeing, it has also affected the world economy. Many industries are now falling. Companies, factories and stores are closing. People are losing their job. Unless this crisis will end soon, many people might find themselves with money worries in the near future. Although income might stop coming, household expenses will not. Debt and mortgages are piling up. Thus, it is important for everyone to how how to improve your finances especially during a crisis.
Here are some things that you can do right now on how to improve your finances during a crisis:
1.Review your budget
Take a good look at your monthly budget. If you don’t have any budgeting plan, now is the perfect time to start having one. The money jar budgeting system is a good way to start creating your survival budget in this tough time. If you are already having a rough time, then you need a budget more than ever. A budget will help you track down where your money is going. It will also help you plan on your future spending.
2.Cut Expenses Immediately
Take advantage of the times. Refrain from going out unless necessary. Focus on the basics. Nutrition and health should be the main concern of everyone. Do not buy non-essential items. Stop eating out. Your main goal right now is to cut down on expenses. You don’t know how long this crisis will last so it is important to have as much emergency money as possible.
3.Talk to Creditors
It is almost impossible to keep up with bills if you are being quarantined especially if you have no savings. The best approach is to talk to your creditors and explain your situation. Ask about your options. The good news is that since you are not alone in this crisis, many governments already issued indefinite moratorium for those affected. Banks and insurance companies have started implementing assistance programs. Utility companies are following suit by waiving fees and postponing disconnections.
4.Look for Other Sources of Income
If your income has already been affected, now is the time to look for other sources of income to boost your cash flows. There are many ways to earn even from the comfort of your home. Search online. Look for something that you are good at.You can be someone’s virtual assistant. You can do online tutoring.You can start creating your own blog or vlog. You can create webinars. The possibilities are endless.
5.Improve your Financial IQ
If you are worried about your finances during this pandemic, that is an indicator that there is a need for you to improve your financial IQ. To be financially literate means having the ability to manage personal finance matters. That includes having an emergency survival fund in times of crisis. It is not yet too late to start now. Take advantage of your time at home. Read about personal finance on books, magazine and the internet. Listen to podcast. Study the lives of millionaires and other highly successful people. Educate yourself and apply it in your life. Start by setting financial goals.
6.Don’t Panic
If you are already an investor; Warren Buffet, the most successful investor in the world, advised investors not to panic. It is best to stay invested and look at the long-term outlook of the stock market. Although it is only natural for investors to be fearful, it is never a good idea to buy stocks based on headlines.
Be fearful when others are greedy. Be greedy when others are fearful. – Warren Buffet
Do you want to grow your wealth? Then, the money jar budgeting system is for you. It is a system that helps you control your spending habits yet at the same time lets you grow your future wealth.
Most people dream of winning the lottery. However, did you know that according to several studies, 70% of lottery winners ended up broke within 5 years of winning? Similar studies also showed that the higher the amount of winnings, the higher the probability of getting bankrupt.
Most lottery winners found themselves in even worse financial situation than before they became rich. So, where did it all go wrong? Lottery winners used the money they won to finance a bigger lifestyle. In short, they start to level up and increase their standards of living. They start to squander on depreciating assets such as luxury cars and extravagant vacations. They also start giving away so much money. This phenomenon is what you call a lifestyle creep.
People who started receiving a large amount of money has the tendency to squander on extravagant lifestyle and depreciating assets like luxury cars. Image Credit: LIFESTYLE CREEP
The money budgeting technique described below is actually a modified version of the Money Jar System, which was first introduced by T. Harv Eker, businessman and author of The Secrets of A Millionaire Mind. It is also an expanded version of the Abundance Formula (100=10-20-70) of best-selling author, entrepreneur and preacher Bo Sanchez.
The purpose of a budget system is for you to develop spending habits within your means and at the same time to lead you to future wealth and financial abundance.
It is called the Money Jar system because you can literally start by getting 6 jars and labeling them. In this budgeting technique, you need to divide your earned income into six (6) accounts:
1. Give Account – 10%
As soon as you receive your income, your first expense should go to this account. You probably think that this is insane. Why do you need to give when you have barely enough to cover your expenses?
The purpose of giving is to put God FIRST in your life.
You need to acknowledge the fact that your gifts and talents all came from God. Giving or tithing is your way of saying thank you to God. More blessings will come your way if you learn to share your blessings.
Do not give the excuse that you are going to start giving once your income increases. Giving is a state of mind. If you cannot let go of your 1,000 if you are earning 10,000, you will not be able to let go of your 100,000 if you are already earning 1 million.
Why 10%? Several verses in the Bible talk about giving a tenth of your produce back to God.
Make an offering of 10%, a tithe, of all the produce which grows in your field year after year. – Deuteronomy 14:22
The give account can go to:
Your church or spiritual community
Your favorite charitable organisation
A person in need
As presents to relatives and friends on occasions
2. Financial Freedom Account – 10%
Don’t you just want to wake up one morning wherein there is no need for you to go to work? You work only by choice and not because of necessity. Well, this account is your key. It is your investment account. It is the most important account for the wealthy.
Financial freedom is the ability to live the lifestyle that you desire without having to work or rely on anyone else for money. – T. Harv Eker
Remember the story of the goose that lays the golden eggs? Well, this fund is your goose. Kill this fund and you kill your source of golden eggs. Do not commit the same mistake as the farmer. You shall NEVER EVER EVER spend this account.
If you have debts, use this account to pay off all our debts first before you start investing.
3. Long Term Savings Account – 10%
This account is allotted for long term spending. This fund has the most flexibility because you can use it for anything in the future just in case you need it. It is your rainy day account or your emergency fund. It plays a major role in ensuring your long term financial success. Having money available when you need it can be a life saver.
Sample usage for your Long Term Savings Account:
Down payment for a house or a car
Your dream vacation
Hospital Expense
Tuition Fee Increase
House Repair
Your child’s birthday party
It is highly recommended that you set up a different savings account for this one. Set the account in such a way that it will be hard for you to withdraw money. For example, instead of an ATM account, open a passbook account. You can avail of an automatic save-up account being offered by banks.
4. Education Account – 10%
You are your most valuable asset. You need to invest in yourself for you to grow. The more educated you are, the more career options you have. Read books. Attend seminars. Develop your gifts and talents.
It was said that this is one of the difference between the wealthy and poor. The poor people have big TVs while the rich have big libraries. That is because wealthy people put emphasis on continuous learning. In fact, about 88% of the wealthy read for at least 30 minutes each day for personal growth or for career development as opposed to only 2% of the poor.
Success is something that you attract, by the person you become. – Jim Rohn
5. Play Account – 10%
This will probably be your favorite account – the FUN account. It is an account to spend however you want. Use this fund to pamper yourself. Get a massage. Eat at a plush restaurant. Go to a weekend getaway. Watch a movie or a concert. Buy that latest gadget. You are allowed to shop until you blow this money away. A small indulgence can have a big psychological impact on your money morale.
So, if you want that expensive bag, sports car or luxury vacation, save up for it or increase your income first until it can fit in your 10% budget.
6. Necessities Account – 50%
This account is for your everyday expenses. Included in this account are your bills, electricity, food, rent or mortgage, transportation, utilities, etc. If you cannot survive on 50%, that means you are living beyond your means. That is a clear signal that you need to simplify your lifestyle.
Follow this system and you will find yourself gradually increasing your wealth. It is going to be hard the first few years but it is all worth it.
First published in Pinoy Smart Living on 01.15.2019
