Financial Lessons I've Learned in 2013

Few days from now, we would be saying goodbye to 2013. 2013 is one great year for me most especially in my financial aspect. As such, I would like to share the financial lessons I’ve learned to close one beautiful year.

Invest on investments. My outlook before was to invest my money in banks be it time deposits or savings account. Little did I know there are still many options I can consider that would yield greater returns on my end. This is where I opened my finances to stocks and mutual funds.

Salary – Savings = Expenses. I’m lucky that our university cooperative can easily stash a few percent of my salary to my savings then what’s left would be my net income. As such, what’s normally deposited in my ATM would be my expenses account. With this formula, I can be able to control my spending while prioritizing my savings.

Building an emergency fund. I just know this year that having an emergency fund is necessary most especially to us employees. An emergency fund is an amount enough to sustain your expenses for three to six months should you get unemployed or something ill happened to you.  This must be separate from your savings account.

Cut down your credit and credit cards. There was a time when I hoarded varied credit cards from different banks. Little did I know that such practice backfired and crippled my finances. That is why this year I made one crucial elimination process. I paid my dues and cut down my cards. Today, I am maintaining only two cards. One is currently not activated and another one with a smaller credit limit.

Going prepaid. I once had a group plan in a certain network brand. Each month I paid 3,000+ for this. The moment the 24 months expired, I decided to cut down my post-paid plan and go back to prepaid. It was one of the best decisions I made. Now I only maintain 500 pesos each month for my unlimited load. Imagine the huge savings! And remember the three million load that went viral online? Good thing I won’t worry with that anymore. 

Control.  I was once splurging on dresses, shoes and bags. Whenever I see one great dress I would hastily buy it. Then that item would just be hanging in my closet. Hence, I wasted money for that. Now, instead of buying items that I think is trendy, I opt for basics and the classics. Now I am controlling myself whenever I go shopping.

Share. Money is simply an instrument in our lives. It could make our life better and we can buy things we want. However, more than earning for yourself, it is always best to share it to your church, to your family, friends and other people who you think might need it most. 

How about you, what financial lessons have you learned this year? 

Cash Flow Inspiration: Towards Your Financial Freedom

Not so long ago, I had a wonderful chance to attend a financial management seminar sponsored by our university cooperative. Little did I know that I would learn more in the process. Our great speaker emphasize on financial freedom. This is one goal that all of us in the room would want to achieve. I am sure, it is your goal too.

Since I don’t have any gifts to give you my dear readers this Christmas, perhaps a gift of knowledge would suffice. I do hope that you would get inspired by this little post in order to improve your cash flow and slowly setting up your finances towards your own financial freedom too. Let me begin.

Cash flow refers to the movement of your money. In this particular post, we would be concerned with the flow of money to you. The more money you generate, the better is your financial status. That is why during our financial management seminar we were introduced with the Cash Flow Quadrant. This quadrant is suggested by Robert Kiyosaki. Remember, Rich Dad Poor Dad author?

The Cash Flow Quadrant suggests four ways to produce income. In here we have, Employee, Self-Employed, Business Owner and Investor.

Employee. Most of us fit in this quadrant. Most of us are employed in a business or company. As for my case, I am employed in a local university here. In this quadrant, we have money every 15th or 30th of the money. This depends on your company’s payroll schedule. Needless to say, this is one secured quadrant since you would be expecting income regularly. However, having this alone will not guarantee financial freedom. Even more, your time is not for you to decide. The company dictates your time and just how much you would be earning. Hence, this quadrant is somewhat restricted.

Self-employed. This quadrant talks about you owning a job. In here, you would probably have a business that you run for yourself. You might have a hobby in which you are earning. In my case, since I love baking, I take orders from family and friends. My parents have their own construction business. The money you generated would be dependent on the kind of business that you put up. As for my baking hobby, it is not that much. As for my parents, the money they generated is dependent on the project. But what differentiates self-employed to the third business quadrant is that it is you who runs it. This means, you will not earn if you are not there. I won’t be earning from my baking if I don’t bake it myself. My parents on the other hand would not be earning too if my parents would not be on site taking charge.

Business owner. This quadrant is more flexible than the second quadrant. In here, you own a system and people works for you. Even if you are not in your business place, it would still be generating income. A good example would be major fastfood, shopping malls and more. There’s no need for the Ayala’s to be in their mall just for it to generate money. However, a system is established already that their employees will just have to follow. If I were to take my baking business to this level, this would mean I have hired myself bakers already to do the baking for me and a number of individuals to do the marketing and delivery. I might already have a store too somewhere in the city. I will just be there to check. Oh how lovely this would be!

Investor. In this last quadrant, you become an investor. In here, the money works for you. To date, there are already a great number of investments you can pursue. You can invest your money in the bank, time deposits, mutual funds, stocks and more. In this quadrant you simply wait for your money to generate income on your end. This is where most of the rich people invest in. it is no wonder that they have more time for themselves and their families whilst earning big time.

Robert Kiyosaki and our financial management speaker stressed that in order to experience financial freedom, we must move to the other parts of the quadrant. Being employed is not enough. We must find ways in order to improve our cash flow by being self-employed, owning a business and via investments. Rich people tend to focus on the third and fourth quadrant.

Hence, as time approaches, perhaps it would be best to find opportunities in the third and fourth quadrant. I am slowly moving in the fourth quadrant. My helper is THIS! I hope you and I will achieve financial freedom together.

Gifts I'm Willing To Spend For

Image from CMIAID Giftshop

I am pretty certain that many of us are still struggling on what would be the best Christmas gift idea! It is already the month of BER and just a few more months December is here.

Budget Friendly Noche Buena Feast

With Christmas only four days away, I am certain that most of us is already thinking on what food items to prepare for Noche Buena. We cannot wait to share this with family and friends.

 

Noche Buena or the Christmas Eve feast is considered one of the most valuable meals for the families and loved one. This is often a good opportunity to gather. We even invite our neighbors to celebrate with us too. Not to mention our relatives, friends and more. Oftentimes, this is where the bulk of our money goes. We tend to spend more in order to provide the perfect Christmas experience. Most of the time, we stretch our wallets to its limit. 

There is absolutely nothing wrong on spending for the family. However, if it already compromised our finances, you better think twice. The point here is, there’s no need to spend tons in order to impress your family and friends. There are budget-friendly tips you can do to provide one hell of a feast.

Do it Yourself. This has got to be the most cost effective and cheapest approach in order to make your Noche Buena dishes. Although this requires more effort on your end, cooking for your family and friends is better than having foods catered. Not to mention, the cost of catering or even buying food items outside. We have been doing this for years already and I can personally say we save tons. Instead of ordering salads outside, we make it ourselves. It is also a good family bonding activity. You can designate a person to prepare one dish for Noche Buena. If you are a family of five, there will be five dishes before midnight. This is a sweeter and cheaper approach in creating a Christmas feast with love. 

Shop wisely. If you decided to prepare your own dishes, doing grocery can be a challenge. I suggest before even buying your ingredients to make a list and compare prices. Check out supermarkets and look at discount retailers. Identify the price difference of your ingredients and go where it is cheapest.  In your ingredients list, assess also items that you can substitute. For instance, if your dish requires Dutch cheese, perhaps change it to processed cheeses. If your cake requires unsalted butter, opt for the regular butter or even margarine. You may also shop in bulk if you think you would be using more of the ingredients in order for you to save tons.

Scrap. For Filipinos, we have mainstay dishes that must be present in our Christmas table. A good example is Lechon. Instead of buying an entire Lechon, you can buy scrap ones that normally retails per kilo. Your family will still have lechon without spending thousands for it. This holds true for hams as well as there are per gram ones in the market instead of a whole ham. If you are planning to get cakes, there are mini cake options from your favourite cake stores. You may also opt for mini desserts. You would be getting more at a cheaper cost compared to buying an entire cake.

With these tips, I am pretty certain you would be able to prepare a Noche Buena feast without the hefty amount. Plus, it is even more personal and practical. With that said, what would you be preparing for Noche Buena? 

Are you Kissing your 13th Month Goodbye?

It's December! And when this time of the year comes we are always filled with glee because of the 13th month or cash bonuses we get. Or not?

13^th month is an extra salary given to employees by their employers. In the Philippine setting, this is mandated by law. This is normally equivalent to a month’s pay. Hence, if you are earning 10,000 a month, you would also be getting the same amount. This excludes all allowances, benefits and bonuses. Imagine getting a whole month of pay without doing anything. See that is heaven.

However, in spite of the added month salary, why is it that we can’t hold it for long? Assess right now, where did you spend your 13^th month last year? Did you use it all up? How did you feel after spending it? Did you welcome the New Year with no money at all? Then don’t let this happen to you this year. We are going to re-manage your 13^th month pay spending with a wiser approach. Stay away from sale and temptations. Buckle up with a lot of “NO” because you will need it so.

Tip 1: Pay debts. Use a portion of your 13^th month to pay debts. If you have credit card debts, loan debts, bank debts and more, allocate a big bulk of the amount to this. You don’t need to zero out the credit, though that would be nicer, however at least you get to decrease the amount. Aside from that, you save yourself from interest rates that can certainly make you broke. Plus, lesser credit is a good way to start another year.

Tip 2: Save. Financial advisers always say to save, save, save. This holds true for your 13^th month pay. Allocate a portion of it to build up your savings fund or emergency fund. An emergency fund is an allocation that is good for three to six months of your expenses. In case you will lose your job or something bad happens to you, God forbid, you will still have money to cover your expenditures. If you are planning to save up your 13^th month, I suggest stashing out 10% to 30% to beef up your savings fund or emergency fund.

Tip 3: Invest. When I say investment this does not mean getting a new flat screen TV or a new gadget. I am referring to make the money work for you. Investing is making your money earn. To date, there are many great investments to start. You can get a trust fund and mutual funds offered by banks. You may also use the money to start up your business too.

Tip 4: Give. It is the season of sharing and giving after all so might as well stash a few percent to give to your family and friends. If you feel generous, you may also share your money to charity. Perhaps a few portions would go to help our dear Yolanda survivors to brighten up their holidays even just a little.

So if you already have your 13^th month pay right now, start setting up the budget plan. Don’t be a one day millionaire and regret after. Be a wiser you today. Your wallet will thank you soon.

A Kuripots Guide to Buying Gifts

I must admit I am a kuripot. As what Tito Boy said, "I'm proudly kuripot". However being kuripot and buying gifts don't fit so well. Worst, they are not in the same page.

With the holidays only a few days away, you can't expect to hide and shut the world so you can't buy gifts for family and friends. In a way or another, parties would require you to buy gifts for gift exchanging, you give something to your loved ones and not to mention your "inaanaks", relatives and friends.

Buying gifts doesn't mean splurging. You can still be able to buy gifts in spite of you being a kuripot. Remember, generosity doesn't have to break your wallet or worst your banks. You can still be able to give gifts! Here's how.

1. Do it Yourself. A little creativity goes a long way. As such, we can utilize this kind of talent in order to create one unique gift item. To date, there are already many DIY tutorials online. What is good about this is you only get to spend a little for the raw materials and the output is just personal and impeccable.

2. Improvise. I am certain there are hidden gems in your house that you can give as a gift. However, most of those items are not gift material. In that case, improve those items. Here we go back to number 1. You can fix it, add some ribbons, clean it up and more. You can also personalize it making this item all the more gift worthy.

3. Sale and Bargains. Being a kuripot, your best ally is always sales and bargains! Malls and establishments normally have sales during this season. Hence, you can be able to save tons. Imagine getting a gift at 50% or 70% off. Now that seems really ideal. No matter how small the sale percentage is the important thing is you can be able to save a few pesos in the end.

Buying gifts need not be expensive. In fact, there are many ways for you to give yet at the same time save your money. You only need to be wise on what to give and where to buy it. As for my case, I already know the gifts to buy for my family and friends. And most of them are dead cheap.

Enjoy the holidays!