Showing posts with label Financial Freedom. Show all posts
Showing posts with label Financial Freedom. Show all posts

Thursday, October 4, 2012

Family Budgeting Tips for Dummies

I have to admit - starting up a family and trying to make it on our own, from scratch, was one of the toughest challenges we ever had to hurdle as a newly married couple. In fact, more than a year into the marriage, and we are still learning the ropes of the game. 

I attribute the difficulty to starting late in almost everything (the downside of spending more years in school than the usual four-year course). It took us more than eight years before we started establishing a career, enjoying our salary through thoughtless spending, and giving back to our respective families. By the time that we got married, we were barely even scratching the surface of a frivolous life. And now, as a married couple, we are often torn between wanting to try a little extravagance, and trying mightily to become responsible spenders. Most of the time, the voice of Robert Kiyosaki saying "delay gratification" wins, and I owe that a lot to the husband. (If it were up to me, we'd mostly be eating bagoong and kamatis in our newfangled shirts!)

So far, these simple rules work for us. If you are a starting family like us, and are mostly clueless about the whole budgeting shindig, you might pick up a thing or two from this list:

1.  Know thy enemies and keep a healthy distance. 

The mall is a dangerous, dangerous place, so we stay away from them. The Cristobal's hardly go out. During weekends, we either go home to our provinces or stay at home. Remember the adage, what you don't know won't kill you - well, if you have no idea that prices are at 70% off, you'll never know what you're missing. So stay away from temptation and live your life in peace.

Seatsales and promos are dangerous, too. If you know that CebPac is offering piso fare, chances are, even if you don't have the money to spend for a trip to the Caramoan islands, you will be enticed to make way for an unplanned trip. And we all know it doesn't take one peso to do that! So, I opted to remove all my email notifications from airline promos. Travel will have to wait.

2. If you have to spend, look for the cheapest way to do it.

No matter how hard we try not to spend, there are of course, things that we really have to buy. And when we do, we make sure we are getting the best deals. Take for instance - gas. Prices are way lower in Tagaytay/Batangas compared to Manila, so everytime we go home to my province, we fill up the gas tank. 

We also do the groceries once a month and we buy things in bulk. Kitchen supplies like soysauce, cooking oil, vinegar, etc. are bought in large quantities that could last us for a month, or even longer. These techniques save us a lot of energy, gas and money. If we run out of anything during the interim, say, coffeemate, we all have to make do with black coffee until the next grocery date.

3. Group-buying sites, contests and promos are there for a reason - utilize it wisely.

To prevent feeling absolutely deprived (which can be a dangerous thing,too!), the husband and I go out for dinner every once in a while. And that's when the group-buying sites come in handy. So far, we've tried A-deals and MetroDeal and the results were great (insofar as their restaurant/food deals are concerned). We tried it twice, and in both instances, we paid for half the price of our food. And if you do not have sensitive tummies, you can save a lot if you settle on service water instead of ordering drinks, which are usually unjustifiably expensive at restaurants!

If you have the time, just sign up the darn raffle tickets thrown at the grocery store or department stores. As for me, I join contests (I join BIR's Premyo sa Resibo every so often), sign up for promos, even buy lotto tickets every chance I get. Not that I've experienced winning, but they're just a lot of fun. It makes me giddy and hopeful all the time. You'll never know, it might just be your lucky day. 

4. Random things that work for us- which you can check if applicable to you, too.

  • The husband and I work nearby, so we just walk on our way home. This is also the time that we get to talk to each other about how our day went, because the moment that we get home, it's going to be our time for Zohan. We only use our car when we go home to the province, so that's a lot of savings on gas, parking, and wear-and-tear. 
  • Breastfeed your baby and save a lot on formula milk. 
  • Cloth-diaper your baby, if not completely, at least once or twice a day, and that will save you a lot on disposable diapers. 
  • Do not overbuy baby clothes, because babies will outgrow them in a snap. Zohan receives a lot of hand-me-downs, too (thanks to Tita Zynia), so that's a lot of savings for us. 
  • Buy baby books in BookSale, Books and Mags, or other second-hand bookstoresIf you are patient enough, you can score books which are almost brand new at more than half its original price!
  • Use your credit card for grocery and other necessary expenses - BUT - earmark the money to pay for the full amount. This can save you from paying interests, and then - you can score a free meal at Chowking or PizzaHut or wherever's the deal of your bank for the month, for a minimum amount charged to your card. (We're loyal BPI customers!)
  • Enroll your utility bills online, for facility and convenience. 
  • Buy meat, fish, fruits and vegetables from the wet market on a weekly basis. It's cheaper and more fresh than when bought from the grocery.
  • Think long-term - if you think you can squeeze your budget a little tighter to buy a house or a condo, do it. The money that you spend on rental expenses are money down the drain for a space that will not be yours at the end of the day, so do away with it as much as possible.
  • It is never too early to start investing!

5. Keep a budget and stick to it.

 As a new house manager, a trip to the grocery can be pretty exciting for you. And if you go by the aisles of the grocery without keeping a budget in mind, you will notice that your needs appear to add up. (Oh, we need this black trash bag, blah,blah.) But if you're working on a budget, you're most likely to sift through what you actually need and what you don't. (Ah, we can utilize the used plastic bags from the palengke as trash bags!) As for us, we keep a budget for grocery and wet market expenses, and we try to stick to it as much as possible. 

6. Realization and Acceptance.

As a starting family, the husband and I realize that things are different now, and we try to accept it as it is. Gone are the days that we can go to coffeeshop at our whims, or buy the latest gadgets. There has to be an acceptance that as parents, priorities will have to change, but...

7. Remember to stay positive!

Tightening our belts cannot go on forever. Right now, our goals are to settle our personal liabilities and then save up for a small business to augment our income. When we look at it that way, saying no to out-of-town trips or dining out more often doesn't seem so sad at all.

There you go. So the next time you see the husband and I looking silly and making funny faces at each other while walking along Pasong Tamo, you know we're walking because we're saving up for the future of the little boy waiting for us at home.

Thursday, June 14, 2012

Half-step to financial freedom

Photo source

As G.I. Joe had put it, Knowing is half the battle. So I would have to say that I am officially a half-step to financial freedom, thanks to a friend by the name John Henry Liquete.

My good friend Joyce organized the coming together of our lawschool friends who had been in touch with each other in the quest for financial freedom. (Yes, ang heavy!) One of our friends, Henry, had been eating all materials relative to financial literacy and had taken the stock market by storm (by our standards, of course!). Realizing that it could be so lonely up there (haha!), Henry thought to himself, why bother getting rich if I couldn't bring along my friends with me? And so, the Lonely Up There club was born and had its first meeting at the Slice in Bonifacio High Street last weekend. (We were also joined by some of Joyce's highschool friends, her sister Chi, and Chi's boyfriend Migs - who, by the way, maintains a very impressive travel-photography blog here.)

We know all too well the familiar story of the two fathers - the poor dad and the rich dad. The poor dad was a very well educated man, and a staunch believer of working hard, saving money and not buying the material things that one could not afford. Like most Filipino household, the poor dad considered education as the ticket to success, and so he hammered his son to do well in school with the end in view of landing a good job in a high-paying company. The rich dad, however, had very little education. He poured efforts and money, not in education per se, but in the knowledge of investing. He did not believe in working for other people, but instead, in working for one's self. Loosely translated, if the poor dad would encourage studying as the way to work in a good company in the future, the rich dad would encourage studying as the way to build his own company. From the rich dad, the son learned not to say, "I can't afford it", but instead ask, "How can I afford it?"

I was raised in a poor dad's household.  Neither my family nor my close relatives had been introduced to business. Most of my relatives attempted to get a shot at an improved life by working abroad, and thank God we were relatively getting there, but only after devoting  lives and efforts and energy to scamper in the rat race. My cousins and I had been instilled the importance of education - getting a degree and becoming professionals - but most of us had taken a chance at working overseas. Indeed, we were a classic example of the poor dad mentality. I didn't mean to say that we had no chance to succeed; we would succeed. But it would be a longer route, and a much more difficult one at that. (I hope that one day, our family would come to know that there is another scheme to do things - the rich dad's way.) That was the reason why I attended Henry's financial literacy seminar, in the hope that I could help educate the younger generation in my family.

Insofar as the  husband and I were concerned, we were not totally naive about financial wellness. He introduced me to Robert Kiyosaki (the author of the Rich Dad, Poor Dad) way before, and I had read other books like Think and Grow Rich by Napoleon Hill.   Those books propelled us to attempt a franchising business before we got married. We also hoarded a lot of Entrepreneur magazines, if that could count. He also invested in some mutual funds and an insurance policy coupled with  investment, but these were just small amounts, to test the water, so to speak. The returns were minimal, but I was happier with just being financially literate (somehow) than gaining an enormous amount right away. We also attended a seminar about stocks before, but to be totally candid, I could not remember a thing about it now. So while we were not totally naive, there were still a LOT that we needed to learn about the ropes of the game. So Henry's nod of approval to give a talk about the stock market was very much welcome.

Most people get easily intimidated when they hear the word "stocks" or "stock market".  I, for one, was disinterested the first time the husband introduced it to me. Filipinos had the notion that it was risky, likened to a gamble actually. It was true, the stock market could be risky. But one thing that I learned about the seminar, there were actually two ways to utilize the stock market: 1) as an investment; and 2) as a trading vehicle. As aptly put by Henry, whenever people say, "The stock market is dangerous!", they're referring to trading at the stock market, not investing in the stock market. And there was a plethora of difference. Trading in the stock market would be buying and selling day in and day out and without regard to the background of the company one was purchasing. Investing, on the other hand, would be buying shares after a thorough analysis of the company's background, without withdrawing/selling shares after a long haul, or until one was already satisfied with its earnings.

Investing in the stock market would be the better option if you had long-term savings in the bank. Henry's example was enlightening. If you park your P1 million in a time deposit account of 36 years, your P1million could become more or less P4million.  But if you park your money in the stock market, your P1 million will become, *drumroll please* at the very least P64 million! I know, I know - it would be difficult to convince people to part with the money borne out of their sweat and blood. However, it would pay to be literate and aware of one's options, so that one could make an informed decision. Besides, there were strategies which we could take advantage of to minimize, if not altogether eliminate, risks. He thoroughly explained cost averaging method, which no book could adequately explain to me. 

There were so many things to learn about the stock market, I could go on and on and on. But then, I would rather leave the talking to the expert because it's money we're talking and I would not want that high a stake to be lost in translation. Henry was so accommodating to answer all our queries. To him, there were no stupid questions! He even provided us with reading materials which discussed everything from understanding the stock market for beginners to what stocks he would recommend buying. He even taught us how to open our own stock market account (through COL Financial). All that, in exchange for his intangible altruistic feeling of helping others + 100 pesos for the printing expense of our materials + we foot the bill! We urged him to consider giving similar talks as an alternative earning career, and he agreed! So if you are interested to be financially literate but are intimidated by the big names of financial advisors out there, you can email me here  and let's see what I can do. If we can come up with a good number of participants and Henry's calendar is clean, we can probably organize another seminar, whatchathink? 

*Credit goes to Henry's materials and to Wikipedia for the information on Rich Dad, Poor Dad
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