Money Matters: Expert advice on how to manage your finances!

     Need money advice? Here are the experts’ answer on how to manage your finances.

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SAVINGS

 

“I virtually have no saving because I live paycheck to paycheck. How do I even start saving? Is there a certain percentage of my salary that I should set aside?”

Saving money is not about the amout you set aside. It’s about establishing a habit. People come to me and tell me that it’s impossible to save. I ask them to save a measely 20 pesos a day. If that’s still not doable, I drop it down to 5 pesos a day. They soon realize that it’s not true that they cannot save money. There really is an amount you can set aside regularly if you put your mind to it. You can start this activity: Get a glass jar with a lid. Put the jar near the door, so every day, when you come home, the first thing you do is put 20 pesos in the jar. Do this for a month and it becomes a habit. On the second month, increase the amount by putting 50 pesos in the jar every day. I don’t want you to put an entire month’s savings in the jar in one day. I am more interested in your day-to-day activity of saving money.

People convince themselves that they cannot save. You can break this negative mindset by trying this simple activity. Through this exercise you can convince yourself that it can be done. Pretty soon, the small 20-peso daily savings will increase. Just tell yourself-it’s all about the habit, not the amount. Fix the habit-and the rest will be easy!

Joe Ferreira is President of MoneyDoctors Inc., a personal finance consulting firm. He started his practice in 1990. he believes that all Filipinos have an equal opportunity to become permanently wealthy, if they are willing to integrate into their lives good money habits. May 2015

 

 

Husband and wife money matters

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“Should I have my own money without my husband knowing it?”

Rather than hiding money from each other, both of you should agree on whether you will contribute to a common fund that will pay for all the expenses, or resort to an expense assignment. If it’s a common fund, then the expense list should include a personal allowance for each of you. You don’t have to discuss how you will spend or save your personal allowance. On the other hand, if it’s an expense assignment, whatever is left after paying your bills is really up to you to save or spend. Hiding money is a bad idea because it is a breach of trust between partners and could damage the relationship. While these are general principles in family finance, there are exceptions. For instance, if your husbad has a gambling problem or some other vice, you have a perfectly valid reason to hide money from him.

Joe Ferreira is President of MoneyDoctors Inc., a personal finance consulting firm. He started his practice in 1990. he believes that all Filipinos have an equal opportunity to become permanently wealthy, if they are willing to integrate into their lives good money habits. May 2015

 

“My husband incurred a lot of credit card debt. He wants to dip into our savings. Is this advisable?”

Ask your husband to cut the credit card, call the bank, and either ask the bank for an amnesty-most banks will give a huge discount if the card holder will pay in full-or, if it’s still toobig an amount, tell the bank that he wants to pay the whole amount and negotiable for a one- or two- year term with a very reasonable interest rate (not 3.5%). Most banks will accommodate such a request. That way, the amount will be manageable, and he won’t need to touch your savings.

Sharon Que and Clarissa de la Paz– coauthors of the bestselling book, I wish They Taught Money in High School. Que put up her first business when she was 10 years old, while de la Paz is an employee and an entrepreneur. Visit their website at lifestyleupgrade101.com., June 2015

 

“Is it important for your partner to know how much you’re earning?”

Yes, it’s important to have a financial plan or goal as a family, especially if you value transparency in your relationship. It’s best to pool your funds together, but, if all monthly expenses are already covered by investments and the insurance is in place, it’s best for each partner to have his or her own “play money.” Each one can then spend that however way he or she wants to.

Sharon Que and Clarissa de la Paz– coauthors of the bestselling book, I wish They Taught Money in High School. Que put up her first business when she was 10 years old, while de la Paz is an employee and an entrepreneur. Visit their website at lifestyleupgrade101.com., June 2015

 

“My husband an I can barely make ends meet every month. We work from paycheck to paycheck, and we have three kids who are all in school. Is it time for me to get a personal loan?”

First, look very closely into your spending habits. There are usually clearly identifiable unnecessary expenses that bore holes in your financial bucket. From there, you can start to determine how to better manage your resources and expenses. If your income truly does your basic expenses, augmenting your income is the only solution. Is there any way you or your husband can reinvent yourselves by getting an additional stream of income that will work around your core gifts and passion? There are so many income opportunities around you, you just need to think hard enough.

If you wish to push through with your loan, availing one should be done with utmost caution. If done for the purpose of starting a business, which you deem profitable after careful evaluation, then it can surely help. But if it’s solely for the purpose of bridging your finances and you end up with loan sharks, then it will only turn your financial house upside down.

Ofelia Tordesillas M.D. is a financial planner who promotes financial wellnes by structuring portfolios to help clients become permanently wealthy. She is a pediatrician by profession. December 2015.

 

 

 

Hand and green plant growing from the coins

Retirement benefits

“It’s my 10th year in the company, and I’m entitled to early retirement benefits. How is this computed? Is there a minimum amount when it comes to this?”

The legas standard is one month for every year of service, payable at age 60 or 65. I am not providing a precise amount because there is a set formula for this. For simplicity’s sake, I put it down as a month per year. however, companies do have a variety of benefit programs that give separation or early retirement benefits. You will have to ask your Human Resource Department about this. There are vesting schedules to these separation benefits as well. The most common is 25% of your total benefits will be paid, if you complete 5 years of service; 50% if you stay 10 years; and you are fully vested for 100% of the benefits after 20 years of work. As to minimums, it will really depend on the company you work for. Most will use a formula in computing what really is due.

Joe Ferreira is President of MoneyDoctors Inc., a personal finance consulting firm. He started his practice in 1990. he believes that all Filipinos have an equal opportunity to become permanently wealthy, if they are willing to integrate into their lives good money habits. May 2015

 

Business/Investments

 

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Savings

“I started an online business via Instagram. Should I be paying taxes too? How do I go about it?”

Yes, you should! Refer to the website of the Department of Trade and Industry (DTI) for detailedsteps to make your business legal: dti.gov.ph/dti/index.php/msme/start-your-business.

Sharon Que and Clarissa de la Paz– coauthors of the bestselling book, I wish They Taught Money in High School. Que put up her first business when she was 10 years old, while de la Paz is an employee and an entrepreneur. Visit their website at lifestyleupgrade101.com., June 2015

 

“They say the way to get rich is to have your own business-That you shouldn’t have to rely on a steady income as an employee. Is this true?

When you are starting your work life, employment may provide financial nirvana as yuor needs are few. However, as you get older, there is more pressure to make more money, especially if you’re paying for your children’s education, buying a car, a house, and saving up for retirement. Most entrepreneurs got started when they realized that an employee’s salary might not be enough to pay for all these needs. You can start with something that can be done from the home and on weekends. As you accumulate capital, you can make the big jumo and get into full-time entrepreneurship.

To hedge the risk of financial distress if the business fails, it would be ideal if you have another source of income such as an employed spouse or, if single, support from your parents.

Going into business has its risks and benefits. To validate your theory that business is the way to go, make a list of top 20 wealthiest people in this country. You will be surprised to discover that majority of them are entrepreneurs.

Joe Ferreira is President of MoneyDoctors Inc., a personal finance consulting firm. He started his practice in 1990. he believes that all Filipinos have an equal opportunity to become permanently wealthy, if they are willing to integrate into their lives good money habits. September 2015.

 

“I own a piece of idle alnd outside of Metro Manila. I want to generate some income from the property, but I don’t know where to start.”

This is a very common question, and there really is no answer for everyone. So, we start by asking: “Why is the land idle?” and “How much income?” This is where things get tricky, as the owner will have to determine how much they can earn from the developing the property, either by doing legwork themselves or hiring consultants. If the plan is to develop and rent out units, then you should research the proper estimates on development costs, taxes, and maintenance fees. The figures can be compared to other alternatives to see if there ar ways for the owner to generate the desired income. For example: If developing the land will cost P5 million, and it is estimated that it will bring in P500,000 in annual rent, then the P500,000, will have to be adjusted for income taxes, property taxes, and maintenance costs. It is only when you have the final figure that you can compare the income generaeted by developing the land versus potentially selling it and investing the money in the other income-generating ventures.

 

– Investment advisor Aya Laraya, MBA, has delved in everything from stocks, bonds and mutual funds to real estate and insurance. He created the TV show Pesos and Sense, to teach people how to grow their money using different types of financial instruments. He received his MBA from University of Western Australia,and teaches Economics at the Australian Catholic University. He also teaches corporate Finance at the Bradford College of England Executive MBA Program. April 2015

 

 

“My friend works for a direct sales company. She has asked me to invest. How can I tell if it’s not another pyramiding, get-rich-quick scheme?”

To determine if the company your friend works for is worthwhile, you need to answer two questions. First, is it selling legitimate product? And second, will your income depend on recruiting people?

I have seen a lot of people recruiting for direct-sales organizations and, eventually, the business depends on more recruits to keep it going. As the recruits “invest” by buying more and more products, they end up not making money, since most of their income is spent trying to sustain the organization. If you want to make money out of directly selling a product, then go ahead. But if you need to drag friends and relatives into the organization to make money, don’t do it. If the organization collapses, the damage to your personal reputation would be difficult to repair.

Joe Ferreira is President of MoneyDoctors Inc., a personal finance consulting firm. He started his practice in 1990. he believes that all Filipinos have an equal opportunity to become permanently wealthy, if they are willing to integrate into their lives good money habits. September 2015.

 

“We’re planning to buy a home. Is it better to find a ready-for-occupancy place, or a pre-selling place?”

It all depends on your immediate needs. If you need to move in right away, you should definitely buy an RFO or ready-for-occupancy unit. But if you are buying for investment purposes, you can purchase a pre-selling unit, since it is more affordable and the rate is lower compared to an RFO unit.

– Chinkee tan- is a wealth coach, motivational speaker, book author, and radio personality. Visit chinkeetan.com.,July 2015

 

 

 

Accounting/Financial planning

 

pigcalculator.jpg“I need an accountant to manage our small businesses. Where do I begin to look for one?”

If your business is a corporation, you will have to produce audited financial reports every year. The Bureau of Internal Revenue (BIR) will likewise require annual financial statements for payment of taxes. Managing and keeping financial records are thus critical functions in any business, and an accountant plays a big role.

There are three functions related to accounting. The first is bookkepping, which can be covered by computer accounting software. The second is submitting reports to management, most of which can also be rpepared using computer accounting software. The third is conducting an audit and submitting financial reports to the Securities and Exchange Commission (SEC) and other institutions may require these.

Your initial step is to look for a reputable audit firm. An audit firm is like a legal firm in that auditors, like lawyers, should keep all information confidential and protect your businesses. As a general rule, choose an audit firm that you personally know or that is highly recommended by somebody you trust. Your audit firm will be your best adviser when it comes to how your accounting should be organized. The firm will do the required audit and financial reports, and can even recommend a good bookkeeper.

Note that you don’t really need to be an accountant to learn how to use that computer accounting software. If you have a good grasp of the software, you may just need someone to conduct the audit and generate reports. In this case, perhaps the audit firm will be in the best position to recommend the software so that the audit process is better coordinated.

Francisco J. Colayco is an entrepreneur, venture developer, and financial advisor, and the author of seven best-selling books. He is the founder of the Colayco Financial Education and the Kapatiran sa Kasaganaan Service and Multipurpose Cooperative. Visit colaycofinancialeducation.com for more information. October 2015.

 

“How and where do I find financial planner who’s not affiliated with a company that’s trying to sell me something?”

Before looking for an independent and professional financial advisor, you have to be very clear that you are actually willing to pay the person for his time and effort. If not, and especially if you believe that this knowledge can be googled anyway, then it will end badly. Frankly speaking, no one wants to work professionally for free. How much would a financial planner charge? Actual figures vary, but, say, 2 to 3 percent of the amount you want invested. (Expensive? Well, many firms offer commission around that amount for a person to sell you a product, so by offering something competitive, you can, and you should, demand that they refse any and all commissions from product providers.)

Now, once you have that, you can look for candidates via social media and referrals (word of mouth). Make sure they are professionally qualified to advise you on the different products available locally.At the bare minimum, they should have passed the licensing exams of the different regulatory bodies, such as Philippine Stock Exchange (PSE), the Insuraqnce Commission, or the Securities and Exchange Commission (SEC). Otherwise, it would be like accepting legal advice from a person who has not passed the bar or medical advice from a person who has not passed the medical board exams.

 

– Investment advisor Aya Laraya, MBA, has delved in everything from stocks, bonds and mutual funds to real estate and insurance. He created the TV show Pesos and Sense, to teach people how to grow their money using different types of financial instruments. He received his MBA from University of Western Australia,and teaches Economics at the Australian Catholic University. He also teaches corporate Finance at the Bradford College of England Executive MBA Program. April 2015

 

 

Kids’ savings/allowances

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“I want to encourage my tween daughter to save her allowance. What’s the most effective way to do this?”

Expose her to savings and investment instruments. There are also a lot of reading materials available for kids. But the best way to teach her is by example. Take her and encourage her to set aside a portion of her allowance every month to be put into her account. Another way is to teach her that value of delayed gratification. By the end of the year, you can offer to double whatever your daughter has saved. This will empower your daughter to make a choice when it comes to money-either spend it now, or save it and wait for it to double.

Sharon Que and Clarissa de la Paz– coauthors of the bestselling book, I wish They Taught Money in High School. Que put up her first business when she was 10 years old, while de la Paz is an employee and an entrepreneur. Visit their website at lifestyleupgrade101.com., June 2015

 

 

“Should I give my high-school-age children their allowance on a daily, weekly, or monthly basis?”

I always recommend weekly allowances for two reasons.First, it removes the daily routine of asking for the allowance. Second, and more importantly, weekly allowances start the children off early on financial management. Young as they are, they can make decisions on what to buy or not without a supervising parent looking over their shoulders. I also tell people to provide advice on saving money. Instead of the usual, ‘you have tosave 20% of what I give you” speech, you should tell your children to spend as little as possible during the week. They open themselves up to the possibility of saving as much as 50% or even 80% of what you give them.You can even do a savings challenge. In October to December of every year, double any savings they make at the end of each week. This, however, will have to come with a provision that they can only spend the money in January of the following year. The best store sales are usually during the first week of January anyway.If you follow this program, you will turn your kids from emotional to logical spenders. They willhave a less troublesome adult life if they learn the saving habit.

Joe Ferreira is President of MoneyDoctors Inc., a personal finance consulting firm. He started his practice in 1990. he believes that all Filipinos have an equal opportunity to become permanently wealthy, if they are willing to integrate into their lives good money habits. August 2015

 

 

BUDGETING

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“We spend so much on food and groceries. How can I scrimp on that? Can I buy generic items? Is it worth it?”

Food is definitely one of the highest items on anyone’s budget list. You definitely cannot skip eating, but you can be practical when it comes to the food that you buy. Just like buying medicines, buying generic products is a wise move especially now that there are many multinational companies selling quality products at lower prices. They acknowledge that if they do not compete with the new players, the new players will start eating into their market share. Nomultinational company will put its name in jeopardy just for profit.

– Chinkee tan- is a wealth coach, motivational speaker, book author, and radio personality. Visit chinkeetan.com.,July 2015

 

 

“Our monthly budget does not allow us to save a lot. How can I tighten our budget so we can have more money left over?”

Allow me to give you some practical and easy-to-do tips on how you can tighten your budget.

1.Bring your own food. I wonder why some people are ashamed to bring their own food to work or school when, in fact, this can save them a lot of money. How? Let’s say you have a budget of 200 pesos a day; bringing your own food will help you save around 100 pesos a day; multiply that by five days, and that is equivalent to 500 pesos a week, 2,000 pesos a month and 24,000 pesos a year!

2.Commute. When going to nearby places, it is better to take the public transportation than to drive your car. This will save you gas money and keep you from getting stressed out in traffic. If your destination is just a kilometer or two away, walk! Again, this will save you money, and will help burn calories.

3.Quit vices. Your cigarette and alcohol expenses can add up to a huge amount. If you smoke a pack a day, you are spending around 40 pesos a day; multiply that by seven days, and that is equivalent to 280 pesos a week, 1,120 pesos a month, and 13,440 pesos a year! Having these vices can add to your medical expenses, too, when you get sick. It’s time to start thinking long-term.

4.Stay at home. This may not sound like fun, but give it a try. What is not to love in your own home? There, you can spend quality time with your family-watch movies, play games with your kids, or even prepare a sumptuous meal, instead of doing the same things in malls where everything comes with a price.

5. Have some me-time. You can write, read a book, watch movies, paint your nails, munch on food, and the like, instead of going out and spending unnecessarily.

 

Remember it’s not how much money you make, but how much money you save. Part of keeping to your budget is knowing how to budget properly.

 

– Chinkee tan- is a wealth coach, motivational speaker, book author, and radio personality. Visit chinkeetan.com.,July 2015

 

“I stopped buying designer bags when I had my two kids. They’re in grade school now and our finances are more stable. Can I spend on luxe items again?”

Financial freedom should be everyone’s ultimate financial goal. It’s when you can provide for your needs and your family’s, even without you working. To reach that point, you need to have discipline to manage your expenses well, so that you’ll have at leasy 30% of your income set aside regularly and invested effectively. You need to invest to be able to address important goals like the college education of your children, buying a home, setting up comfortable retirement funds, or maybe even setting up a business.

Setting aside the 30% regularly can only become possible if you limit your survival expenses to 50%, business expenses to 10%, and lifestyle expenses to 10% of your income. If buying signature bags doesn’t veer you away from the 10% lifestyle benchmark, then by all means go and buy them. Otherwise, if you break that 10%, you’ll be sacrificing much more important goals. If this is where you are now, you just need to be patient until you reach the point where you have a wider profit margin, where there’s a big gap between your earnings and expenses.

Ofelia Tordesillas M.D. is a financial planner who promotes financial wellnes by structuring portfolios to help clients become permanently wealthy. She is a pediatrician by profession. November 2015

 

’“I’ve paid for my parents’ utility bills since I started working up to present. My husband is okay with it, but recently. We’ve had to control our budget. He suggested that perhaps my other siblings could pitch in. what should I do?”

If you live with your parents and siblings under one roof, I don’t see any reason why it would be wrong to pay for the utility bills. (However, if you live in separate households, you may have to rethink this expense.) Filipinos would normally pick up some of their parents’ household expenses when they start working, as a sign of gratitude for, and recompense to, what their parents sacrificed to put them through school. You are having difficulty letting go of this expense because you equate it with your love for your parents. Put yourself in their shoes. If they are financially independent and can pay for the utilities easily, your coming up to them to explain that you will stop paying the bills will not be an issue. I do believe they will be more willing to let you stop because they know you now have responsibilities as a married person. If, on the other hand, they were financially strapped for cash, then it would be natural for you to talk to your siblings and explain that they may also want to contribute.When you speak to your siblings, point out that a communal effort is needed to support your parents. Don’t make the mistake of focusing on your difficulty. You might not get the cooperation you desire if the discussion will focus on you, and not on your mom and dad.8. Tips in raising smart money kids.

Joe Ferreira is President of MoneyDoctors Inc., a personal finance consulting firm. He started his practice in 1990. he believes that all Filipinos have an equal opportunity to become permanently wealthy, if they are willing to integrate into their lives good money habits. August 2015

 

 

Emergency funds

Woman Dropping Coins Into Glass Jar
Woman Dropping Coins Into Glass Jar

“Where should I park my emergency fund? Can you recommend banks or instruments with the best interest rates?”

An emergency fund, by its very name, is supposed to be for emergencies. Hence, the key consideration should not be how much it will earn, but rather, how accessible it will be when an emergency arises. Consequently, it should only be placed in instruments that are easy to liquidate and access. In the Philippines, this would mean savings accounts, checking accounts, or time deposits.Ideally, it should be deposited in a bank that is near the depositor’s ome or office for quick access. It really does not matter how much the account earns, for as long as the owner can get the money when it is needed. Again, it must be emphasized that an emergency fund should not be expected to make significant amounts of money. Therefore, mutual funds, UITFs (especially those with holding periods), as well as the stock market, are not good places to park your emergency funds.

 

– Investment advisor Aya Laraya, MBA, has delved in everything from stocks, bonds and mutual funds to real estate and insurance. He created the TV show Pesos and Sense, to teach people how to grow their money using different types of financial instruments. He received his MBA from University of Western Australia,and teaches Economics at the Australian Catholic University. He also teaches corporate Finance at the Bradford College of England Executive MBA Program. April 2015

 

“How much should my emergency fund be, and where should I store it?”

The general rule of thumb is for emergency funds to be at least the equivalent of your living expenses for three to six months. This is to adequately prepare you for unexpected events like unemployment, illness or injury that takes away your ability to work, or any other unplannedd expenses. People with a substantial income or a profit margin can aim for two to three months of their living expenses. For them, there’s time to move money around before the entire emergency fund is consumed. Because of the very reason for which they have been created, emergency funds should be accessible and easy to withdraw. They should not be placed in volatile investments, as a market downturn can negatively impact the availability of funds.

Traditionally, funds are placed in a savings account, time deposit, or the money market. Then place the remaining four months of emergency funds in preferred shares or government bonds, or fixed income funds, which come with better yields and minimal risk, and at the same time are also very liquid.

Ofelia Tordesillas M.D. is a financial planner who promotes financial wellnes by structuring portfolios to help clients become permanently wealthy. She is a pediatrician by profession. November 2015

 

 

Loans/Credit cards

 savings-card

“I’m thinking of getting a housing loan to help out with our house payments. What terms should I look for?”

From your question, I understand that you already have a housing loan, which you want to increase. Loan terms are basically related to the loan amount, the number of years, and the interest rate.How much can you afford to pay for the house amortization every month? Once you’ve determined this, you can work backwards and compute the loan you can afford. You need to make an assumption on the interest rate, and this will depend on the institution you borrow from. Usually, the lowest rates are loans from PAG-IBIG Fund, ranging from 6 to 10% per annum.

Since you already have an existing housing loan, you need to check with your present loan provider if they can increase your loan, based on the current value of your residential property serving as collateral for your present loan. If not, you could offer other assets as additional collateral. If your current lender is still not agreeable to increasing your loan, you may be able to find a new lender to replace your existing creditor. other financial institutions may hav different loan policies, which may get you a higher loan amount that your existing loan.

Francisco J. Colayco is an entrepreneur, venture developer, and financial advisor, and the author of seven best-selling books. He is the founder of the Colayco Financial Education and the Kapatiran sa Kasaganaan Service and Multipurpose Cooperative. Visit colaycofinancialeducation.com for more information.October 2015.

 

 

“Is there any merit to getting credit cards that cater to a certain lifestyle, like those that double your gas points, or those that you can use to get frequent flier miles?”

Getting freebies like frequent flier miles or double gas points will always be a welcome thing. But these are freebies that should come as a real bonus without adding burden to your finances. If in settign your sight on these freebies you are led to spend beyond your budget just to earn extra points, then forget about them. The card should not take you out of your budget. Also, always remember to pay your credit card bills on time in full. Otherwise, interest payment and late charges can easily encounter the merits of these cards.

Ofelia Tordesillas M.D. is a financial planner who promotes financial wellnes by structuring portfolios to help clients become permanently wealthy. She is a pediatrician by profession. December 2015.

 

And there you have it!

Were they able to answer your questions? 🙂

 

 

 

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