Tag Archives: Cash loans philippines

Tanya’s Notes on Pisobilities

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Last week, Armand Q. Bengco, Executive Director of Colayco Foundation conducted the Pisobilities talk to the employees of the Bangko Sentral ng Pilipinas.  One participant, Tanya, shared with us a blog she wrote about it.

Notes on Pisobilities

I attended a talk by Mr. Armand Bengco yesterday on Pisobilities (Managing Personal Finance). He is a co-founder of the Colayco Foundation, a local firm advocating financial literacy towards financial freedom.

Mr. Armand’s presentation was lively and informative, esp. to beginners. But a financial literacy enthusiast like me was able to gain a few tips on refining my personal cash management.

Here are the tips I find useful:

1. Differentiate needs from wants. If you cannot persuasively justify the purchase as a necessity, it must be a want.

2. Develop your kids’ financial management skills. Only supply the necessities. Let them work/save/invest for wants. No class, no allowance. Instill in their minds that they will not get a single peso from you once they get married. If you can, don’t pinch in for the wedding expenses.

3. There are 3 realities common among Filipinos – first, most have little or no savings; second, many live from paycheck to paycheck, and third, many have too much debt. Debt is more than a friend that a foe. Filipinos should know that debt is a privilege and not a right.

4. Wealth is relative. Not only does the number of your relatives increase in proportion to your wealth (LOL), the definition of wealth varies from person to person. Being wealthy is not having to work to pay for your expenses/desired standard of living.

5. Personal finance management encompasses money (nauubos), income (natatapos, will stop) and wealth (can be accumulated; protect it; share it so it can generate more wealth).

6. On wealth management. In order to generate wealth, you have to earn enough, plan regularly, save prudently, spend wisely and invest wisely.

7. On savings. Try living on 80% of your active income and save/invest the rest. If you cannot do that, use your active income only for needs. Fund your wants with your passive income.

8. On debt management. The following are the rules of thumb in borrowing:
– 30-40% of your active income for a house
– 10-20% of your active income for a car
– business – borrow only if earnings can pay off debt
– education – only if it can be reversed (that is, you can pay it before the next school year)

9. Don’t borrow if: it has no purpose, it is merely a want, to pay off debt, beyond 40-50% of active income, for groceries/car expenses not paid on time, for education/emergencies, or to be given/lent to others (do not give what you do not have).

10. On investment. Have a clear purpose (need to be addressed), target (amount of gain) and timeline (length of time) when you are investing. Avoid losers/stay with winners. The higher the return, the higher the risk. Time is your friend so be patient. Think long-term (more than 5 years).

11. One typically overspends if with kids. So make sure to eat before oru leave the house. They should be full before you shop.

12. There are 2 types of investments: lend and buy (own). Lending involves instruments givng fixed, guaranteed, insured return (interest). In Philippine setting, they typically give 1-8% return annually. Buy investments are stocks, mutual fund, UITFs, fx/commodities, and real estate/landbanking. Returns are no guaranteed.

13. Choosing between lend and buy investments will depend on your age (50 yo and older ate safer with lend instruments), investment horizon (buy instrumenst are recommended if lookign at a 3 years and lonegr horizon), country of investment’s economic environment (if the economy is not good, stick to lend instruments), and investor’s personal experience (if you are good in stocks, invest in it even if you are retired).

14. Continuously hone your financial literacy skills. You can never control the winds but you can learn to adjust your sails.

Mr. Armand Bengco shared this wonderful motto of Ms. Gloria Romero “Let us not be afraid of tomorrow. We have seen yesterday. Let us make the most of today.”

 

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You too can learn all this and more on September 29, at the Pisobilities: Wealth Within Your Reach Seminar to be conducted by Armand Q. Bengco. For complete details get in touch with Renzie at 09178088857.

Powerhouse: Lechon Kawali Recipe

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This is definitely not one of our usual posts! Last Tuesday night, the show Powerhouse on GMA News TV hosted by Mel Tiangco featured my home and myself as well. In one short segment I shared my beloved Lechon Kawali recipe taught to me by a Singaporean chef. Soon after we got emails, FB comments and PMs and Tweets asking for the recipe…so here it is! It is a labor of love.

1.  Fore every 1 Kg Liempo (pork belly)
     Apply tenderizer;
     Marinate with:  20 gms oyster sauce;
                                  20 gms sesame oil
                                  20 gms shaoxing rice wine
                                  1/2 tsp pepper powder
     Marinate for a few hours in room temp.
2.  Oven: 4 hrs @130 C degrees
3.  Cool down with heavy object to flatten skin (suggest you place tray over meat with skin down side and place heavy object over tray), say for a good 4 hrs
4.  Chill in fridge over night still with weight over the meat (NOT FREEZER);
5.  Before serving next day, pre-heat oven 10 mins @200 C degrees
6.  Brush meat wtih oil then roast 20 mins at 200C degrees
7.  Take out and dry out with paper towel and brush again with oil
8.  Roast for another 20 mins @ 180-200C degrees for another 20 mins
     You may not want to over roast and have dry meat.  You can adjust above times for final roasting according  to your taste.
I suggest you serve boiled tomatoes with rock salt on the side.  Enjoy!

After the Rains

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Heavy and continuous rains have submerged many parts of Metro Manila in floods. Many of these areas do not normally experience floods. According to Inquirer.net, the accumulated rainfall for last Tuesday (August 7) was 472mm in 22 hours, while typhoon Ondoy in 2009 was only 455mm in 24 hours. The rains continued on to the following day, Wednesday, Aug. 8. Dams threatened to overflow, so waters were released. Rivers were at critical levels and evacuations were conducted for flood prone areas. Whether typhoon or monsoon rains, Metro Manila residents should be more conscious of being vigilant and prepared for calamities.

Whether you have been affected by flooding or not, keep the following five things in mind:

  1. Check and clear your home’s drainage system. A clogged drainage system will surely facilitate premature and sustained floodin.  There is a need to do periodic checks since floods contain not only water but silt, mud, trash, and other materials which can cause blockages in your drainage systems.
  2. 2.     Replace wooden portions of house to marine wood or other water resistant materials.  Take advantage of technology.  Building materials that have water resistant properties will fare far better compared to regular materials which warp and expand when wet.  Replacing these ordinary materials with flood resistant ones will be more expensive initially but the cost is far less than if you replace ordinary materials frequently. This will translate into savings in the long run.     
  3. 3.     Place belongings in sealed plastic bins.  Plastic bins float and keep belongings secure and dry. Out of all the plastic bins bought for our house, only one toppled over during this recent flood.  You can also tie them together so floatation will be more stable keeping water from seeping through. 
  4. 4.     Ensure the safety of vehicles.  Look for multi-level parking spaces nearby.  Some will charge a fee for overnight parking and some wont.  Regardless, a submerged vehicle will take several months to rehabilitate causing much hassle and a lot of lost productivity on your end.  Cost of repairs will very much likely reach six digits.  Resale value of affected vehicles significantly decline and buyers tend to stay away from these since performance of these vehicles will never be the same as before
  5. 5.     Ensure the safety of family members during floods.  The most expensive expense is the loss of a loved one due to the floods. Evacuate before your area is in the danger zone. Possessions and property can always be recovered, wealth can be rebuilt but once you are gone that’s it. Avoid wading in flood waters especially if you have open wounds. Leptospirosis is the leading cause of death due to flooding. Be wary of exposed electrical wires submerged in flood water.  This may cause shock since water conducts electricity.

We can only hope that there won’t be a next time. That calamities will not affect us however we cannot be sure. There is no guarantee that life will be smooth sailing. It’s better to be prepared than be caught off-guard.

A note from the editor – Guita T. Gopalan, Managing Director of Colayco Foundation: 

We at the Colayco Foundation remind everyone to Protect Your Greatest Asset! Having a complete protection basket at your disposal this will help tide you over financially in times of personal and natural calamity.

The basic things you should have are the following:

  1. Emergency Funds equal to 2 month’s income. Complete this in the next 3-6 months.
  2. Cash Reserves equal to 6 month’s income. Complete this in the next 2-3 years.
  3. Insurance for yourself – Life insurance and medical/health insurance
  4. Insurance for your property – Car Insurance, House Insurance

The more prepared we are the faster we can recover from unforeseen situations both personal, economic and natural.

Victor S. Cruz is a Financial Wellness Advocate of Colayco Foundation. He is a former Project Officer of Colayco Foundation. At present he is an educator who focuses on teaching stock market decision support systems. He also works as a sales executive and tests new business systems. He actively manages his investment portfolio consisting of equities, mutual funds and cooperatives, particularly KSK Coop and Ahon sa Kahirapan.
 

 

Personal Finance for Engaged Couples

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I received an email about why the wedding ring is worn on the fourth finger. We have five fingers.

– The Thumb symbolizes our parents.

– The Forefinger symbolizes our siblings.

– The Middle Finger symbolizes ourselves.

– The Ring Finger symbolizes our spouse.

– The Little Pinky symbolizes our children

Put your hands and fingers together as in prayer. Then, fold your middle fingers inward so that the outside of each knuckle touches each other. Keep the tips of the other fingers touching each other. While making sure that the middle fingers continue to be folded touching, try moving the other fingers:

– You can move your thumbs showing that your parents can leave you.

– You can move your forefingers showing that your siblings can leave you.

– You can move your pinkies showing that your children can leave you.

– But try moving your ring fingers and you can’t.

Marriage is permanent but while you are not yet married, this article might prove useful for you.

We all know that the engagement period is the time to really get to know each other before marriage. But couples who become engaged seem to think that they cannot break the engagement, if necessary. Should the couple see “substantial differences” in thinking, this period is the time to understand those differences before they become “irreconcilable differences”, which become the reason for many separations and annulments. Do not believe that you can change your partner once you are married. For most, the marriage makes the partner even more fixed in his/her ways.

So many engaged couples are embarrassed to discuss money matters before they get married. Based on my experience, if you cannot discuss financial matters with your loved one before you get married, it is almost inevitable that you will have problems related to financial matters during your married life. It is not the amount of money that you have that matters but what you intend to do with it and how you expect to manage it. You could be very lucky and have all the money you will ever need until you retire. However, nothing is sure in this world and all of that could easily be lost with wrong management of finances.

YOUR VIEWS ON MONEY

Many times, the family environment you grew in will dictate your reaction to money. One of you may be always saving or even downright stingy and the other might not care about money and may even be a spendthrift. During the courtship period, your real personalities may not be immediately obvious since you are trying to show your best side. I suggest that you tell each other frankly how you view money. Ask each other how you will view your success and the role of money in that success. If it turns out that your ideas about finances are not compatible, both of you will have a better understanding on how to accept each other for what you are or to agree on how you will both overcome the differences. There is also the option to postpone the marriage or cut the relationship if the issues are truly irreconcilable and you can see that love might not be enough, in the long run.

AGREE ON YOUR LIFESTYLE

Understand how much money and also how much debt each of you already have. If there is debt, you have to agree on how it will be paid. Be open about how much each of you earns and what you expect to be spending as a married couple. Do not leave the decision of what to spend on a day-to-day basis. This could lead to unnecessary misunderstandings on how much each should be spending on specific items. Having a budget will help you agree on the kind of lifestyle you should live to be able to reach certain goals. For example, you can aim to have a car within a year, a house within five years etc.

Having children is also another matter that has to be discussed in relation to finances. How you raise your children will depend on the time you will have. If both of you have to work for your chosen lifestyle, obviously, you will have to share the raising of your children with yayas or your parents.

HOW WELL DO YOU UNDERSTAND PERSONAL FINANCE

As I have seen time and again, parents and schools rarely teach personal finance. Even finance students and employees do not know how to manage their personal finances. They may be very good in their theoretical studies and in their actual jobs related to finance but that is not what personal finance is all about.
I have many friends who give my books as wedding presents. I am happy that the couple will have some guidance during their married life but it would have been better if they had been given the books before or when they became engaged. The books will help them understand how they can save and grow their savings. With these books, they can discuss and mutually agree on the type of investments they would choose both for the short-term and for the long-term. You can also join our Pera Palaguin Seminars that we hold regularly.

WHO WILL BE RESPONSIBLE FOR KEEPING THE MONEY

Even if financial wellbeing is a joint undertaking, one of you has to be responsible for:

– Staying within the agreed budgets. Informing the other when there is any possible deviation foreseen.

– Keeping track of all important documents and records such as your marriage license, passports, Income Tax Returns, insurance policies, investment certificates, etc. Decisions on Insurance, Investments and Income Tax Returns filing should always be done jointly in consultation with experts.

– Properly maintaining and balancing all bank accounts to prevent penalties and not allow cash idle without earning any interest. The matter of keeping joint or separate accounts or a combination of the two is a choice that the couple should agree to. They should be open with each other with their reasons.

Of course, these activities can move from one to the other, say one year each. This way, both of you learn and have a good understanding of your financial situation. This is especially important in case of emergencies where one is not available.

WHO WILL PAY FOR THE WEDDING

There used to be a rule where, in the Philippines, the groom’s family pays for everything and in the United States, the bride’s family pays for everything. Today, the best solution is for the couple to pay for everything. The families of both the groom and the bride can give whatever monetary gift they can afford. From the gift, the couple can decide on how much they want to spend for the wedding itself.

I always admonish couples not to spend too much on their wedding day. It is only one day and they have the rest of their life together to look forward to. The rest of their life together is definitely more important. They should not try to keep up with their friends who got married before them. Parents should respect the decision of their children.

COMMIT TO DISCUSS MONEY REGULARLY

Differences are inevitable. Work on a program of continuing discussion and communication with an open mind and sincere heart. Bring in an objective and experienced financial adviser if your differences seem to be major. This is key to your long-term financial compatibility.

Masaganang Buhay sa Kabila ng Pagtaas ng Presyo

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Pinakamalapit na usapin sa bawat isa sa atin ang patuloy pagtaas ng presyo lalo na ng mga pangunahing bilihin —-ito ang tinatawag na implasyon (inflation) sa ekonomiks. Maituturing na direkta ang atake nito sa ating pang-araw-araw na buhay lalo na kung hindi naman kasabay na tumataas ang ating kita. Paano nga ba natin maaalpasan ang epekto nito at masisiguro na maging masagana ang ating buhay?
 
Bakit Malaking Usapin ang Implasyon?
Sa bawat pagtaas ng presyo, nababawasan  ang kakayahan ng ating salapi na bilhin ang dati nitong kayang bilhin. Halimbawa, kung ang iyong P 100 ay nakakabili ng 5 kilo ng bigas sa presyong P20 kada kilo ay hindi ka na makabili ng kaparehas na dami  ng ito ay maging P 25 kada kilo. Apat na kilo na lamang ang kakayaning bilhin ng iyong hawak-hawak na isandaang piso. Ito dahilan kung bakit  bantay na bantay ng bawat isa sa atin ang bawat paggalaw ng presyo.
 
Sinu-sino ang  mga apektado ?
Kung isa kang fixed income earner na walang kasiguruhan kung kailan tataas ang sweldo ay siguradong apektado ka! Walang pagbabago sa iyong kita samantalang kumukonti ang iyong nabibili ng dahil sa implasyon. Kaya talung-talo ka kung di rin tataas ang iyong sweldo.
Ganundin sa mga nag-iipon,tabi ka ng tabi  ng salapi  na ang  akala mo sa pagdaan ng panahon ay lumalaki. Subalit ng magkaroon ng 10% na implasyon ay nabawasan  ang kakayahan nitong makabili ng 10%. Ang dapat lumaking ipon ay lumiliit ang “tunay na halaga” ng dahil sa implasyon.
Apektado din ang mga nagpapautang! Ang babalik kasi sa kaniya ay mas mababa sa tunay nitong halaga kung ikukumpara dati nitong kayang mabili! Higit na problema kung ang inflation rate ay mas mataas kaysa itinakda nilang interest rate. Talo ang negosyo!
Paano tatalunin ang Implasyon?
Sa librong PISOBILITIES ni Francisco J. Colayco , ang annual average inflation rate sa ating bansa ay nasa 5.5%. Ibig sabihin ay 5.5% din ang nabawas sa kakayahang bumili (purchasing power) ng ating salapi. Para talunin ito ay kailangang tumaas ang ating kita ng higit sa 5.5%. Kung pantay ang pagtaas , atleast nakatabla tayo!
Kaya mahalagang mabantayan ang inflation rate.
Kung ikaw ay nagpapautang, dapat isaalang-alang sa pagtatakda ng interest rate ang galaw ng implasyon.
Sa mga fixed income earner, dagdag sipag ito at paghahanap ng sideline para makabawi. Hindi maaaring iasa lang sa pagtaas ng sahod. Dahil kung tila bagyo sa pagbuhos ang implasyon ay tila ambon lang sa dalang ang pagtaas ng sahod.  Mahalagang usapin na makapagsimula ng kahit maliit na negosyo na maaaring panggalingan ng dagdag na kita!
Masuwerte ang mga may ipon dahil malaki ang oportunidad na talunin nila  ang implasyon. Iba na ang may ipon, may maipapamuhunan! Napakaraming investment instruments na pwede nilang lagakan ng kanilang ipon na lilikha ng passive income tulad ng mutual fund. Mga pamumuhunan na kung saan ay kikita ng mas mataas sa inflation rate ang inyong ipon kaysa simpleng ilagak ito sa savings account sa bangko. Kailangan lang na masusi nating pag-aralan ang mga ito at makapag-invest ng mas mataas sa  inflation rate ang kita. Maaari itong matutunan sa pamamagitan ng pagbabasa ng mga libro at pagdalo sa mga seminar hingil sa financial wellness.
Isa sa mga dapat basahin ay ang mga libro ni Francisco Colayco at pagdalo sa mga INVESTability seminars ng kaniyang foundation.
Kakayanin nating talunin ang implasyon! Kailangan lang ng tamang pamumuhunan!

Melchor V. Cayabyab is an educator, an entrepreneur, and a Financial Wellness Advocate of Colayco Foundation. He has been teaching economics for more than ten years now. He was awarded the “Most Outstanding Teacher of Manila” in 2003. As an entrepreneur, he is a successful distributor of different food supplements. Last year, he established “AHON SA KAHIRAPAN”, a micro-lending cooperative that aims to lend money with very low interests and at the same time help its members learn how to manage their finances properly.

KOOPERATIBA: Ang Ating Kapatiran sa Kasaganaan!

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Likas sa ating mga tao ang makisalamuha, makipag-ugnayan at makipagkapatiran. Sa ganitong kadahilanan kung bakit ibat-ibang samahan ang itinatatag natin depende sa ating pangangailangan, interes, propesyon at iba pa.

Bawat samahang itinatayo ay nagtataguyod ng mga layunin. Kapuna-puna na ang karamihan sa mga ito ay kung paano magkakatulungan ang bawat kasapi nito. Isa sa mga natatangi rito ay KOOPERATIBA bilang isang kapatiran para sa kasaganaan.

Ano ang KOOPERATIBA?

Ang kooperatiba ay samahan ng mga taong nagkaisa at nagtutulungan upang matamo ang kanilang layuning pangkabuyahan. Sama-sama ang mga ito sa pag-iimpok at pag-aambag para sa kailangang puhunan at tanggapin ang tamang hatian ng mga kapalaran (risks) at mga kapakinabangan (benefits).

Maituturing itong pagbabakas-bakas ng mga tao ng kanilang hindi kalakihang impok upang makapaglunsad ng isang mapagkakakitaang gawain. Mga impok na kapag pinagsama-sama ay naging isang makapangyarihang puwersa upang kumita. Ang aking P1,000 ay mahihirapang mailunsad sa isang matinong negosyo subalit kapag ito ay ibinakas sa 99 na kaparehas na halaga ay magiging P100,000 ito na maaaring pagsimulan ng isang matinong negosyo.

Ito ang tinatawag ni financial wellness expert na si G. Francisco Colayco na kapangyarihan ng pagiging isa (Power of One). Magiging malaki ang kalat-kalat na maliliit kapag pinagsama. Magiging makapangyarihan ang mahihina kapag pinagsama.

Benepisyo sa Kooperatiba

1. Pagtanggap ng Dibidendo
 Dahil bumakas sa puhunan, kahati din sa kita ng negosyo. Bawat kasapi ay tatanggap ng bahagi sa kita ng kooperatiba na tinatawag na dibidendo. Ang laki nito ay depende sa laki ng kinita ng kooperatiba at laki ng ambag sa kabuuang puhunan.

2. Nagkakaloob ng hanapbuhay
Bukod sa dibidendo ay mataas ang potensyal na mabigyan nito ng trabaho ang kaniyang mga miyembro lalo na ang mga nasa linya ng produksyon.

3. Mas murang halaga ng produkto at serbisyo.
Bilang kasapi ng kooperatiba ay karaniwang may diskwento sa mga produkto at serbisyo. May mga ilan namang nagbibigay ng patronage refund sa pagtangkilik ng mga miyembro.

4. Access sa pautang, pagsasanay at iba pa.
Karamihan ng mga kooperatiba ay nagpapahiram ng ibat-ibang uri ng pautang sa mga kasapi nito sa mas mababang interes. Nakakahiram ang mga kasapi ng puhunan para makapagsimula at makapagpalaki ng sariling negosyo. Kasabay nito ay pagbibigay din nila ng pangkabuhayang pagsasanay at iba pa.

Batay sa mga benepisyong nabanggit, hindi mapapasubalian na ang pagsapi sa kooperatiba ay isa mga landas na posibleng tahakin natin tungo sa pinapangarap nating kasaganaan. Nasa ating pagsasama-sama at pagtutulungan ang ating kasaganaan!

Melchor V. Cayabyab is an educator, an entrepreneur, and a Financial Wellness Advocate of Colayco Foundation. He has been teaching economics for more than ten years now. He was awarded the “Most Outstanding Teacher of Manila” in 2003. As an entrepreneur, he is a successful distributor of different food supplements. Last year, he established “AHON SA KAHIRAPAN”, a micro-lending cooperative that aims to lend money with very low interests and at the same time help its members learn how to manage their finances properly.

Communication as a Need

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Remember those days when beepers ruled the land. One needed to call an operator and give the message. The operator would send a set of numbers that the beeper (receiver) would somehow understand when read. Eventually this proved inefficient as messages that were often garbled or mixed up by the operators.
A few years later, the privileged had access to the “refrigerator” type cell phones. Yes to those born in the 90’s, cell phones didn’t always fit the size of your palm nor did it fit your pocket. Motorola dominated this era and Nokia wasn’t available yet in the Philippine market.
But now we have a multitude of mobile devices available. It seems difficult to even imagine yourself without a cell phone. Some individuals today carry more than 4 units, varying in brand, model, function, network provider, etc. Text messaging is such a big industry here that we remain the undisputed texting capital of the world.
The changes in technology highlight one thing: clearly there is a need to communicate. The question I would like to present  to you is: how much do you actually need to spend on it?

At present Juan dela Cruz spends a significant portion of his money on load or communications expenses from simple texting and calling to mobile internet services.  Prior to all these technological advances, costs were minimal (think posting letters and telephone service). Granted that time is the most expensive resource, one would need to spend for paper and postage if a letter was written, or a cup of coffee for a conversation.
Those of us who remember days gone by, remember these things with fondness as they are filled with much meaning and emotion especially when compared to Php7/min. calls and Php1/SMS. (We’re not even considering the cost of the mobile device).
Imagine how much you can save monthly if these usual forms of communication were reduced. But then again, one can argue that there are “unli” promos that give you a bang for your buck. However think again, re-evaluate your actual monthly consumption. For all you know, it could be that you are not able to fully utilize unlimited services. Or if you are an avid user of mobile services and you aren’t using these unli promos, look at what is  available as you might spend less by taking advantage of it.
Most phones have minute trackers and text counters so it’s not like you’d be jotting down numbers after every call or SMS. Compare this with how much you spend on a daily, weekly and monthly basis. If most of your calls are to family members-spouse or children, consider switching to shared plans which allow for unlimited calls/texts or share minutes. Every peso saved matters! It could be the peso that kickstarts your journey to wealth or the peso that finally gets you out of debt.
Use communication to your advantage and spend wisely on it. More importantly encourage your children and young people to be prudent in spending for communication because unlike us, they don’t remember the age where mobile phones and the internet didn’t exist. To them this is normal – for them communication and being on-line are a necessity. Free yourself from the pressure to respond to every text message, phone call and email the second you get it. You have time 🙂
Victor S. Cruz is a Financial Wellness Advocate of Colayco Foundation and a former Project Officer of Colayco Foundation. At present he is an educator who focuses on teaching stock market decision support systems. He also works as a sales executive and tests new business systems. He actively manages his investment portfolio consisting of equities, mutual funds and cooperatives, particularly KSK Coop and Ahon sa Kahirapan.

Reaction to Worrisome Savings Data

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One of yesterday’s Business World Online articles entitled: Statistics agency cites worrisome savings data elicited discussion in Colayco Foundation. Here’s some of our insights:

Guita T. Gopalan, Managing Director

In the Colayco Foundation’s many years of advocating financial literacy and financial freedom, we have observed that the savings problem affects all income classes regardless of  whether they are earning six figure incomes or are living on a street sweeper’s salary.

Through the generosity of partners, we at Colayco Foundation are able to give training to low income earners: factory workers, tricycle drivers, janitors, etc. In these events we have noted that despite very limited income, families spend for recreation. In many cases, we’ve found families neck deep in debt but still spending on ‘wants’. While in terms of ratio, recreational spending is small compared to spending on necessities, it is a behavior which keeps them in a cycle of debt and financial insecurity.

The most alarming reality is that the financial behaviors of low income households are pretty much the same with their middle and high income counterparts. There is a savings problem, a huge debt problem and ultimately an inability to achieve wealth among Filipinos.

Armand Q. Bengco, Executive Director

Savings is a habit – a repetitive action. And just like any good habit – it’s very difficult to start in the same way that it is difficult to start exercising, eating healthy, stop smoking, etc. Why is that so? Because the benefits of saving take time to manifest, the myth of instant wealth and easy money remains alive. The notion that saving is depriving oneself further deters Filipinos from saving. It’s a big contrast to spending on recreation or consumer goods which give immediate but short-term satisfaction.

I remember my own personal struggle to take hold of my personal finances beginning 9 years ago: I was heavily in debt, a limited income and with a family of 4 to support. What finally convinced and motivated me to start saving was when Mr. Colayco said “If you can not do everything, why you do nothing? Start with something!” And it hit me! I can start small – save what I could and increase it when it’s reasonable to do so. I may not be wealthy YET, but I’m getting there one step at a time. This is the mindset and commitment I want to share with everyone.

This is the work of Colayco Founation to motivate and encourage Filipinos to take a hold of their personal finances – to Be GOOD: grow out of debt, to actively embark on their Wealth Journey, to explore their PISObilities by developing their InvestAbility and to being fully InvestEd in their obligation to be wealthy. We also develop an environment which encourages Filipinos to be financially responsible in tandem with financial institutions, government, the private sector and educators.

Through saving and investing, a Filipino’s dreams can become reality. By saving Php33 a day Filipinos could grow their money to Php2.1-5.7 million in 30 years and even as much as Php94.7 million in 40 years. Imagine that!

Mary Anne B. Colayco, President

I have three points on the reason brought forward by those who save less.

  1. The costs of living are higher but income is not commensurately higher…ergo, less savings.
  2. Spending for vices (alcohol, gambling, drugs, unnecessary shopping, clubbing, etc) like opium… drown out their pain.
  3. It is also possible that good education has become too expensive. And that over all there are fewer chances of getting jobs, especially good ones, with mediocre education.  So why spend on education?

No matter how real these points are to some people, it still doesn’t negate the importance for each to overcome the difficulty of saving.  Follow the formula INCOME minus SAVINGS equals EXPENSES.  Even if the savings are less for the reasons stated, continue and invest over a long term basis.

Francisco J. Colayco, Chairman

This is simply a validation of a mindset of ” induced helplessness”, i.e ” eh kulang na rin lang, gastusin na and enjoy.” It is also an indictment on staying within one’s comfort zones and not exploring new ways to improve one’s lives. Perhaps, it is still a manifestation of the mindset of entitlement vs the mindset of achievement: “asa sa iba; hindi sa sarili.” Additionally, so many have fallen to become losers. They may have developed this habit of losing as a result of utter dependence on others other than themselves.

Investing in a Sari-sari Store

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A favorite business of OFWs and their families is the sari-sari store where the capital required is very low.  For just about any amount, and a property that opens up to a street or pathway that is frequented by people, one can open a sari-sari store.  In fact, many stores are just a small room in their home with a barred window that opens out to the street.

What will make a sari-sari store successful?

Because of the numerous sari-sari stores located beside each other, it seems unbelievable that any of them make money.  In fact, a few make money but others end up just selling their inventory to get back their cash.  Some even just use up their inventory for their personal needs so that these do not rot.  Many don’t even know if they make money or not.  They just don’t seem to be running out of cash for their business so everything must be okay.

The required inventory capital can range from PhP10,000 and more.  There may be costs for permits and fees for the barangay depending on the practice in your area plus of course any renovation you may need to convert your place to a store.  A successful Owner said that if you want significant earnings, no less than PhP50,000 inventory capital is needed.  Examining the margins that storeowners add, it seems that 20% is a good average.  Assuming you can turn-over your inventory at least twice in one month, then you can have a gross profit of anywhere from PhP2,000 to PhP10,000 per month.  You can add to your inventory as you become more successful.

To compute your net profit, remember to deduct your allowance for your storekeeper or “Bantay”, your transportation costs to purchase your inventory and your electricity, if you have a refrigerator/freezer.

It seems that the three most important factors for success in a sari-sari store are pricing, customer relations and inventory control to make sure that your earnings are not fictitious.

Pricing

All sari-sari Owners say that they check out the competition in their area to determine their selling price.  If they are all checking each other out, it must be the oldest store in the area that sets the benchmark then.  However, each owner does not necessarily follow the benchmark.  Each has a reason to sell higher or lower than the benchmark.  For example, some owners have a source where they are able to purchase at a much lower price than the regular wholesalers and supermarkets. Others believe that they can price higher because they have a better location or better service.  However, I doubt that this will be a good long-term strategy as purchasing power worsens with the cost of oil and gasoline going up.  People will walk the extra mile to get the best value for their money.

Customer Relations

Nobody likes dealing with a grouch.  Foreigners always say that Filipinos are happy and smiley people.  Let’s be happy and smiley to our co-Filipinos too, not only to the foreigners.

It is always good to be in touch with the needs of your customers.  If you know what else they would buy that you don’t yet have available and what price, tell them that you will make sure you have it on the date you are sure you will have it.  Don’t make promises you won’t keep.

Inventory Control

Very few do this as they consider it a waste of time considering the many items in small quantities.  However, it is just a matter of setting up the system and everything else can be done automatically.

The Owner has to set a day for inventory of all items to be sold.  For each item in the store, have a stock card (can actually be a piece of paper).  The stock card has columns for Date purchased, # of units, price/unit, total price, Date Sold, # of units, selling price/unit, total price and Balance # of Units.

The Owner makes the stock cards for each item giving the correct description for easy alphabetical filing and fills up the Date purchased, # of units, price/unit and total price.  The cards are filed alphabetically in a box for easy retrieving.  Each time an item is sold, the “Bantay” picks up the correct card, fills up the Date Sold, # of units, selling price/unit and sets aside the stock cards that he/she filled out during the day.

At the end of each day, the Owner then checks the stock cards that had a sale and fills out the Total Price and Balance# of Units columns.  All the stock cards are then returned to the same box alphabetically together for the next day.

Once a week or at least once a month, the Owner has to make a total inventory to make sure that the Balance# of Units column for each item matches.  This way, the Owner knows his /her profits plus he keeps the bantay honest.

Here are a few more tips:

1)      Have a good bantay you can trust, preferably one who can read your alphabetically arranged stock cards and can write the date and # of units sold.  The bantay should understand the system and know that he/she will be checked.  This should help in reducing the temptation to be lax or to give away products.  Make sure you do the checks; otherwise your system was a total waste of time.  If you or your child is computer literate, this system can easily be done on your computer.

2)      Canvass where purchase costs are cheapest and plan your trips to reduce transportation costs.  Some suppliers, particularly those with unbranded products, are willing to deliver.  Look for them.

3)      If you have a refrigerator or freezer, sell refrigerated items at a premium over the regular items to cover the electricity cost.

4)      Try not to sell on credit but if you do, add a premium and set a credit limit per customer depending on how well you know him/her.  Collect within a week.  Stop all sales if not paid on time.

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Whether you are an entrepreneur or an employee, personal finance skills and knowledge are necessary for your financial success. Learn more by joining our upcoming seminars:

PISObilities: Wealth Within Your Reach

July 7, 9am-12nn, Pasig City

INVESTability: Mutual Funds

July 7, 2pm-5pm, Pasig City

Contact 6373731, 5024590, 09178088857 or email renzie@colaycofoundation.com for inquiries and to avail of our early bird discount.

Makabuluhang PANGUNGUTANG

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Makabuluhang PANGUNGUTANG: Ang Ating Paningga sa Kasaganaan

A guest post by Financial Wellness Advocate Melchor V. Cayabyab

“Give me a lever long enough and I could move the world.” – Archimedes.

Ang “pingga” o lever sa ingles ay mga kasangkapan na nagagawang pagaanin ang anumang bagay,  gaano man ito kabigat,  na nais nating ilipat, iangat o di kaya ay kuhanin. Dahil sa paggamit nito, mas nagiging mabilis at mas marami ang ating nagagawa.

Sa ating pang-araw-araw na buhay, ang pingga ay ang mga tulong na nakukuha natin mula sa ibang tao, samahan o maski sa pag-unlad ng  teknolohiya na nagpapagaan at nagpapataas ng kalidad ng ating pamumuhay. Ito ang ating  mga paningga o leverage na ating ginagamit upang pagaanin ang ating buhay.

Sa usaping pinansyal, ang paningga ay  ang mga ginagamit natin upang mapabilis ang pagpapalago ng ating salapi. Ito ang makakatulong sa atin para makapagsimula ng negosyo o di kaya ay mamuhunan sa kabila ng kakulangan ng ating impok at ari-arian. The concept of leverage is all about achieving ever more with ever less.

Pangungutang Bilang Paningga

Isa sa mga pwede nating magamit bilang paningga sa ating buhay-pinansyal ay ang pangungutang. Ito ang paghiram ng pera ng ibang tao para ipantugon sa ating ninanais gawin. Sa pamamagitan nito ay nagagawa nating alpasan ang usapin ng kakulangan ng salapi. Ito ang ginagamit ng mga negosyante upang magsimula  at/o  palawakin ang operasyon/produksyon ng kanilang negosyo upang magkaroon ng mas malaking kita. Ika nga nila “kung wala kang sapat na pondo at may magandang ideyang pagkakakitaan ay gamitin ang pera ng ibang tao.” Subalit …tulad ng iba pang paningga, ito ay “double-edged sword” . Makakatulong ng malaki kung tama ang diskarte subalit ilulugmok tayo nito kung magiging mali ang ating paggamit tulad ng karanasan ng maraming lubog sa kumunoy ng pagkakautang.

Makabuluhang Utang

Upang  maiwasan ang panganib ng pangungutang bilang paningga ayon sa personal finance expert na si Francisco Colayco ay mahalagang maunawaan ang konsepto ng GOOD DEBT at BAD DEBT.

Good Debt: Ang pagkakautang kung ito ay ginagamit sa pagtatayo at pagpapalawak ng negosyo, pamumuhunan o anumang gastusin na makapagpapataas ng ating kita. Sa madaling salita, ito ang utang na ginagamit upang palaguin ang ating yaman.  Mangyayari lamang ito kung ang kikitain sa paggamit ng pera ay mas mataas kaysa babayarang  interes sa inutang na pera.

Bad Debt: Ito naman ang inutang na ginamit sa karaniwan, buwanang gastusin at mga luho ng hindi dahil sa emergency. Pinakamasama rito ang inutang para ipantustos sa luho, pambili ng mga gadgets para makasabay sa uso at iba pang kahalintulad. Hindi na nga nakapag-ambag sa pagpapalago ng ating yaman, ilulugmok pa tayo nito sa pagkakautang na  kumakain ng malaking bahagi ng ating kita. Ang dulo, magiging siklo (cycle) sa atin ang pangungutang. Mangungutang para ipantustos sa nawala sa atin bunga ng pagbabayad utang at mangungutang para ipambayad utang.

Mga Paalala sa Pangungutang

1. Piliting magbayad lagi ng cash. Tandaan na ang interes na babayaran ay karagdagang gastos dahil  bawat pangungutang ay may kaakibat na bayaring interes. Manghiram lamang kung kailangan.

2. Huwag na huwag mangungutang para sa luho.

Walang masama sa panghihiram ng pera. Nagiging mali lamang ito kapag ito ang hiniram ay hindi nakapaglilikha ng karagdagang kita. Pinakamali kung ipantustos lamang sa luho.

3. Mangutang lamang ng  kayang bayaran. Bago mangutang, alamin muna kung kakayaning bayaran ang obligasyon (prinsipal at interes) ng hiniram na pera. Never assume that you will always have your present job. Kapag nalubog kasi tayo sa utang ay malalagay sa alanganin ang ating reputasyon at nagiging masikip ang mundo natin sa kaiiwas sa ating mga inutangan.

4. Huwag paabutin na 30% ng inyong buwanang kita ay mapupunta lamang sa pambayad utang. Ayon sa mga eksperto, sobra na ang pangungutang kung lalagpas sa 30%. Magiging mahirap ng matugunan ang ating mga pangangailangan. Malaki ang panganib na mabilanggo sa siklo ng pangungutang.

5. Piliin ang utang na may pinakamababang “effective interest rate”. Mahalaga na malaman kung paano kinokompyut ang interest ng ating inutang. Posible kasi na hindi pareho ang interest rate na sinasabi sa iyo sa aktwal na interest (effective interest rate) na babayaran.  Mas mataas  ang effective interest rate kapag ibinawas kaagad ang interest sa matanggap na halaga ng inutang. Piliin din ang interest on amortizing principal – ang interest ay nakabatay sa balanse ng prinsipal sa buwan.

Iilan lamang ito sa mga paalala ko tungkol sa wastong pag-gamit ng utang. Gamitin ang ating mga paningga upang makamit ang kasaganaan! Para sa dagdag na kaalaman, samahan kami sa July 7, 2012 para sa Pisobilities: Wealth Within Your Reach seminar.

Melchor V. Cayabyab is an educator, an entrepreneur, and a Financial Wellness Advocate of Colayco Foundation. He has been teaching economics for more than ten years now. He was awarded the “Most Outstanding Teacher of Manila” in 2003. As an entrepreneur, he is a successful distributor of different food supplements. Last year, he established “AHON SA KAHIRAPAN”, a micro-lending cooperative that aims to lend money with very low interests and at the same time help its members learn how to manage their finances properly.