Savings Up!: Tips on Money Management
abs-cbnNEWS.com | 02/17/2009 2:20 PM
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Time and again, we have reneged on our New Year’s Resolution that this time we will save up and avoid spending on unnecessary expenses. However, such vows only fall short of realization. In this day and age, there are a thousand and one ways to spend one’s money and another to save it.
Contrary to the belief that money is the root of all evil, Eric Barroquillo, Senior Manager and Head of Field Sales Force Department of Bank of the Philippine Islands (BPI) deems otherwise. In Shop Talk’s episode “Basics on Saving” on ANC, he says that what you do with money makes it good or bad. He added that 95 percent of Filipinos are broke or suffering from financial crisis.
With the aim to orient Filipinos on the proper habits to develop financial independence, BPI shares the stages in one’s financial life and financial goal setting. First is the Formation Stage wherein a person in his early 20s carefully lays foundation for financial growth. The second is the Accumulation Stage wherein an individual starts to invest on a property for his family. The Consolidation Stage on the other hand is when one gathers and pulls together all he has acquired for the future. The last stage is the Disposition Stage wherein a person leaves his assets to his family and peers.
In connection with the last stage of financial goal setting, Baroquillo puts an emphasis on saving for the future. Some years down the road, one will undergo retirement and in the midst of economic meltdown, one has to save money. Baroquillo says, “Save when you have money, not when you don’t”. People only realize that they need to put aside money for more important use only when they run out of it.
The term ‘hidden wealth’, that is unknown to many poses as a threat to most people who are having difficulties with financial management. A perfect example would be a visit to a high-end coffee shop. A 125-peso worth of coffee would go a long way when spent regularly -- a month’s expense could shoot up to a value of a mobile phone.
Baroquillo is vigilant in his belief that savings should be a habit. He also encourages employees to save a portion of their income on a monthly basis to exercise the value of keeping and earning money at the same time.
BPI creates a program called BPI Save-Up Account designed for employees to inspire them to save money. BPI Save-Up Account works by transferring money from an employee’s payroll to his personal account.
Alvin Tabañag, registered financial planner and author of the book 12 Steps to Build Wealth on Any Income, also shares his standpoint on financial independence. In similar vein, Tabañag believes that other than going to expensive cafes, people should also try to lessen or totally eliminate vices. A 35-peso worth of cigarette pack could not only contribute health hazards but also a major rip in the pocket.
To advance people’s critical view on money management, Tabañag discusses the 4-Way Test of Spending. The first question that one should ask oneself when buying something is:
- Do I really need this item? If you are in dire need or you can see yourself using the item for six months or longer, then one should proceed to the next question:
- Can I afford to pay it in cash even if I don’t charge it? Either credit or cash, you should consider the consequences of purchasing the item.
- Do I already have something that serves the same purpose? If you think that you already own something that works for the similar function as the item, you can dismiss the idea of buying.
- Have I found the best value for the item? If you sense that your item of choice proves the best price and quality for your money then go for it, otherwise your decision might make serious repercussions in the long run.
Learning to set aside cash for emergency and future purposes, making intelligent choices and letting go of vices and unnecessary spending could serve as jumpstart to a positive money management. With useful tips from financial experts, it could be a breeze to grapple with the time’s economic strain. -- MIKI ESPE, abs-cbnNEWS.com
