5 Financial Advice every Filipino Professionals Should Know

5 Financial Advice every Filipino Professionals Should Know

It seems like it was just yesterday when you just graduated from college, now you are a working professional. You already earned your first income and you can now afford the things you wanted when you were younger. After spending your first income, have you ever wondered what you should do with your next pay check?

5 Financial Advice every Filipino Professionals Should Know

Our school did not teach us how to spend our salaries, as a result most professionals will end up indebted and broke. So, based on my research for a few years the following are 5 Financial Advice every Filipino Professionals Should Know:

5 Financial Advice every Filipino Professionals Should Know

1 PAY YOURSELF FIRST- Before spending your monthly income, keep 20% of that amount for yourself. Some professionals will go shopping and whatever is left by the end of the month goes to their bank account. This should not be the step that you should take. This will also apply to professionals who spend for their family, before giving to your family keep the 20% to yourself. It may sound selfish but there is a reason why you should save first. Open a bank account separate from your main bank account where you will put your savings. This way you will not mix your savings with your money for expenses.

The formula of your spending should be:

2 STOP LIVING FROM PAYCHECK TO PAYCHECK- Most professionals fall in this trap, they stretch their monthly salary until the next pay day. If their salary was delayed, they panic because they could not pay their bills on that month. They end up being buried into debt and pay lots of interests. This should not be your lifestyle.

5 Financial Advice every Filipino Professionals Should Know

How do you stop living from paycheck to paycheck? Start with learning how to budget and set aside a one month pay which will cover a month before your paycheck. Use your 20% savings to create a one month advance payday. It will be difficult at first to save for a month’s salary but this is a must. It may take you at least 6 months to save for a month’s advance but it is worth it.

What it’s like to not live from pay check to pay check?

What it is like to live from Paycheck to Paycheck

3 TRACK YOUR EXPENSES AND SET UP A BUDGET – This is important if you want to live without bad debts. This will prevent you from spending more than your pay check. Setting up a budget takes time, the first step in setting up a budget is knowing how much you spend every day. You can use apps like moneylover to record your day to day expenses. Record how much you spent during lunch time, your transportation, money you hand over to charity, and all other expenses regardless of amount. List down all your regular bills and obligations such as electricity, internet, and subscriptions. Take note of all irregular bills and include them in your list of expenses. Now that you know how much you need each month, it will be easier for you to set aside the amount you need.

Example of Monthly Budget: 16,325

Use the envelope system to separate your budget. Use different cash envelope for each category. I use the brown coin envelopes to separate my budget. I then deposit the savings to Bank Account 1, put the investment to investment account (BDO NOMURA), put all other expenses to Bank Account 2, Insurance payment will go to Globe Atram until I have to pay it quarterly. Use whatever works for you as long as every category are segragated clearly from each other.

5 Financial Advice every Filipino Professionals Should Know

4 SET UP AN EMERGENCY FUND – You should have an emergency fund before you invest. Some people will tell you that the best time to invest is now, however Warren Buffet said that do not invest into something you do not know.

Emergency Fund is a savings set aside for emergency expenses such as unemployment, dry spell for freelancers, accident, destruction of house/car caused by natural disasters, sudden medical expenses, and similar events. The amount of your Emergency Fund shall be equivalent to 3 to 6 months of your monthly living expenses. For example, if my monthly budget is Php16,325, I should have an emergency fund of PHP48,975 to PHP97,950. Creating an eergency fund is not easy and takes time. After you set your 20% savings to your one month advance pay, save for your emergency fund.

After you completed your 3 months emergency fund, you can now invest. I divided my investment and savings into two. Ten percent goes to my emergency fund and 10% goes to my investment. If you received bonus and other payment on top of your salary, it will be easier for you to build your emergency fund.

5 Financial Advice every Filipino Professionals Should Know

5 LEARN HOW TO INVEST – While you are building your emergency fund, learn how to invest. Read books and educate yourself with stocks and other investments. While I was building my first 3 months emergency fund, I read books such as Robert Kiyosaki’s Books, Napoleon Hills’ Think Rich and Grow Rich, and books recommended by Warren Buffet.

Be Patient, do not be too excited because you might lose your money if you dive into a lake with depths you do not know. To help you out, I will share some ebooks to you. You may get them for free, but if you wish to donate to UNICEF children and PAWS.org.ph, please purchase the books from this website for only PHP50.

RICH DAD, POOR DAD EBOOK and THINK RICH AND GROW RICH EBOOK PHP50 each.