It is not uncommon to meet people in the Philippines who shell out more money on unnecessary expenses and things that they don’t own before as they earn more money and become more successful. The same pattern goes to most of our dear OFW’s and their dependents back home.
When the salary increases, the spending increases as well.
I think most Filipinos find this culture fun and fulfilling. Leaving them without anything to save for their emergency fund and retirement.
The Importance of Recording Your Expenses
If you are really serious on saving up for your retirement then you have to commit and discipline yourself to write down all your previous month’s expenses. When you do this, you are helping yourself determine which are the things that you really need to have on a monthly basis and which ones are just plain wants than can be postponed for some other time.
When you’re finally done with your list of previous month expenditures, identify those wants and decide to cut it on your next shopping schedule.
The total amount of those wants can be re-allocated now for your savings, emergency fund, or investment for your retirement. But don’t just stop there. Work out to increase your savings and reduce your expenses.
Saving Is Not Enough
So you started saving. But you need to know that there is an unseen enemy of your money’s buying power every year: Inflation.
Inflation is like a bug that eats up fast a plant’s slow-growing new leaf.
Marvin Germo illustrates inflation very vividly with his McSpaghetti Test. He illustrates the time when McSpaghetti costs just Php29 and that you can already buy 3 McSpaghetti meals with your Php100. But in 2010, McSpaghetti meals costs around Php50 already. That means you can now buy only 2 McSpaghetti meals with your Php100. And that’s because of inflation.
That is why you need to do more than just saving your money in your drawer, piggy bank, or your bank accounts. You have to find a suitable financial instrument to beat inflation. You need to grow your money in investment vehicles such as stocks, mutual funds, UITF’s, ETF’s, index funds, treasury bonds, bills, and others so you can continue to build your retirement fund.
When you continue to save up more and invest it, time will come when your invested savings will even be enough to buy those things that really want to have.
Insure yourself as well. Don’t leave your family and loved ones suffering because you forgot to do this.
You May Not Have Seen The Scariest Things in Life Yet
Many working people in their 20’s or 30’s believe that they can save up for their retirement later on and that they should enjoy instead whatever they are earning from their salaries.
I’m still hoping that this type of “tsaka na lang” mentality will not make them realize later that it’s already too late for them.
I hope they realize that if they fail to change their lifestyles and postpones to save and invest for their retirement, a long list of sad and horrific possibilities can happen when they grow old:
– continue working even after retirement age, coupled with arthritis and rheumatism
– be passed around by children because they are already a burden
– sell their assets like house and lot, car, or even furniture when they get really sick
– pay huge estate taxes for the transfer of their property to their children
– other wild scary visions of your old age without any retirement fund
A lot of Filipinos don’t have money during their retirement years. Makes me think that’s fun for them.
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Join the OFW UsapangPiso Facebook Group and Forum to learn how to plan your finances the right way and how to grow your money in various financial instruments and investment vehicles such as stocks, mutual funds, UITF’s, bonds, money market, real estate, and others.
P.S. 1. Bro. Bo Sanchez has appointed me as a coach for our young and new investors at the TrulyRichClub social site. It’s a fun, learning family with the purpose of “helping good people become rich”. I’m inviting you to join the TrulyRichClub too and email me at email@example.com if you have any questions. Click here to join!
P.S. 2. Learn How To Earn Through Larry Gamboa’s Real Estate System. Real Estate Mentor Larry Gamboa is giving a Seminar on February 9, 2013 on how he buys foreclosed properties or properties from “motivated sellers” and turn them around into rental properties or quick sales. If you’re interested to learn his system, click here now!
P.S. 3. Visit the Philippine Red Cross site to donate whatever amount you can for the victims of typhoons “Pablo” and “Quinta” and “Labuyo” in the Philippines.
Photo credit: 401(K) 2013