PART
9 |
REGULAR
CONSUMPTIONS |
FINALLY,
you can now compute for consumption expenses.
Consumption |
Family’s
Monthly Expenses |
Family
Contribution |
Your
Contribution |
Your
Monthly Expenses |
| Food |
|
|
|
|
| Utilities |
|
|
|
|
| Transportation |
|
|
|
|
| Clothing |
|
|
|
|
| Leisure |
|
|
|
|
| Total |
S
= |
T
= |
U
= |
V
= |
Tips:
n•
Encourage everyone to participate in listing, computing, and
validating the above expenses. You will have a lively discussion
for sure.
n•
For Clothing Expenses, it is hard to imagine (and not advisable)
to buy new clothes every month. What you can do is calculate
expenses for a family member per year, get the total for all
family members, and then divide the total by 12 to get the monthly
expenses. All other expenses can be done on a monthly basis.
n•
Include cell phone loads in the cost of Utilities.
n•
Leisure is an important item to include because doing so will
set a limit or budget to it. If you don’t put it there
the tendency could be to splurge because no limits were set.
The other extreme is not to spend any time for leisure. This
may put unnecessary stress on family relations.
n•
It is important to separate your own expenses, especially if
you are an OFW. This may make other family members realize how
much you are you are sacrificing by contributing to their expenses
while spending very little for your own.
Family
Budget
Goal |
Amount |
Family
Contribution |
Your
Contribution |
Education
|
D2
|
E2
|
F2
|
| Housing |
G2 |
H2 |
I2 |
| Health |
J2 |
K2 |
L2 |
| Insurance |
M2 |
N2
(Spouse) |
O2 |
| Retirement |
P2 |
Q2
(Spouse/Parents) |
R2 |
| Consumtion |
S |
T |
U |
| Total |
W |
X |
Y |
Fill
in the Family Budget with the amounts you calculated from
the previous tables. Negotiate among yourselves
on the realistic amounts and contributions each member can
make. You may have to go back to the previous tables to recalculate
and renegotiate. Remember: Each one should make a
contribution no matter how small! For children, it
may mean saving on expenses and putting their money in the
bank. For employable adults, it means looking for or maintaining
their present employment even if they receive just a modest
salary. It also means diligently paying for their insurance
and pension plans.
After you have negotiated your respective contributions, you
can compute the totals W, X, and
Y. When you have been able to fill out this final
table, you would have finished most of the Planning
and Budgeting Process. Congratulations!
The only steps left are
n• Get
each family member’s commitment to
the Family Budget by keeping expenses below or equal to W
and by maintaining the respective contributions, X
and Y. Make sure everyone has a copy
of the Family Budget to remind each one of their commitment;
n• Review
the Family Budget and actual costs and contributions twice
or thrice a year to see if it is being met or whether it needs
to be revised. You may have to assign a specific member of
the family to lead this important task.
Don’t worry if you cannot finish the Family Budget quickly.
You really need plenty of information (tuition fees, insurance,
housing payments, etc.) to fill it up. Just make sure you
do fill it up somehow and get everyone’s commitment
to live up to it!
|
PART
10 |
WHAT
TO DO WITH ANYTHING EXTRA |
After
accomplishing the Family Budget, what is left for you to save?
The answer is: You have already done your saving by “paying”
for your Education, Housing, Health, Insurance, and Retirement goals
before your Consumption needs! Two interesting ways of looking at
this are “saving before you spend”
and “paying yourself first”. By following
these simple rules, your savings will continue to provide you and
your family’s needs when you’re not able to work anymore.
Looking back at the family budget, you can say that even if you
and your family spend the amount V completely every
month you would’ve been able to save an amount that is at
least equal to your payments for Insurance and Retirement/Pension.
If you are paying for the purchase of education plans and a home,
these are additional savings for you. Compute for the minimum amount
that you and your family are actually saving per month by adding
all your payments for Insurance and Retirement. If you are buying
education plans or a home, add these, too. You will see how much
you are already saving automatically without your
even knowing it!
What if there is still some amount
left over (surplus) after spending the amount W or after giving
your contribution Y?
If you think this surplus is going to continue in the long-term,
then you can increase your insurance or retirement/pension
plans. This has the effect of “paying yourself more while
paying yourself first”. Ask your insurance agent for advice
on how to do this.
If you think the surplus is going to be for the short-term, then
you can directly invest it in short-term investments.
What should you consider when making
investments?
There are three (3) main factors to consider when you invest: Safety,
Liquidity, and Return. You will always want to maximize
all these three. However, this often may not be possible. One factor
will always counteract another. So you have to strike a
balance of the three depending on your objective(s) in
investing your money.
Safety
The first rule of safety is to deal only with licensed agents of
top-performing banks and insurance companies. Ask for documents
proving that the agent you are dealing with is an authorized representative
of the company. You should also ask for proof that the company is
a bank licensed by the Bangko Sentral ng Pilipinas (BSP) [http://www.bsp.gov.ph/banking/bspsup.asp]
or an insurance company licensed by the Insurance Commission [http://www.insurance.gov.ph/htm/_statistics.asp].
Next, ask yourself the question: “What is the worst
thing that can happen if I put my money in this investment?”,
or “What is the Risk involved?”. The
safest investments that are available to all are Savings and Time
Deposits. These are insured up to a certain amount
by the Philippine Deposit Insurance Corporation (PDIC). Right now,
you can deposit up to PhP 250,000 in savings and
time deposits in any bank and no matter what happens to that bank,
the PDIC will pay back your money. However, if your bank closes
down, it will take some time before you can recover your deposit.
Also, you will not be able to recover any amount above the PhP 250,000
limit if no other bank takes over your bank.
Although savings and time deposits up to PhP 250,000 are guaranteed
and, therefore, safe investments, they also give you the lowest
return in your investment. This is an example of how the
different factors affect each other. In this case, increased
safety brings about low returns. It is
difficult to find a highly safe investment that has very high returns
at the same time. That is why when a bank or financial institution
offers you very high returns on their savings and time deposits,
BEWARE! Usually, there is a great danger or risk that they are not
telling you about.
There are occasions when the Philippine Government offers Retail
Treasury Bonds (RTBs) to the public. RTBs are investment
instruments guaranteed by the government that offer
returns higher than those from savings and time deposits. However,
they are offered only once every 1 or 2 years. You may also have
to pay some penalties if you withdraw them before their maturity
(2-5 years, or more). If you read or hear of an announcement about
RTBs ask your bank if it is accredited to distribute them and find
out how you can invest in them.
There are other investments that can give you a higher return but
which involve higher risk. These investments will be discussed in
the next section. The different types of risk are explained in Appendix
D.
|
