Increase Your Income (Part 1): Making the Decision to Move Forward
| This is the first in a series of posts called “Increase Your Income”. By the end of this series, you’ll know the concrete steps you need to take to make more money. |
You can’t save your way to financial freedom. It’s limited and shortsighted to rely solely on saving. After all, there’s only so much money you can save in a month.
See, the amount you save depends on the amount you make. If you only make P13,000 per month, then there is no way for you to save P15,000 per month. There is only one way to increase the amount that we save, invest, and even spend – we need to increase our incomes.
Everyday we hear some of our friends, family, and colleagues lamenting the state of the economy, the limited number of jobs out there, or the low wages that employers pay. How is it possible to increase our incomes?
Read MoreHelp 1-month old Hero Chip get the heart operation he needs
Hello Frugal Pinoy readers. Sorry for not updating this blog this week – I’ve been busy with a lot of work, including helping my best friend raise funds for her newborn nephew, 1-month old Hero Chip.
He was born on June 19, 2011. He shares the same birthday as the national hero, Dr. Jose Rizal (hence the name). He’s barely a month old, but hopefully, someday, he’ll grow up to live up to his name.
A very promising start, but he has a congenital heart condition. He has ventricular septal defect, or VSD. He has, literally, a hole in his heart.
If left untreated, his VSD can cause permanent damage to his lungs, or make his heart fail all of a sudden. Hero’s heart needs to be mended as soon as possible to prevent any further damage. But the cost of a heart surgery — PhP500,000++ or more than half a million not counting the hospitalization and medicine expenses — is way too high for his young, twenty-something parents to shoulder.
If you want to know more about Hero Chip’s condition and how you can help – even if you can’t donate – please click here to visit his website. Even sharing the link on Facebook and “Liking” their Facebook page, raises awareness to the cause.
For those who prefer to see all the details, click here to find the webpage for scanned documents regarding Chip’s condition. It includes the medical abstract from the doctor, the statements of account, and the estimates for the procedure.
Hero “Chip” needs your help. Be Hero’s hero, and chip in for his heart surgery.
Even the smallest bit of help counts for a lot.
Create a Financial Plan in 1 Hour with a Money Map
For most people, financial planning means talking to a paid professional and getting this “expert” to tell them what to do with their money. Which is why most people don’t do financial planning. they believe that they can’t afford this expert, or they aren’t experts themselves.
But we can do financial planning. This doesn’t mean listing “wishes” and “hopes and dreams” and unrealistic budgets that you can’t follow. Let’s face it – we all have weaknesses. This is why we should set up automatic, hassle-free systems to work around these weaknesses. One way to do this is by creating a money map. The objectives of the money map are the following:
- Automation. If you’re employed, notice how your employer automatically deducts your tax payments and SSS payments? You can do that for your savings and bill payments as well. After setting this up, don’t have to think about setting aside money for savings, or for paying some of your bills.
- Simplicity. You don’t have to decide what happens to your income once it arrives. You’ve already pre-decided. Just make the necessary calculations everytime new money comes in and send them to the right accounts (15% goes to this, 25% goes to that, etc.).
I first encountered this idea from this article by Ramit Sethi in The 4-Hour Workweek Blog. Normally, I’d just point to the article and tell you to read it there, but a lot of the principles there don’t apply to the Philippine banking system.
Note: I am not affiliated with any of the banks, companies, or accounts I mention. These mentions are limited from my own experience, and I encourage you to add comments here about your favorite banks and banking solutions that are similar to the ones I mention.
I tried this exercise myself, and here’s the money map I came up with:
Click the image above to see a larger version in a new window
How do you make your own money map?
Read MoreThe #1 Investment You Should Make
What if I told you that there’s this risk-free investment out there with guaranteed returns and requires minimal or no financial capital on your part?
Sounds too good to be true, right? It must be a scam. After all, don’t all investments carry risks? Is there even such a thing as a guaranteed return? And, most importantly, how is it possible for an investment to require almost no financial capital?
Let’s cool down for a bit. First of all, I have not gone crazy and I am not going to scam you. You may think that the answer is something touchy-feely like “you should invest in …YOURSELF”. But no. What I’m suggesting is something more concrete than that. Here it is:
Invest in Your Earning Ability.
Now, what exactly is your earning ability? It’s your ability to make and save more money. It covers the following things:
Read MoreHow Will You Become Financially Free?
In April, I ran a survey asking Frugal Pinoy readers “What is your #1 financial goal?”. Most of the answers were “financial freedom” or “to be financially free” or “financial independence”.
Image by jdhancock from Flickr
While almost everyone in the world wants that, we all define it differently. To reach this “financial freedom” or “financial independence” that we’re talking about, we need to know how to objectively quantify it. And this will depend on your definition.
To make it easier, think of your definition as a checklist. What financial goals much you reach before you become financially free? Here are some questions to consider:
- How much should you have in emergency funds to not worry about financial emergencies?
- How much should you have stashed away in retirement investments? How much is their historical average growth? Do you think you’ll have enough to live comfortably when you retire?
- How much should you be earning each month to fulfill all your financial obligations? How much do you need to live comfortably and pursue all your hobbies and other leisure activities?
- Do you have any debt? If so, have you developed a plan to repay all of your debt and stay debt-free?
- Which stage of personal finance are you in? Which stage do you want to be in within 6 months? A year? How do you plan to accomplish this?
Don’t be afraid of being as specific as possible. Include numbers such as: “I must have at least P120,000 in emergency fund savings” or “I should be earning an additional P20,000 monthly from my side business”. The more specific you are, the easier it will be to know the steps you have to take to reach these goals.
So let me ask you again, “What is your #1 goal that will help you reach financial freedom?” Answer the completely anonymous survey below to share even just one criteria of how you define financial freedom.
Read MoreHelp Iligan and CDO
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