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”.

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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.

The photo above may look yummy, but once you get behind the metaphor it isn’t so appealing anymore.

What is the sandwich generation? Basically it’s the people who are financially caring for their retired parents while they are also financially providing for their children. In other words, they are financially “sandwiched” between two generations that can’t provide for themselves. It’s a relatively new term, which just made its way to the Merriam-Webster Dictionary in 2006. Though the term originated in the US, it’s a common phenomenon here as well.

But how does this happen?

First, most retiring Filipinos aren’t financially independent. According to a recent study by Sun Life, 45% of retirees become a financial burden to their relatives, 30% are dependent on charity, and 22% continue to work even after retirement.

Our culture’s attitude doesn’t help either. We feel compelled to repay our “utang na loob” to our parents, even if it’s more than we can afford. It doesn’t stop at parents either – sometimes you will be socially pressured to help out your “less fortunate” relatives, even if some of them fell into misfortunes that they created for themselves (such as excessive gambling, lack of will to find employment, etc.)

At the same time, it’s you will have to provide for your own children. Everyone knows that raising children can be expensive, especially if you want to provide them with the best medical care or send them to the best schools.

Now, the sandwiched person may earn enough to pay for both the needs of their parents and their children, but there’s often a cost to this. Usually, they don’t earn enough to also set aside money for their own retirement. At this point, it becomes a cycle and their children are doomed to feel “sandwiched” too when they become adults.

Breaking the Cycle

Here’s the sad thing: I know that when I have children, I will be part of the sandwich generation. But I don’t want it to become a cycle. When they grow up, I want them to worry about their own needs and even have the money to enjoy themselves a little more. I do not want to burden them.

There’s little that a sandwiched person can do for their parents if they are already retired. Maybe you can improve their health care coverage and set up an emergency fund for them. But if they live long lives and have no money for retirement, they will be financially dependent on you for a decade or two.

As for your children, there are ways to prepare for them financially. My partner and I will be saving up a certain amount as a “children’s fund” for our future kids so that we can pay for all the financial emergencies that come up within the first two years of having children. These include visits to the doctor, immunization, diapers, clothes, and other needs.

There are also educational plans, insurance, and other available vehicles that will allow you to plan for your children better. By having the money for your children before they arrive, you’ll be saving yourself from debt and a whole lot of headaches.

In other words, the key is to make a financial plan before your parents retire and before your kids arrive. Create a spending plan and account for major expenses. This will put you in a better position that will equip you to handle expenses for both parties.

More importantly, you need to earn more. Only by increasing your income can you also set aside enough money for yourself when you retire. After all, who wants to have their children go through the same problems and unnecessary stress?

Are you part of the sandwich generation? Feel free to share your experiences with other readers in the comments.

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When you say you want to be better at handling your money, what does that mean? The answer to this question depends on the person. It could mean early retirement, higher income, more savings, and a variety of other things. But is financial improvement merely a numbers  game? What do you aim for if you’re unclear about how a certain lifestyle will cost? Surely there must be other ways to measure improvement.

Because of this, I prefer to think of financial growth in stages. It doesn’t include a specific net worth amount, nor a minimum income level. After all, there’s no such thing as “one size fits all” when it comes to personal finance. What exists instead are different psychological and emotional stages, and the numbers corresponding to them vary from person to person. What I’m measuring in this case is one’s sense of comfort, freedom, and security which, frankly, is more telling than the numbers themselves.

So what are the different stages of personal finance?

Stage Zero: Ignorance

Why start with zero and not the number 1? Well, because zero is what’s going on here. The idea of handling money hardly makes a blip on your radar. Not to sound too harsh, but stage zero is the stage where you are ignorant about money. That’s okay, everyone starts here.

While you may know about saving or investing, you’re not really doing them. You feel like you should save or at least do something about your money, but this thought soon disappears as you go back to your daily life. You don’t know how much your monthly expenses are, either. If you’re unlucky, you’re already in financial trouble but are vaguely aware of it. If you’re lucky enough to avoid trouble, this is mostly because of chance. Any minor event such as a toothache or “therapeutic shopping”  is bound to rock your financial boat.

Stage One: Awareness and Action

Finally, you’ve realized that it’s time to take control of your finances! You start asking around, reading books, and learning all you can about how to do things right. Then, you actually do something with this new information.

If you have debt, you’re creating plans to reduce or eliminate it. At this point you are also forming new habits such as getting your spending under control and managing your money. If a lot of damage has already been done, you may be far from financial stability – but at least you’re taking steps towards it.

Stage Two: Stability

By this time your actions have paid off and you’re taking consistent measures to keep it that way. You have no debt, or if you do, it’s completely under your control. You have an emergency fund that is suited to your needs, and you’re on track when saving or investing for retirement. Your income is also consistent and you spend less than you earn. You may even be sleeping easier.

Stage Three: Freedom

In this stage, you’re earning passive income that’s equal to or greater than your living expenses. You don’t have to rely on your job to live. Where are you getting this passive income? It could be from a business that you’ve invested in but don’t personally run, stock dividends, or the sale of information products (such as ebooks). The only downside is that because of the high level of knowledge, time, or capital needed for this stage, not everyone ends up here.

What stage of personal finance are you in right now? What stage do you hope to be in by the end of the year?

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This is Day #25 of “25 Days to Healthier Finances”, a series of blog posts where Frugal Pinoy readers and myself work on 1 task a day to make our financial lives better. Here’s today’s installment and the concluding article of the series:

Today’s Task: Make a financial plan for your future

Your ability to succeed financially for the rest of your life will partly fall on your ability to mitigate large, life-defining expenses. The more aware you are of your possible expenses while you’re still young, the better prepared you’ll be for them. Once you’re debt free and have reached your goals for your emergency fund, it’s time to think of the following things:

• Wedding. This is for the unmarried Frugal Pinoy readers out there. Even if you think you’re not going to get married or that you’re going to have the simplest wedding in the history of the Philippines, you can’t know this for sure. This is especially true if you aren’t even engaged yet. Saving up for it is better than spending your honeymoon worried about debt before your marriage has even really begun.
• House. Most Filipinos dream of owning a home. If you think this is for you, start researching ballpark figures of houses that are similar to the one you want. You don’t have to save up for the complete amount, either (though it’s ideal). At the very least, start planning for the down payment.
• Vehicle.
• Travel. If I only knew how much I wanted to travel I would’ve saved up for it more, especially since I prefer 2-week trips to weekend getaways. Having a travel fund – even if you have to replenish it regularly – allows you to take advantage of discount fares and accommodations as the opportunity arises. This way, you can enjoy your trips without worrying about money, and you’ll have more options available to you.
• Additional education. Want to take up a second degree or pursue higher education? If you’re planning to do this within the next 3 years, then save up for it now – especially if you’re planning to study abroad, where the cost of living is generally more expensive.
• Supplementary income source. These could include investments, businesses, or rental properties. Ventures like these require capital upfront. This is especially important since it relates to your income, and you won’t have to be dependent on your paycheck.
• Children. I’m lucky enough to be in the position to plan for a child (my partner and I will adopt) so there are no “surprises” along the way. I’ve observed firsthand how expensive having children can be, even if they eat very little for the first few years of their lives. Baby formula is expensive, so are medical expenses, clothes, and education. Speaking of education, it’s smart to start planning for that even before your children are born.
• Retirement. A bank teller once laughed at me for having a retirement at the age of 24. It’s not a laughing matter if you consider compounding interest. The younger you are, the more important it is to start your retirement fund no matter how small. Even P500 per month can starting now can become hundreds of thousands of pesos down the road. Use this compound interest calculator to try it yourself (don’t mind the dollar sign and don’t forget to take inflation into account by subtracting it from your interest rates).

Now, if you’re not yet debt free or if you’re still waiting to complete your emergency fund it doesn’t mean you shouldn’t prepare yourself for the above expenses. It might help to work on your financial plan for at least one of the above items as well.

How to Make Your Financial Plan

Drafting your financial plan can take a few minutes to a few hours, depending on how detailed you want to be. Among the items listed above, I’m going to pick “House” to use as an example. Here are the steps I’d take to plan buying a house:

1) Find out how much it costs, total. For the house, this includes the house and lot itself, fees for the real estate agent (if necessary), moving expenses, and other relevant fees. If you want to buy an existing house, factor in what repairs and maintenance costs you could possibly have – but only if you already have a specific house in mind and can compute these things accurately. In the house example, let’s pretend that the total costs are P900,000 (I know it’s cheap for a Metro Manila home, but it’s just an example).

2) Know the month and year when you hope to finish saving up for it and make this your deadline. Let’s say I want to have a house by January 2013. Having a deadline like this will allow me to factor in inflation, as well as any changes in my regular income or expenses.

3) Compute how much you need to set aside each month to save up for the complete amount by the deadline. Since I want the house by January 2013, I need to set aside around P25,000/month to have the complete amount by then.

4) Figure out if your monthly budget allows for it. If it does, great! You’re all set. If not, then you need to take a cold hard look at your income and expenses to see where you can cut spending or increase your earnings. Investing your money, engaging in part-time work, or starting a business may help you with the earning part. After all, there are only so few expenses you can cut back on, especially if you’re frugal to begin with. Just remember that normally, if you’re saving up for something you want to have/do within the next 3 years, you should pick more conservative investments. But with things you’ll need 10 or 20 years down the road (such as retirement), you can be more aggressive.

What major expenses are coming your way within the next few years? How are you preparing for them?

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This is Day #24 of “25 Days to Healthier Finances”, a series of blog posts where Frugal Pinoy readers and myself work on 1 task a day to make our financial lives better. Please stay tuned for the final installment of this series, which will be up tomorrow. Here’s today’s installment:

In the income and expenses spreadsheet I use (which I also refer to as my budgeting spreadsheet, though that’s inaccurate), I include an extra sheet titled “Ideal”. This sheet contains my ideal expenses and income. While you don’t need to use a spreadsheet, I think it’s important that we all have a written record of our ideal income and expenses somewhere.

Today’s Task: Write down your ideal income and expenses.

The first thing to do is to grab a sheet of paper (or create a new document in your computer) and write down your ideal income. It’s not enough to write the amount itself, also note where the money will be coming from. How much will come from your job? A side business? Investments?

Then, it’s time to come up with your ideal expenses. First, trim down your expenses on the things you don’t care or need to spend on. For me, that’s cable TV, transportation (I work from home), and dining out. Then, add the expenses that you do want. For example, I want to travel more next year, so I’ll increase the monthly amount I’ll put in my travel fund. I also want to save up early for the holidays in 2010 so I’ll add that as well.

Now, the problem with this “Ideal Income and Expenses” exercise is that many people might have unrealistic expectations of where their finances can go. Here are some guidelines to keeping it real:

• Only include ideal income from things you can control. Winning the lottery, projected returns from stocks and mutual funds, or receiving inheritance do not count. These things come from external forces you can’t control so don’t expect any sure income from them.
• If you have recorded your expenses and income consistently for at least three months, you’ll be able to make more realistic projections because you know your habits, needs, and wants better.

Now, why is this exercise important?

• You have a firm goal to aspire to. “Making more money” and “spending less on unnecessary things” are no longer abstract goals. You know exactly what they mean.
• Working backwards is more specific. By listing your final goal in this way, you’ll know exactly what you want and can work backwards to get it. You’ll also know how much money you need exactly for your ideal lifestyle. This can help you make the right choices when it comes to getting additional income.
• By preparing both your ideal expenses and income, you’re working with both ends of the spectrum. Most people just have goals for one aspect of their financial lives. For example, they want a specific income each month (“Sana P400,000 per month ang sweldo ko”) or they want specific lifestyle changes (“I wish I could afford to travel more” or “Sana may mas naitatabi ako for savings each month”). By noting both your ideal income and expenses, you know that these two work hand in hand. Without additional income, you might not reach your ideal lifestyle. Also, without taking a closer look at your expenses, you won’t know if you already have the means to reach your ideal lifestyle.

So this is what I’ll be doing today – preparing my ideal income and expenses for 2010. I hope you try it too.

What changes do you want to make when it comes to your ideal income and expenses? How specific are these changes?

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This is Day #23 of “25 Days to Healthier Finances”, a series of blog posts where Frugal Pinoy readers and myself work on 1 task a day to make our financial lives better. Please stay tuned for the next installment of this series, which will be up tomorrow. Here’s today’s installment:

It’s nearing the end of 2009 so it’s just the right time to look back on the past year and review our experiences – whether they are positive or negative.

Today’s Task: Do a financial review of your year so far.

Collect your documents. These would be your latest bank and credit card statements, payslips, and other documents that are relevant to your finances. If you have a budget notebook or spreadsheet, take those out too.

Get a pen and paper or open a new document in your computer. You’ll need to write down your financial review so that it’s concrete, and you can review it next year to see how well you’ve improved.

Note the following information:

• Debt status. If you currently have outstanding loans and debt, look at your most recent statements and see how much you still owe. How much longer do you need to repay all your debt?
• Income. How much gross income did you earn this year? How much is it after deducting taxes? Apart from the pay you get from your regular job, don’t forget to include any subsidiary income you received such as money from side gigs, selling, or investments.
• Savings. Look at the statements from your savings accounts. How much did you end up with this 2009? How are you allocating these savings? (In other words, how much is for your emergency fund, retirement, or other items?)
• Spending. If you collect detailed expenses like I do, look back at all the information you gathered last year. What major expenses could’ve been avoided? Where did you succeed in minimizing expenses?
• Investments. If you invest any money in bonds, stocks, mutual funds, or businesses, how did your investments do by the end of this year?

Your financial review can be as simple or as detailed as you want. You don’t need to jot down your month-by-month activity if you don’t have to. Just start with the basics above, and if something seems wrong or if there’s a specific part you’d want to improve for next year, that’s when you can choose to be more detailed. Also: if there are certain aspects of your finances that you’re not too proud of, don’t dwell on it! Just make an action plan to avoid making the same mistakes next year. Let’s keep this exercise positive.

Have you reviewed your 2009 finances yet? Which areas did you do well in? Which ones need more improvement?

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This is Day #22 of “25 Days to Healthier Finances”, a series of blog posts where Frugal Pinoy readers and myself work on 1 task a day to make our financial lives better. Please stay tuned for the next installment of this series, which will be up tomorrow. Here’s today’s installment:

For most people, it’s taboo or bad manners to talk about money. But sometimes, not discussing money properly leads to even deeper problems. For example, married couples often disagree on their financial status. In one survey, 86% of couples admitted that they regularly fought over money. Another survey revealed that more than 2/3 of Americans learn about money management from home rather than school. Whether we like it or not, discussing money with others has a significant impact on how we perceive or handle it.

Today’s Task: Discuss finances with a friend or relative.

Your discussion doesn’t have to be deep or complex. Here are some examples of some simple starting points:

• Ask an older relative what they wish they started saving up on when they were your age.
• Give your kids glass jars where they can collect loose change and tell them why doing this is important.
• If you’re interested in starting your own business, you can ask advice from a friend who has done it before.
• Ask your parents what they wish their parents taught them about money.
• Go on your social networking sites (Facebook, Friendster, Multiply) and make a post about how you’re interested in learning how to manage your money, invest, or whatever aspect of personal finance you’re most interested in. Ask openly if your contacts have any books or blogs to recommend.

Of course, before you start any conversation about money, assess your relationship with the person first. How close are you? What do you expect to gain from the discussion? Have you discussed finances in the past? If you’re having trouble gauging their comfort level , keep these pointers in mind:

• People are more open to discussing things like cost of living (bills, rent, etc.) and budgeting/planning methods rather than specific price tags on purchases or how much their salary and savings are. Ask “how” rather than “how much”. “Do you know a cheaper grocery store or market nearby?” is better than “How much do you spend on groceries each month?”
• Friends and relatives in the finance sector tend to be more open about these kinds of discussions, so if you have a close friend who works in that field, talking to them is a good start.

Why is this important?

For me, talking about money – especially with my partner – is an exercise in getting real. It allows me to express and evaluate my ideas about what money is and how I treat it as a resource. Without my regular discussions with my partner, I might not be as disciplined about managing my money well. Also, doing this can be a learning experience. I have some friends that I ask financial tips and advice from. They allow me to see things in new ways that I haven’t explored before. It’s certainly much better than keeping all your thoughts and ideas inside without the input of others.

How often do you talk about money? What is your experience with talking to your spouse or parents about it?

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It’s always surprising to me when anyone with an income doesn’t have a budget. If you read my review of The Millionaire Next Door, you probably know that even millionaires budget. That’s how they stay millionaires.

Sometimes I even hear people say “I have a budget, I know it in my head, I just don’t write it down.” But if you don’t write it down, how do you compare it with your actual expenses? How do you stick to it? This brings us to today’s task…

Today’s Task: Plan Your Budget

If you don’t have a written monthly budget yet, you need to start one now. As in today, if you can. You may need more information regarding your expenses, but at least start with an estimation and tweak it in the next two months as you watch your spending habits. The important thing is to take at least the smallest step as soon as possible.

Some basic pointers for drafting a budget:

• If you’re unsure about estimating monthly expenses, especially with food, groceries, and other “fluid” items, track your expenses by writing them down in a small notebook as you spend or by collecting bills and receipts. Then, at the end of the month, use these to estimate what your expenses will be for the following month.
• Try zero-based budgeting. It’s easier to stick to because you’ve already committed each peso of your income to an expense – even if it’s only on paper. I wrote about zero-based budgeting in a previous post.
• Include savings in your budget. Because saying “I-save ko na lang kung ano ang matira” really, really doesn’t work.

Should you need any extra help, I’ve listed below some budgeting tips from other blogs. I chose the simplest and easiest tips I could find so that “It’s too hard!” or “I don’t have the time!” won’t be used as excuses.

• Budgeting 101: How a Simple Budget Helped Me – And Can Help You, Too and Make a Simple Budget – A First Timer’s Guide from TheSimpleDollar
• Budgeting for Non-budgeters from GetRichSlowly.org
• Envelope Budgeting System from FrugalDad

Also, feel free to use the budgeting spreadsheet I made for Frugal Pinoy readers. It allows you to compare your budget to your actual expenses, and your expected income to your actual income. Don’t forget to watch the video tutorial on how to use it (in Tagalog).

Alternative Task: Improving an Existing Budget

If you already have a monthly budget, try to fine-tune it and spot areas that need improvement. Here are some things you can consider:

What expenses do you have every other month? Every third month? Twice a year? When we budget our money, we usually watch for monthly patterns (rent, utilities, etc.) when there are other expenses that creep up on us less regularly. This may include gas for the stove (for my family it’s every three months or so), car maintenance, dental checkups, etc. Factor in these  items in the appropriate months for a more realistic budget.

In what areas are you usually underbudgeting or overbudgeting? One of my early problems was that I allotted P2,000 worth of groceries per month for my “family” (not technically relatives, but they live with me). As my family grew and as the cost of commodities rose, I kept the budget at P2,000. Soon, it was obvious that it was not a realistic figure.

How do you spend windfalls? Unexpected income or windfalls such as bonuses or cash gifts (insert PGMA joke here) can be both a blessing and a problem. People spend them as soon as they receive them. They say things like “Marami naman akong natanggap, eh” or “Siyempre kailangan magcelebrate”. I hate pointing this out, but here goes: “Eh ano ngayon kung marami kang natanggap, nawala naman agad!”

While there’s nothing wrong with enjoying extra cash, just make sure you can afford it. It’s kind of silly for those who complain that they don’t have enough money, yet they manage to spend their windfalls in one go.

Parting words:

Now that you’ve either come up with a budget or improved an existing one, your work hasn’t finished. It’s only begun. The hard part is committing to it and tweaking it based on your needs as you go along. Then, when living within your means and saving your money becomes a habit, maybe you won’t need that budget anymore.

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I’m proud to say that I made only a few money mistakes ever since I started earning.  It was my mother who made all the money mistakes in our family, and I mostly learned what not to do by just watching her.   She hasn’t saved enough for her retirement, she incurred so much debt that it’s impossible to repay, and she lived beyond her means even when she had no job.  Her mistakes were a financial nightmare for the entire family.

I guess you could say that I became smart with money because I was so afraid of ending up like her.  This fear made me educate myself about saving and earning so that I would not have to repeat her mistakes and make my children pay for them.

But this doesn’t mean that I’m free from mistakes.  I am perfectly human.  I’ve made some money and business mistakes that I wish I never made.  Here they are:

Lending money to others.  Sometimes, even when it comes to relatives, lending money actually means giving it without expecting anything in return.  For years I said “yes” to lending money to family members, and I rarely saw a centavo of my money back.  This led to tense family relations, which weren’t worth the money I “gave away”.

The bottom line?  Involving money in your family relationships tends to be messy and destructive.  Learning from my mistake, I’ll be avoiding this situation again.

Doing everything myself.  When I started my online business, I did everything myself.  It’s perfectly normal to start a business as a one-woman show. The problem was that it stayed that way for 3 years.

One of the most important things about running a business is that you should work on it, not in it.  I got this idea from a book called The E-Myth Revisited.  You should get others to work with you, whether it’s a business partner, a contractor, or in-house employees.  This allows you to focus on the more important aspects of the business as well as the tasks you enjoy.

What does this have to do with money?  Well, if you do everything yourself, your time will be consumed by tasks that anyone else can do.  You won’t have the time or energy to do other tasks that will bring in more money such as expanding your business, doing guerrilla marketing, and creating other means to diversify your income.

Undercharging for my services.  I used to be afraid to charge higher for my writing services, thinking that clients would hire some $1 writer from other countries.  I used to charge  $5 to $20/article.  It took a very generous client before I realized that I could charge much more than that.  Now I get paid around $30 to $100 for most of my work.  This means that I get paid more per hour and can actually relax about work a bit, rather than spending every single waking moment writing articles.  I may love my work, but there are other things I want to do as well.

Also, getting paid more made me become more serious about improving the quality of my work.  I guess both my clients and I won in the end

Not applying the 80/20 principle.  One of my biggest business mistakes was giving all my clients and projects equal time and effort.  Why is this a mistake?  Because some ventures, clients, and projects will be worth more than others.  What should you spend more time on, the difficult and demanding client who pays you at a low rate, or the low-maintenance client who pays well?  It took me a few years to learn to focus on the latter.

This is where the 80/20 principle comes in. A short definition of this principle is that 80% of your output/income, should come from 20% of your input/effort.  Of course, you don’t follow this idea literally, counting every percentage.  The point is that you should focus on the things that give you the best results with the smallest amount of effort.

These are only the top 4 mistakes I can remember off the top of my head.  How about you?  What financial mistakes have you made in the past?  What could you have done to avoid them?

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It’s the start of a new year again, and it’s time for planning one’s finances for the rest of the year.  I spent the past few weeks working on my financial goals for 2009, so that I can increase my chances of being financially stable in 2009.

I find that it’s important to make your goals as specific as possible.  For example, “save more money” is a bit vague.   How much will you save and what are you saving it for?  Also, write down the actions you need to take for each goal. If you intend to make more money, how will you do that?  What are the steps you need to take to make it happen?

I encourage you to do the same thing.  Let’s make this year a year of better financial responsibility.  List your financial goals on your blog, and send me a link to your post (either through the contact form or the comments section of this post).  At the end of the month, I’ll compile all your links and share them to other Frugal Pinoy readers.

Note: For privacy, I won’t be including actual figures here, just percentages and placeholders.

My financial goals for 2009

Earn at least P xx,xxx per month.  I’ve raised this by 63% from my previous goal last 2008.  This is my most important goal, because without it, I won’t be as successful with my other goals.  Here’s how I plan to accomplish this goal:

• Be consistent with my work output.  At least 13 articles per month for one client,
• Explore other moneymaking opportunities.  This includes a passive income stream (more about this later), applying to travel writing gigs, launching my illustration studio, and earning more from my web content service.
• Put my money in accounts with better returns.  This means I’ll look into special deposit accounts, time deposits with higher interest rates, and maybe even other investments.

Finish saving up for my 1-year emergency fund.  Right now, I only have the money for a 6-month emergency fund.  I’d like the security of knowing that I can pay for my current lifestyle even if I don’t earn anything for a year.  This is especially important since I have dependents.  Based on my calculations,I’ll finish saving up for my emergency fund by September.

Reach a certain amount of savings for my retirement fund.  My retirement fund is doing okay, but every year I have a goal of how much I should set aside for retirement.  Note that my definition of retirement is the time when I am no longer physically or mentally able to work.  I love my work, and I want to do it for as long as I can.  Also, since I don’t have a corporate job, my definition of retirement is different from the traditional definition.

Save up at least P xxx,xxx for Pangasinan house.  I’ve already mentioned before that one of my goals is  to build a house in a farm in Pangasinan by 2011.  To do that, I need to save a certain amount of money this year.

Prepare a will and have it notarized.  Remember Heath Ledger?  When he died, he did not update his will, so there was nothing in it about his daughter and his ex-wife.  I want to make sure that my partner gets the bulk of my savings and personal effects, and the only way to do that legally is through a will.  I’ve seen many Filipino families get torn apart just because people didn’t agree about who was entitled to what.  Something as legally binding as a will prevents these unnecessary arguments.

Here’s a sample of a will that is valid in the Philippines.  Feel free to browse that site as it also has templates of other legal documents, such as deeds of sale and special power of attorney.

Donate more money to causes I support.  I already donate to an animal shelter, but I want to donate to PAWS, Haribon, and maybe an educational NGO.  I welcome suggestions here.  If you also plan on donating to causes in 2009, click here for a list of organizations you can donate to.

Establish a passive income stream.  To ensure that I have an income even if don’t have any clients, I need to establish an income stream that requires little input and maintenance.  I’m thinking of working on an ebook (for an international audience) or online mentorship (for Filipinos).  I haven’t fleshed out this idea yet, but I’ve scheduled the planning stages in my calendar.

I’ll be updating you on my goals each month, to show you whether I’m on track or not.  That’s the point of blogging about your goals – so that there’s public accountability. If you’re writing a list of goals that only you can see, it’s very easy to remove some items or throw the list away altogether.

Now, it’s your turn.  How about you?  What are your financial goals for the year ahead?