My Personal Financial Goals for 2009
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?
Read More"You Don't Really Want Money" by Ron Davis
Today I found this great video by Ron Davis, whose personal development blog, Distinctions For Life, contains great advice on living better.
I thought I’d share this video entitled “You Don’t Really Want Money”, mostly because it points out several things I believe in:
- That when people want money, they don’t really want the money per se, rather, they want what they think the money will bring.
- You don’t necessarily need more money to get what you want.
You can play the video below:
You Don’t Really Want Money from Ron Davis on Vimeo.
At the end of the video, Ron tells us to ask ourselves the following questions:
- Why do you want money?
- How will you know when you have enough money?
- What picture appears in your head when you think about having enough money?
- Can you have that moment or feeling without money?
Think about them.
Read MoreFree Personal Finance Ebook
There’s a free personal finance ebook available at Mytwodollars.com . “Money Matters for All Ages: A Guide to Taking Control of Your Finances from Birth to Retirement” is a comprehensive collection of personal finance and frugality tips that may prove to be useful, no matter how old you are. This includes infants and young children, teenagers, college-aged people, and people in their twenties up to the sixties. This ebook also covers advice for retirees. This series was even featured on MSN Money.
Here’s a description from the website:
This e-book is the culmination of sixteen different personal finance bloggers who got together and decided to write a financial guidebook that spans an entire lifetime. From the innocent little infant to the older retiree, all the different stages of life are covered here. Whether you are in your 20’s or 30’s or any other age — you can benefit from reading this book.
I’ll be taking a quick look myself, and I might even post a review. So far, it looks like we can all learn a thing or two from this handy resource.
Click here to download the ebook. Once you’ve read it, feel free to share your comments with us.
Read MoreDo you have what it takes to be a millionaire? (Part 2)
To recap the previous post, here are the questions you need to ask yourself to determine if you have what it takes to be a millionaire (at least, according to David Bach’s Automatic Millionaire):
1) Do you pay yourself first?
2) Do you have an emergency basket of cash?
3) Do you know what your latte factor is?
Now, on to the remaining 3 questions.
4) Do you own your own home?
According to The Automatic Millionaire, statistics say that most renters have a low net worth (roughly $4000) and home owners have a higher net worth ($140,000 and up). However, this isn’t necessarily true if you have a long-term mortgage you haven’t paid off yet.
If you already own a home, you need to learn why it’s an important asset and investment. According to David Bach, You can leverage the value of your home, especially when real estate values go up. (I’ve seen this happen in Marikina, especially over the last few years.) Also, nothing compares to the sense of security you feel when you’re owning a home. Overall, David Bach says that whether you rent it out or hold on to it, a home is a good investment.
5) Do you give to charity?
Some people give for tax deductions, while others give because they’re feeling guilty. They wait until the end of the year, ask themselves how much of their money is extra, and that’s what they give. David Bach doesn’t recommend this. He suggests that we make giving automatic – just like when you automatically pay yourself part of your income.
This part is all about feeling like you’re coming from a place of abundance. Some people may have multi-millions, but if they don’t give away a single peso to anyone, for a cause larger than themselves, they probably feel cheap inside. From David Bach’s research, most multi-millionaires have one thing in common: they were giving part of their income for charitable causes, even when they weren’t wealthy yet. It’s all about the mindset rather than just the measurement of how much money you have stashed away in the bank.
I can’t say that this is something I do on a personal level (I’m not in the best financial shape), but my business partner and I have agreed that part of our company profits should go to charity. We have yet to decide the beneficiaries, but it’ll probably go to causes that we truly believe in.
6) Is your financial plan automatic?
Wherever your income goes – to the bills, savings, retirement, emergency funds, debt payment, charity – you need to make these payments automatic. Not only will it save you time, but it strengthens your commitment to distribute your income properly. It lessens the spending temptations you may encounter along the way.
Personally, my financial plan isn’t automated. The main reason for this is because I get paid in cash (via remittances, because I’m an online worker). However, several banks offer bill payments (via phone or online). So if it were convenient and possible for me to automate distributing my income, I would. It’ll certainly save me a lot of stress doing personal accounting. Also, it’ll force me to save more.
Read MoreDo you have what it takes to be a millionaire?
I’ve been listening to David Bach’s “The Automatic Millionaire” audio book. At the beginning of the audio book, he wants you to find out if you have what it takes to be a millionaire. You can find out if you do by answering these questions:
1) Do you pay yourself first?
David Bach recommends that as soon as you get your paycheck, you should pay yourself first. Not the government, not the electric company, YOU. He also recommends that you pay yourself at least 10% of your income.
Personally, I think it’s important to pay yourself. After all, it doesn’t make sense to work really hard and have someone else take your money.You need to make it possible that YOU receive a percentage of your income. He recommends that you set it aside on your savings or retirement account.
However, it’s not as easy as David Bach portrays it. When PLDT sends you that notice of disconnection, you can’t exactly tell them “I’m sorry, I can’t pay you now because I had to pay myself first.” It’s very, very important to pay yourself, but make sure that you can survive with what’s left. I’ve had my own experiences where I had to pass up paying myself first to pay the “Big Guys” (PLDT, Meralco) and for other necessities (food, school supplies).
2) Do you have an emergency basket of cash?
I’ve talked about emergency funds in the past (specifically, in my pinoy money talk post). David Bach recommends that you have at least 6 month’s worth of living expenses stashed away in an emergency fund. Personally, I have 3-4 months worth of living expenses in mine. My goal is to have a year’s worth of expenses.
Why is an emergency fund important? To prevent you from digging yourself into a financial hole, should emergencies arise. If you want to learn about emergency funds, click here to read the post I wrote about it.
3) Do you know what your latte factor is?
Throughout his books, David Bach often talks about the “latte factor”. This is the small amount of money that we spend regularly for little things. An example – if you buy a latte every morning before going to work. Let’s say that latte costs P150. For an entire work week of 5 days, you spend P750 on that latte. After a month, you would’ve spent P3,000 on lattes alone. You need to figure out what unnecessary regular expense accumulates to a lot over time.
For me, my latte factor is fast food chains. That’s why I have a No Fast Food Goal for the entire month. For other people, it might be their cellphone credits, idle chatting on internet cafes, etc. Figure out what your latte factor is by writing down your daily expenses as you’re paying for them. that way, nothing slips by your radar.
There are 3 more questions you need to ask yourself if you want to know whether you have what it takes to be a millionaire. Click here for part 2 of this article.
Read MoreHelp Iligan and CDO
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