MANILA, Philippines – People have different personalities when dealing with money matters, a financial planning expert said.
Joe Ferreria, the president of Money Doctors Inc., said the personalities range from being challenged to being permanently wealthy.
A financially challenged person, Ferreria explained, is someone who simply doesn’t have enough money to buy what he or she needs.
“You need to work harder or cut down a little bit more because you are challenged financially,” Ferreria told ANC’s “On The Money.”
A person with a “normal” money personality has enough money for every expense that he or she has, but this person does not have any money set aside for emergency situations.
“They’re able to pay for the bills but if you ask them, ‘Do you have 2 years worth of expenses in the bank?, [they don’t]” said Ferreria.
A “wealthy” personality is someone who has saved at least 24 months worth of expense money. Ferreria said a recent Forbes survey showed that if you have P5 million in the bank, you are considered among the ranks of the wealthy.
However, Ferreria stressed that the wealthy differs from the “permanently wealthy,” which have money that is greater than all expenses.
Ferreria said what people should aspire for is the “stable” money personality.
“If somebody gets sick or you need to do something that will require money, you have money in the bank to sustain it. If you lose your job, you have 6 months or a year to look for another job,” he said.
He explained that someone who is stable sets aside an emergency fund and has at least 2 years worth of expenses in the bank.
“You should stabilize yourself, meaning you are spending within your means, you’re saving 30 percent of your income, and the money in the bank allows you to go through financial traumas,” Ferreria said.
“You work to live a life. You don’t work to pay the bills,” he added.
A person’s money personality is formed by parents, life experiences, and influence from media and friends.
Ferreria said understanding oneself is key in determining spending habits which can evolve from being challenged to being permanently wealthy.
source: www.abs-cbnnews.com
