New digital piggy bank helps Swiss kids save

ZURICH - In Switzerland, one of the world's wealthiest countries, financial planning starts young.

The country's number two bank Credit Suisse on Tuesday unveiled a piggy bank with built-in apps allowing children under 12 to set savings goals, check their balance and make payments.

"The financial education of children is a concern to people in Switzerland," Credit Suisse said in a statement, citing a recent study showing that 90 percent of parents in the wealthy Alpine nation want their children to learn how to handle money.

The study, conducted by the amPuls market research firm on behalf of Credit Suisse, also found that most children in Switzerland not only receive pocket money but "are frugal with it".

According to the research, Swiss parents have asked questions about how to teach children about money when it increasingly exists in digital form instead of coins and notes that can be stored in an old-fashioned piggy bank.

Named Viva Kids, the piggy bank "provides a wide range of options for teaching kids in a simple way how cash and digital money work and how to use them," Credit Suisse said.

source: news.abs-cbn.com

7 Ways to Use a Reverse Mortgage as a Financial Planning Tool

In the past, the main purpose of a Reverse Mortgage was to help seniors to fulfill cash needs by allowing them to pull the equity in their homes. But today, many seniors are finding that even if they don’t particularly need to fulfill a cash need, they can take advantage of the benefits of a reverse mortgage as a tool to use strategically in retirement planning. Here are 7 ways a reverse mortgage be used as a financial planning tool.

 
    You can delay Social Security and pension payouts

Some seniors may financially need to use payouts from Social Security and pensions as soon as they are available. However, with the cash from your reverse mortgage, you will be financially sound enough to wait on receiving those payouts, thus increasing how much you receive.

    You can postpone drawing down retirement assets, giving assets time to grow


This idea follows the same formula as your Social Security and Pension payouts. The longer you can delay in receiving your benefits, the longer they have to grow. With a reverse mortgage, you can afford to wait.



    You can increase your cash flow by eliminating monthly mortgage payments

Every month, a monthly mortgage payment takes a chunk out from your income. But with a reverse mortgage, your existing mortgage is paid off. This leaves you with extra money in your pocket that would have normally gone to paying your existing mortgage.

    You have access to a low cost, non-cancellable, GROWING line of credit

With a reverse mortgage, you have an ever-growing line of credit available to you. It grows with time. This means that the line of credit available to you years from now will be much larger than the line of credit available to you now.

    You can protect your portfolio performance in a down market

In a down market, your portfolio and cash flow may not be at its peak performance. With a reverse mortgage, the incoming funds are able to protect you until the market picks back up again.

    You can have annuity-style payments using your home’s equity

With a reverse mortgage, you are able to choose the option of receiving your funds in annuity-style payments. This is perfect for some types of people who would rather plan their income as a steady flow.

    You can replace cash reserves

Some people have less cash in reserve than they would like. A reverse mortgage gives you the chance to catch up and replace your cash reserves, getting you up to speed financially.

These are just a few examples of how you can use a reverse mortgage as a strategic tool. With the right plan in place, you will be well on your way to a solid retirement.

These are just a few examples of how you can use a reverse mortgage as a strategic tool. With the right plan in place, you will be well on your way to a solid retirement.

source: everythingfinanceblog.com

The one-page financial plan

(The writer is a Reuters contributor. The opinions expressed are his own.)

NEW YORK - Gather round because here is today's personal-finance lesson inspired by famed Hollywood screenwriter William Goldman: Nobody knows anything.

In other words, no one knows where the market is headed. No one can tell you exactly what financial moves to make. And no one knows where they are going to be 40 years from now.

Here is what you can do: Make your best guess and muddle through life the best you can. That's the thesis of "The One-Page Financial Plan," the new book by New York Times columnist Carl Richards.

Rather than over thinking everything to the point of paralysis, just jot down a few general goals, get started, and don't beat yourself up over past mistakes. Reuters sat down with Richards to talk about the surprising power of simplicity.

Q: Personal-finance experts usually don't talk about uncertainty. Why was that important for you?

A: The giant fantasy of financial planning is that we all know exactly where we will be in 40 years, so we just need to sit down and plan for it. That gives people a false sense of precision.

The reality is that most of us don't even know where we will be six months from now. We don't know what our utility bills will be in the future, let alone when we are going to retire or when we are going to die. So the natural human reaction is to say, aw, just forget it. But that's not a good choice either.

Q: So what should people do?

A: Call it what it is - guessing. Give yourself permission to let go of all this anxiety, and just make the best guess you can and be committed to the process of guessing.

Q: Your book is called "The One-Page Financial Plan." So what's on that one page?

A: On my one-page plan, there is a statement at the top of what's important: For my wife and I, it is to spend time with the family, and to serve in the community. Then there are three goals: To fully fund all retirement accounts, to fully fund our kids' education accounts, and to put money away for a house.

That's it.

Q: You have had some financial missteps yourself. How did those experiences inform the book?

A: When you write publicly about this stuff, people think you have everything figured out. But nobody is foolproof, and making financial decisions is hard.

We got caught up in a very basic mistake: Projecting a rapidly growing business, which meant we could afford a big house. It turned out the business didn't keep doing that, and we were faced with the tough situation of owing far more than the house was worth. So we lost it.

Q: What is one trick people can use to get their finances under control?

A: I use what I call the 72-hour Test. Once I found myself with a stack of unread books on my desk, and I thought: 'What if I just waited 72 hours between when I thought I had to absolutely have a book, and when I actually purchased it?'

The surprising reality is that after 72 hours, whatever it is, you usually discover you don't need it anymore.

Q: What about debt - how much is too much?

A: I have yet to meet anyone who has paid down debt and was unhappy about it.

Maybe on a spreadsheet it makes sense to have some mortgage debt, and invest the difference in the stock market, and make a bunch of money. But paying off your home makes people really happy.

Q: We are all so anxious about money. Why is that?

A: Money is not just about math, it's about emotions. The stuff you dream about, the stuff that keeps you awake at night, your most cherished dreams and your biggest fears. The rubber always meets the road with dollars. That's a very potent cocktail.

source: www.abs-cbnnews.com

Debt Repayment 101: How to Create a Repayment Plan

Are you in debt and unsure how to start getting out? Or are you in debt, and unsure of if you want to find a way out? If so, that’s okay—tackling debt can be a little scary, but it’s in your best interests to start working your way out of financial trouble like this.

Don’t you want to reclaim your paycheck, and not have to send a portion of it off to a creditor? You should enjoy the money that you earn! If you’re tired of living paycheck to paycheck and having maxed out lines of credit, you can (and should) take action.

Read on to find out how you can get started making good financial decisions, and how to start making a debt repayment plan.

Making the Decision to Get Out of Debt

Deciding that you’ve had enough of debt can be empowering and overwhelming all at once. On one hand, you can’t wait to kick your debt to the curb. On the other, you’re worried about how to get there and the sacrifices it might require.

Let’s get this out of the way: there’s no wrong or right way to get out of debt. Everyone should go their own pace and choose a method that works for them. Some people are okay with giving up many possessions and “wants” while living meagerly. Others still want room to enjoy life.

Before you start on a plan to pay off your debt, you should outline what you want your journey to look like. It’s okay if it changes, but it helps to have a list to go off of when things get rough.

Make a list of your values, your goals, and your wants. Ask yourself what you’re willing to go without—and what you’re not willing to sacrifice to achieve debt freedom. Be honest with yourself about what’s truly worth it. Once you determine the parameters, you won’t have to question your priorities (or be upset if others do).

It’s also important to understand what you’ll be able to do once you’re debts are repaid. You can devote more money to your other financial goals. You can accelerate your progress to your retirement goals, for example, or save up for a big purchase. Maybe you want to take a round-the-world trip, or you’re ready to start paying down your mortgage.

Use these other financial goals as your motivation to repay consumer debts from credit cards and student loans as soon as possible. When you’re free of these burdens, you’ll be able to reach other money goals even faster!

What Are Your Numbers?

It’s difficult to face the reality of your debt situation. But in order to move forward with a plan, you need to know exactly where the numbers stand.

The easiest way to do this is to list out all the debts you have, like so:

Type	Lender	APR	Balance	Min. Payment	Due Date
Credit Card	Chase	11%	$3,020.17	$75.00	4th
Credit Card	Discover	8%	$7,385.28	$130.00	8th
Student Loan	Nelnet	8.5%	$11,274.32	$220.00	11th
Car Loan	Dealership	3%	$21,295.23	$250.00	20th

You don’t have to follow a spreadsheet layout. This is just an example to help you get started. Some people like putting their numbers on a whiteboard, while others people have found creative ways to measure their success with paying off debt. Pick a method that will keep you motivated.


Creating a Repayment Plan

Now comes the fun part: strategizing! Again, there’s no wrong way to repay debt. All that matters is that you’re erasing the red on your balance sheets. There are a number of options you can choose from: pick the one that makes the most sense for your situation.


    The snowball method requires paying off the loan with the smallest balance. (In the example above, it’s the Chase card). This gives you a quick win and added motivation to keep going. Once Chase is paid off, you snowball the amount you were paying to Chase into the balance with the Discover card. If you paid the minimum amount, you’d be able to put $205 toward Discover from paying off Chase.

    The avalanche method requires paying off the loan with the highest interest rate first (in this case, Chase again). The reason for doing this is that the loan with the highest interest rate is going to cost you more down the road. Interest is ugly; the quicker you can get to paying off the principal balance, the better.

    You can also try a combination of both the snowball and the avalanche methods. Maybe you want to tackle the loan with the highest interest rate to get that out of the way, but then you want to target the loan with the lowest balance to get a quick win after all your hard work.

    The emotional method isn’t an official strategy, but it’s still an option worth covering. For some people, there is a certain debt that they absolutely despise. They would do anything to get it out of their lives. If you have one like that, feel free to attack it with a vengeance and let numbers go out the window. Then get down to strategy with the rest of what you owe.


At the end of the day, what matters is that you make progress and do what is best for you. Don’t be afraid to tweak things if one method isn’t working for you. Financial plans are rarely ever set in stone because life gets in the way.


The trick is to not give up and adapt to changes, no matter how hard it may seem at first. Share your plans with supportive friends and family members – this isn’t a journey you have to take alone.

source: totalmortgage.com

Can you afford a baby?

MANILA, Philippines - A baby’s arrival into a family is always marked by great changes. The peace and quiet that once reigned in the home is suddenly disrupted by the baby’s laughter and cries; new furniture, toys and accessories are suddenly strewn everywhere in the house; mealtimes now include milk and cereal; and just about everything will begin to revolve around the new family member.

As a member of your family, your baby will be part of everything you do—from grocery visits to holiday vacations—and will influence every facet of your life, including your career, business, and even your choice of home and car. Expectedly, there will be both big expenses such as tuition fees, child care, and health care costs, as well as many small ones like purchases of toys, entertainment, clothes, and gifts, to name a few.

Needless to say, a baby’s arrival has lifelong financial implications that parents should prepare for, starting from childbirth all the way to adulthood. If you are planning to have a baby soon, or have recently had a new one, expect to make adjustments to your lifestyle and finances.

Here are some areas you need to look at closely to make sure no surprises for your budget:

Your date with the stork.

Your first major expense will be the cost of childbirth. Find out how much your chosen obstetrician will charge in professional fees so that you can set aside funds for this. Many hospitals offer a package that includes the doctors’ fees, hospitalization charges, regular check-ups, and other related fees. Compare and choose from among your options to come up with something that works best for you. If you have medical insurance, find out if this is covered. Check out and update your Philhealth coverage as well.

Time off to nurture.
When the mother gives birth, she will have to take a break from work. Philippine law provides for 60 calendar days off for a normal pregnancy and 75 calendar days off for birth by caesarian section. For some working mothers, this disruption might mean less or no income, so take this into consideration when planning your cash flow.

If you are working, check out your benefits and fill up forms that you might have to attend to in advance. Some companies give paid maternity leaves, and SSS also gives a maternity benefit. Fathers, on the other hand, are entitled to a paternity leave under the law. If you are employed, be aware that realistically, you will probably be taking some days off from work every so often to attend to unforeseen needs of the baby, which will be heaviest in the first 2 years of life.

If you used to make a good sum from doing overtime work, also expect that realistically, you may not be able to render as many hours in overtime work while your baby is very young.

Cost of Child care.

When the baby is born and when he is still young, you will need to make arrangements for his full-time care. Some mothers leave the work force to become a full-time stay-at-home mom, either permanently or for a short period. Alternatively, many working mothers employ the services of a full-time nanny (yaya). Others ask relatives to care for their children, while others leave their children at a day care center.

Work out an arrangement that is most suited for your circumstances. Whichever alternative you choose, expect child care costs to account for a major portion of your baby-related expenses.

Health is wealth (and expensive).

A new baby means many visits to the pediatricians. If you are lucky, these visits will just be for the administration of routine vaccinations. However, most children go through many illnesses in early childhood–respiratory tract infections, viral illness, diarrhea—that will require you to make a quick trip to the doctor. If you are employed and have health insurance or coverage from a health maintenance organization (HMO), find out if your baby may also be covered. Learn about the procedures to avail of these services.

Protect your future.

Now that you have a baby, you will have to think of ways to manage life’s uncertainties, like how to provide for your family’s needs in the unfortunate event that you pass away early or get disabled. This may be an opportune time to consider taking out a life insurance policy which is always cheaper to purchase when you are younger.

Invest in education (yes, this early!).

It is never too early to prepare for your baby’s education. At around 4, he will begin to attend preschool, and will continue to be in school for the next 15 years or so. Needless to say, the cost of education will account for a substantial part of the family’s budget, so it is something that you should begin to anticipate and plan for as early as you can.

Since the arrival of the baby heralds major changes in your life, it may be time to think about your life plans. Think of your life goals, the timetable with which you want to achieve these, and set up a financial plan to make this possible, taking into consideration the needs and wants of your now expanded family.

In the meantime, enjoy your bundle your joy!

source: www.abs-cbnnews.com

Why you should start investing in yourself

Seven steps to a better you

MANILA, Philippines - For parents with school-age children, May is that time of year when expenses start pouring in – from tuition to school supplies, in anticipation of the school opening in June.

And why not? Education is prized all over the world, not only for the learning, but also for the opportunities that it creates. Although it cannot be quantified or put into one’s personal net worth statement, education is an asset that could be worth as much as your bank account, the properties you own, or any of the assets you have accumulated.

Given the ever growing demand for new skill sets in the business world, learning should not stop after you graduate from college. It is imperative for people to continue to upgrade their knowledge and skills, and hopefully, create something of value in the process. So why not consider going back to school yourself? There are many ways to upgrade, either formally or informally.

Formal ways to upgrade your skill sets are done through higher education courses or any other training sessions in an institution. This would include post-graduate studies, executive education courses, diploma courses, certification programs, and the like.

Formal education courses have several advantages. The most important of these is that you are conferred a degree which can help raise your market value and allow you to meet the minimum requirements for some positions in some organizations. It also deepens your understanding of important areas in your field of specialization, introduces you to new concepts, techniques or ways of thinking, and allows you to network with people in the same field.

Formal education courses come at a price, which may vary depending on the institution or course that you have chosen. Many formal courses require full-time attendance, which may require you to leave employment.

There are also shorter formal education courses offered by organizations, running from as short as two weeks to six months, which may or may not require your full time attendance. Thankfully, technology has made available blended learning courses which allow a mix of face-to-face sessions and online discussions.

Informal training courses, on the other hand, may take the form of on-the-job training, apprenticeship or mentorship programs. They are often offered by companies to their own employees, although there are institutions that take in students specifically for this.

Some of these courses are focused on very specific skills, which may be most handy for immediate use in the workplace. Often, these run for a shorter period than formal courses, and may not cost as much. As such, you may not have to resign or take a long leave or sabbatical from your job when you enroll in such courses.

One of the biggest considerations of those who are thinking about pursuing higher education is the cost that it entails. Another is the time that they will have to allot for it, which may mean taking a leave from employment and subsequently, having no income during that period.

There are, of course, no hard and fast answers for those who are weighing their options. Each person’s circumstances and priorities are different, and decisions have to be made after careful consideration of many factors.

A single person in his third year of employment in a large multinational firm, for instance, has a different set of considerations from an individual with four dependents who is in his 15th year of employment in a microenterprise with a staff of 4. Your decision will also be influenced by your life plans, financial goals, and state of finances, among others.

If you would like to pursue higher studies now or in the future, here are seven points to help you in financing your plans to pursue higher education:
1. Look for scholarships. Many institutions offer scholarships to those who would like to avail of higher education courses in fields that they support. Apart from the universities themselves, look at foundations, industry associations, embassies, and the like.

2. Ask for a subsidy from your company. Some organizations will be willing to absorb the cost of your training, in exchange for time served in terms of employment. This is a win-win situation for you and your firm, as it allows the company to benefit from the training you will receive.

3. Ask for a sabbatical. Not only firms offer a sabbatical leave, but you can work this out with your employer if your concern is being out of a job right after your graduation.

4. Take out a loan. Just as you can take out a loan to finance a vacation getaway or a car, so can you take out a personal loan for your own degree.

5. Save for it. If your plan is to pursue a higher degree sometime in the future, begin a sinking fund where you can put in some funds regularly and invest it in a fund where it can grow. Draw on this when it is time to pay for your tuition.

6. Find some part-time jobs or projects. You may have lull periods while you are studying that you can use to take on some small projects, which can help fund your expenses while you are studying.

7. Consider other learning approaches, such as online courses. Online courses may allow you to keep your present job by not requiring your physical presence in the classroom. This will also help minimize your travel, lodging and other study-related expenses. What’s more, they cost less, if not come for free.

Here’s a to better you – and remember, learning is a lifelong process. Never stop!

source: www.abs-cbnnews.com

Own several credit cards? Here's when to say 'yes' to balance transfer

MANILA, Philippines - If you own more than one credit card, or if you’re being offered another one, you have most likely been offered a balance transfer scheme with the promise of attractive interest rates. Most card companies offer balance transfer programs, and market these to attract new customers.

Credit card balance transfers are a good financial tool for lowering your interest rate expenses and for consolidating multiple debts. A credit card balance transfer allows you to move the amount you owe in one credit card account to another credit card company.

For instance, you have an outstanding balance of P30,000 in Credit Card A. If you could not pay the whole amount when it falls due, you will be paying an amount higher than the minimum amount due, let’s say P10,000, and rolling off the balance of P10,000. In so doing, you will be paying an interest on the P20,000 plus the purchases you will be making after that.

In a credit card balance transfer, you can take the whole balance of P30,000 and transfer it to another credit at their balance transfer rate, which is usually lower than the regular interest rate. You will be asked to pay the balance in equal and successive monthly payments, within a time period chosen from the time of your application. The interest for this period is fixed from the beginning.

As you can see, the total amount you will be paying off under the balance transfer scheme can be less than keeping the amount on your credit card if you choose the right terms. It can help ease your cash flow, and allow you to better plan your budget.

Use credit card balance transfers judiciously. When used correctly as part of a financial plan, credit is a smart tool to attain your objectives. But when used whimsically, it can throw your budget out of whack.

A credit card balance transfer is usually not an additional credit line, so it is best to check with your credit card provider if you have concerns about your credit card limit. This facility simply affords you lower interest terms, and fixes your payment period. When availing of it, your object is to improve your cash flow or make your credit card payments more predictable, not expand your credit line.

If you are thinking of availing of the credit card balance transfer feature of your card, here are some notes to remember:

Understand interest rates.

Credit card companies usually offer an add-on rate. Loans with add-on interest are paid in equal installments every month, with principal and interest payments staying constant monthly. Feel free to ask for a computation using the balance you are considering to transfer as well as payment period, say 12 or 24 months.

Look at fees.

Credit card firms typically charge fees for transactions of this nature. Make sure that you perfectly understand the costs involved, not only for making the transfer, but for other issues such as late payment or early repayment. Some card companies may consider waiving the fees to get your business – so you should explore this too.

Pay on time.

Note that if you don’t make your credit card payments on time, there will be additional finance charges. These extra charges may negate the savings you have made in making the balance transfer or worse, make it higher.

Compare and compare.

Scan the market and compare rates. Don’t jump at the first offer you receive. Check out what others have to offer in interest rates and payment fees before making your decision. Make sure you also read the terms and conditions so no surprises down the road.

Be organized.

Sometimes, balance transfers are offered by credit card companies looking for new cardholders. If you sign up with one, that means you will have an additional credit card to maintain. Make sure that you do not confuse your payment schedules with the addition of a new card.

source: www.abs-cbnnews.com

Want to manage your finances better? Here are some apps

MANILA, Philippines - Managing your finances can be made much easier with some of the financial planning tools that are now available through your smart phone. Tracking your expenses, analyzing your budget, and scheduling payment of bills are just some examples of the many things that are easier to do with the apps.

Smart phones and apps offer many conveniences. For one, they allow you to record your transactions in real time. Since you almost always have your smart phone with you, you don’t have to get home to record your transaction in your spreadsheet. There are apps that let you store your receipts as well.

It’s also a very handy way to access your financial records. If you need information about your finances while you are at the bank, for instance, you can simply check your smart phone. They also provide you with a good recording system. You can synch your phone with your PC, providing you with an automatic back-up system. Best of all, it’s a paperless system, so you minimize waste.

Remember that apps are just a tool that would make financial planning easier for you. While some of these apps would give you financial advice, they do not take the place of financial planning. Also note that these apps process data based on what information it receives. Therefore, you should take pains to put in complete and accurate data. Use whatever advice the apps give in the context of your financial goals or as inputs that would guide your decision making process.

Apps can either run on Android, Apple’s IOS, or both platforms. Although most financial apps have been designed to be secure, exercise the same caution as you would in doing any online transaction.

For starters, check your own bank for their apps. The services offered vary but most would offer balance inquiry, balance transfers, and bills payments. At the same time, the Philippines’ top telecommunications carriers also offer financial services such as mobile wallets and mobile payments.

Other than those, here are some of the most useful finance apps worth checking out:

Mint.com
Free app, Android and IOs

One of the first personal finance apps, Mint.com syncs with your bank records and will even categorize these for you. It keeps track of your spending and categorizes them, so that you have an idea of how your budget looks like. It sends bill reminders, alerts, and even advice to your phone.

Level
Free app, iOS

Another budget tool is Level. It allows you to record your spending and monitor your transactions, and then it analyzes this and provides you with budgets for the day, week and the month. It also helps you create a plan to save money, or tweak the budget that Level automatically provides. It even tells you if you have overspent.

Koku
iOS

This app downloads and consolidates all your financial records, including your checking accounts, savings accounts or credit cards (f your bank is included in its list of banks). All you have to do is just refresh your account. This way, you do not have to log on to different online banking sites just to see your balance. If your bank is not among those that Koku can connect with, you can import your statements into Koku. The app also provides an analysis of your income and spending habits. Since it automatically syncs to iCloud, you will be able to access your account from anywhere using your Apple device.

Expense Manager
Free, Android

This app that lets you track your expenses by week, month or year, in different categories. You can take photos of your receipts and store it using this app. It also lets you automatically save information to a Dropbox account, so that you can check this from another PC or mobile device. It also includes payment alerts, a currency converter, tax calculator, and a tip calculator, among others.

MoneyWise
Free, Android

Another expense-tracking and budgeting tool, this app let you monitor cash flow and set personal financial goals. You can keep track of your expenses across categories, and it converts these into charts for your reference. Data can be exported as HTML or into Excel.

Money
iOS

For businesses, Money is an app that tracks and balances cash, debit, credit and savings accounts by importing these files. There are tabs for your balance, transactions, budgets, and reports. It can convert currencies automatically. It syncs with ICloud, which makes the information available on other devices.

Unleash
Free, iOS

Unleash monitors your company's income, expenses, profits, cash, profit margin and valuation. It tracks collections, and lets you know when customers’ payments are overdue. If you want to compare how your company is performing against US small businesses in your industry, this app will allow you to see comparisons. It also provides a facility for making financial projections based specific scenarios, like hiring additional personnel or increasing sales volume.

Expensfy
iOS

For travellers, Expensify is a useful app that keeps track of your business expenses and mileage. It also lets you scan, upload and file receipts which can be made into expense reports that you can readily submit to your supervisors when you get back to the office.

Toshl Finance
Free, iOS and Android

Toshl is an expense and budget tracker. It works with any currency and separates your travel expenses from the rest of your finance. It syncs across multiple devices.

Other expense tracking apps worth looking at are Spending Tracker, Money Zen, and Spendee.

In using any of these Apps, make sure that your account information will remain private and are accessible only with strong passwords known to you and only you.

source: www.abs-cbnnews.com

Why you should make a 'money roadmap' for 2014

MANILA, Philippines - All motorists understand that a good map is worth its weight in gold, especially if you are navigating in difficult conditions. In this age of GPS or global positioning system, charting one’s course has never been easier. Are you doing the same with your money?

The best way to open the year on the right footing is to have an idea of where you’re going. This is why the beginning days of 2014 is a great time to work on a personal financial plan. This could serve as a roadmap that will guide you in the year ahead.

Why do you need a personal financial plan?

In a nutshell, it’s your map that would guide your spending and investment decisions to help you reach your goals. Simply put, how to get from A (your money situation right now) to B (your goals).

A personal financial plan may also be likened to a blueprint of a house that you are building. While it may be fun to think of how to decorate individual rooms and make your choice of toilet fixtures, you cannot create a sound house without having an architectural plan first.

Similarly, making spending and investment decisions that are not part of a personal financial plan could keep you from achieving your goals of having a secure financial future optimally.

What goes into a personal financial plan? It should have your goals on one hand, and your personal financial profile on the other. Here are some tips to get you started in working on the different components of your personal financial plan.

Your goals:

Look at every facet of your life and try to come up with comprehensive goals. These could cover the following aspects:

Intellectual goals.

This could include continued education, whether graduate studies or short courses. You may wish to add accreditation tests that will help further your professional career, or learn new skills to enhance your capabilities. Consider if you would like to venture into new or related disciplines as well. Also think of your educational goals for your children—possibly university education abroad or extra courses.

Professional goals.

If you are employed, think of where you would like to be in the medium and long term. Do not limit yourself to just positions within your organization, but consider what other companies you may want to work for. Also think of other disciplines that you may want to move on to. You may also be thinking of putting up your own business. Include this in this plan.

Lifestyle goals.

This would cover your aspirations on how you plan to live. It includes leisure, travel, and entertainment. Perhaps you plan to celebrate your 25th wedding anniversary or intend to have yearly vacations abroad with your family. There may also be sports that you plan to take up, or hobbies that you would like to pursue.

Relocation goals.

If you intend to move out of the country, this should be part of your personal financial plan.

Going through the list above, think of what you would like to be and what you want to have very soon, in the near future, and in the distant future. These will constitute your short, medium, and long-term plans. Define these by a timeframe – short term could mean the present up to the next three months; medium term could mean the next three years; and long term may mean anytime from five years and above.

Estimate how much you would need to achieve your different goals. For instance, if you plan to buy a car in the next six months, indicate how much you think this would cost.

Your financial profile:

List down your current income streams.

This would include your monthly pay (if you are employed), your earnings (if you have a business), interest or investment income, rental income, and all others as the case may be.

Do an inventory of your assets.

This will include your savings accounts, real estate, cars, insurance plans, shares of stock, your retirement fund, and all others as the case may be.

List down your debt.

This will include your credit card debt, amortizations on real estate or car purchases, and other personal debt that you may have taken.

Examine your expenses.

Based on your past months’ expenses, determine how much you spend on different things: utilities, rental, education, transportation, entertainment, etc. This will be helpful as you make a financial plan that will help you achieve your goals.

Your financial strategy:

Looking at your goals, now expressed in peso terms, against your current financial profile, project how much you need in savings or investments to be able to have these in the future. For this, you would need an investment plan to grow your wealth, and a spending plan, to manage your expenses.

Take note of your current life stage. Your financial strategy is determined by your current life stage—you may have just started working, you may have just had a baby, or you may be just a year away from retirement. This may also determine your risk appetite, which refers to your willingness to invest in high-yielding, but high-risk investment instruments.

Seeing your goals and financial net worth on paper will make it easier for you to design a financial strategy. If you need help in coming up with a financial plan, consult a professional financial planner. Banks and other financial firms would be glad to provide these services to you, and help you on your path to a more secure financial future.

Happy planning!

source: www.abs-cbnnews.com

Top 3 financial moves you should make in 2014

MANILA, Philippines – As rising interest rates and global financial issues loom in 2014, financial advisor Salve Duplito said there are top three financial moves that Filipinos should consider making in the new year.

Rebalance your investments

Duplito said shifting funds to other investments and cash saving instruments depending on your needs is a good idea to start the year.

“If you have short-term needs like tuition, shift your money into cash or near cash instruments like money market funds or time deposits,” she said on ANC’s “On The Money.”

“Make sure you have cash reserved for buying assets when the opportunity looks right,” she added.

Pay off consumer loans

Duplito said paying off consumer loans should be prioritized because now “is the worst time to be in debt.”

“For long-term loans, lock in at the lowest rate possible as interest rates may be on the uptrend,” she said.

Duplito also noted that one of 2013’s black smudge is credit card debt. As of June 2013, Filipinos spent P150 billion using their credit cards.

Make sure you are not under-insured

Lastly, Duplito said you should protect yourself with insurance before investing your money.

But she also stressed to think twice before subscribing to an investment-linked insurance at the danger of under-insuring yourself.

“Rethink your strategy, protection should come first before investing,” she said.

source: www.abs-cbnnews.com

How you can grow your money in 2014

MANILA, Philippines - It’s the time of the year when new year’s resolutions are made. Often, these have to do with improving one’s health and wellness. When thinking of these, why not try to include resolutions that will make you money smarter?

After all, being of sound financial standing could contribute enormously to both your mental and emotional well-being.

Since sound financial health results from good planning and discipline, it pays to have a few resolutions that can guide your decision making process in the months ahead. But as with all start-of-the-year promises, remember that resolutions only work if you keep them. Here are some seven suggestions on what you can look at to improve your financial health in the year ahead.

1. Set money goals.

Now’s a good time to set short-term, medium-term, and long-term money goals for you and for your family. Short-term goals would cover anything you’d like to do in the next 3 to 12months —possibly a gadget you’d like to buy, or a vacation you’d like to take.

Medium term would cover those plans you intend to do in the next five years — maybe purchase a car, or perhaps go back to school. Long-term plans would include a much longer horizon — say a comfortable retirement, or a vacation home.

List these down, plus timing when you would like to achieve them and how much you think they’ll cost. Knowing what you want is the first thing you need to be able to plan well.

2. Keep money records.

Gather records pertaining to your finances — your bank accounts, investments, credit card bills, tax filings, pay slips, to name a few. This will give you a better idea about your financial standing, and may provide you additional insight on your income, cash flow, and investment needs. Keep a record of these important documents. Many find this to be tedious and leave it for later, but later can be now and start you on the road to a better understanding of your money.

3. Have a budget.

Come up with a realistic budget that you can stick to. In creating one, make sure you look at all aspects of your life that you spend on. You may also wish to think of how your typical work day unfolds to identify the moments when you have to spend. For instance, on your way to work, you need to pay for gasoline or transportation. Once you get to the office, you need to buy breakfast.

Your updated records would provide important information you need in coming up with a realistic budget. Note that this budget is not only a tool that would help you manage your expenses and project your cash needs, but it could also help you achieve your financial goals in the long run.

4. Cut expenses.

Based on your budget and your updated records, you may be able to identify what you are spending a lot of money on. Look at those areas where you can cut expenses.

Could you have spent so much on gasoline because you are using a gas guzzler? Have you spent so much on car repairs because your 20-year old car is constantly breaking down? Are you spending way too much on food because you are getting your snacks and groceries from the 24-hour convenience store?

Of course, you may also have to do some cuts if you discover that you have spent way too much on something. For instance, do you really need to visit the coffee shop two times a day? Do you buy dresses weekly only to hoard them in your closet? Take a hard look at your life to know where you can make the cuts.

5. Save.

Pay yourself first whenever you receive your salary or earn a bonus. Do this before you spend on your other necessities. This way, savings becomes a basic need as well.

Most people prefer to pay off all their bills and buy the things they “need” before setting aside money for a rainy day. More often than not, they find there is nothing left over. But if you start the discipline of setting aside for your savings fund before settling all other expenses, you’ll find you have better chances of increasing your savings pot.

6. Invest.

Once you’ve built up a healthy savings fund, time to consider investing to make your money work harder for you. Whether it is for capital preservation or to grow your wealth, there are various investment funds and vehicles that may be worth looking at, depending on your individual needs. Consult a financial professional to better understand what will be best for your needs.

7. Live within your means.

There is nothing wrong with occasionally splurging on the finer things in life. You do have to reward yourself every so often However, it is necessary to know how much you can afford to spend on non-essential items.

People’s definitions of non-essential items would vary but they could very well include all expenses that you do not necessarily need, but simply want. Try to keep non-essential purchases up to a certain percentage of your income. This way, you can enjoy some things you’ve always wanted without necessarily busting your budget.

source: www.abs-cbnnews.com

13 financial resolutions for the New Year

MANILA, Philippines – With the New Year only days away, you should not only consider physical health in your resolutions but financial health as well.

ANC’s “On The Money” listed some financial resolutions to help you reach your financial goals:

Review your budget and spending habits
Making a list of the items and activities you spent for during the year will help you anticipate where you spend most on and where you can cut back.

Check the amount of savings you have at the end of the year
Pay off credit card debt you may have
Set your money goals
When you have accounted the saving you made for the year, use it to pay off any debts you may have to enter the New Year debt-free.

It will also help you set your money goals for the coming year.

“[Ask yourself], ‘This is how much I am making in 2013, will I ask for a raise this time?’ At least write it down in your head so you know where you are going, you know where your road map for 2014 is when it comes to your finances,” registered financial planner Rowena Suarez told ANC.

Get income protection through insurance
Health insurance
“Without [health insurance], you cannot work anymore if you are sick, and another thing is the high cost of medical expenses,” said Suarez.

Set a spending budget and review it regularly
Create an emergency fund equivalent to 3 to 6 months worth of expenses
Suarez said if your expenses reach P100,000 a month, then you need to have around P300,000 to P600,000 in your bank account for emergency funds.

“Don’t touch that,” she stressed.
Figure out your financial needs for retirement
Set up an automatic payment plan to pay yourself first
An automatic payment plan will also help you save every month, Suarez said.

“Sign up for an automatic savings plan system. Like every month, take out P5,000 or P10,000 from your account, and that’s like paying yourself,” she said.

Adopt a healthy lifestyle
Meet regularly with your family to discuss finances
Become financially literate
Suarez noted that becoming financially literate is key in reaching financial goals to prevent joining savings programs that don’t yield good interest.

“Get educated when it comes to financial programs. You have to look around and scout around, and study. There’s so many programs right now that gives free learning,” she said.

source: www.abs-cbnnews.com

How to set goals for a personal financial plan

MANILA, Philippines – The road to financial freedom begins in writing your own financial plan.

Salve Duplito, ANC’s resident financial advisor, said a simple financial plan has three important contents: goals and time frame, financial inventory and a financial road map.

“It’s like going on a financial road trip. You need to know where you want to go, what car you have and the gas level, and how you intend to go there,” she said on ANC's “On The Money.”

Duplito said the most crucial part of writing a financial plan is setting the goals.

But before doing this, Duplito said you should first build a value-based system to determine the importance of money to you.

“Financial planning is not just about the money, it is about finding the money that will allow you to enjoy the things you want most out of life,” she said.

Duplito suggested listing down tangible financial goals that allow you to fulfill your values and set deadlines for these goals.

She advised having a "values conversation" with your partner to determine what in life you value most.

If, for example, the answer to the question "What is important about money to you?" is security, the next question is, "What is important about security to you?", and so on.

When the goals are set, bring out all your financial documents from insurance to mortgage and list them down in a worksheet.

Duplito said for the number crunching part, it is best to consult an expert financial planner who can help in cash flow planning, investment planning and tax planning.

source: www.abs-cbnnews.com

What's your money personality?

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

Want to make your first million? Here are some tips

MANILA, Philippines – Students planning for their future should not only start saving, but should also consider investing their money.

On ANC’s “On The Money,” financial planning expert Salve Duplito stressed the power of compounding, saying that while saving up is important, there are bigger rewards in investing.

Savings as little as P25 every day from daily allowances can make earning that first million possible before the age of 50 if it is invested.

“If you start saving P25 every school day starting today and invest that at an 8% return every year, your little savings will grow to a million by age 49,” she said.

Putting money in individual stocks of companies that you are familiar with should also be considered.

“If you invested P25,000 in Jollibee in 2003, your money would be worth around P234,882 by early September 2013,” she said. This amount does not include dividends paid out by Jollibee over the period.

“This historical returns in no way guarantee that you will enjoy the same earnings in the future, but they show you what can happen if you study investing and not afraid of losing some money while learning,” said Duplito.

She noted that students are in the best position to invest because they have the luxury of time to learn, to make mistakes, and to recover.

Students with huge savings and are not breadwinners of the family can also benefit from the power of compounding.

For instance, a student with P200,000 savings can invest half of the amount in direct investments in blue chip stocks or equity funds.

The amount of P50,000 can be placed in a time deposit or money market account, while the remaining P50,000 can be used to start a business.

Duplito advised that personal and business finances should be separated.

“This way, you won’t spend money on gadgets you suddenly think you need. When you do that, you cannibalize your own business and at the same time, you can also avoid putting all your money into the business and forget to save for your future,” she said.

When eyeing that first million, Duplito suggested laying out figures on an Excel worksheet to figure out how much to invest every month and what kind of returns to target to reach the goal.

“Let interest from your investments earn interest and you will see the miracle of compounding by the time you reach 30,” she said.

source: www.abs-cbnnews.com

Is losing weight linked to gaining wealth?

MANILA, Philippines – Is there a correlation between weight loss and wealth gain?

On ANC’s “On The Money,” co-host and finance planning expert Salve Duplito said losing a little weight does nothing to wealth but those who have lost significant weight showed a significant increase in their net income, citing a study in the US.

The study, conducted by Jay Zagorsky of Ohio State University’s Center For Human Resource Research, said “individuals who lose small amounts of weight experience little change in net worth, but those who lose large amounts of weight have a dramatically improved financial position.”

Duplito, however, believes more studies are needed to find the direct correlation between biology and economics.

“This study alone does not in any way indicate that those who have weight problems are in debt or have financial trouble, and those that are thin lead perfect lives,” she said.

Despite this, Duplito said there are similarities in the process of losing weight and gaining wealth, saying both take time and taking shortcuts may bring disastrous results.

“Fad diets hurt our wealth while being greedy and getting into scams hurt our wallet. Exercise won’t make us thin in a day. Investing, at least legally, won’t make us rich in a day,” she said.

She also said “consistency counts” in trying to lose weight and in trying to build wealth.

Duplito said losing weight and gaining wealth are simple to do, but noting that “simple” and “easy” are not the same.

“It takes a lot of discipline…If you can lose weight, you can dig deep with the same discipline to control your spending and keep investing regularly,” she said.

source: www.abs-cbnnews.com

Want to retire in 12 years? Follow these saving tips

MANILA, Philippines – Retirement is possible in 12 years for a young professional who is following the ideal formula of saving and investing, a financial planning expert said.

Joe Ferreria, president of MoneyDoctors Inc. said any person can plan finances by doing personal financial diagnostics in five steps -- calculating savings potential,
calculating personal liquidity, calculating personal liquidity ratio, calculating expenses, and expense audit.

He said it is ideal to save 30% of income into a product that yields an average of 12% interest a year.

An employee can calculate savings potential by getting a percentage of monthly income, multiply that by 12 months, then multiply the product by 5 years.

“Compare how much you have versus what you aspire for. So therefore you will know that if the amount you have in the bank is greater than your potential to save, you’re doing very well. If it’s not, therefore you need to do a little bit more work in saving money,” Ferreria said on ANC’s “On The Money.”

Calculating personal liquidity comes from annual job income and annual income from investment.

The goal is for funds to generate income equal to your own.

For example, if annual income from your job is P200,000, and annual income from investment is only P100,000, this only equals 50% of the active income.

The passive income should equal the active income.

“You can continue to work, but you can slow down a little bit and enjoy your life,” said Ferreria.

The personal liquidity ratio, meanwhile, is the percentage of assets you should have in cash, which ideally is the figure acquired by adding 10 to a person’s age.

“If you’re 70 years old, plus 10, 80% should be cash assets because as you grow older, you don’t need more real estate but more cash flow,” Ferreria said.

For expenses, Ferreria noted that it should be divided into three categories: survival, lifestyle, and work-related.

He said it is important to stay within 10% of income for lifestyle and work expenses and within 50% for survival expenses.

“I admire the Chinese for their thrift and one of the things I’ve noticed with them is that to save on expenses, they will live above their stores, and you will see that even if their income has grown exponentially, they still live above their stores. It takes a long while before they move to a better house. They allow the income to go far ahead while the expense, they keep it at a very simple ratio over income,” he said.

To slow down the outflow of cash, Ferreria advises to cut back on expenses and divide the expenses into a weekly basis.

He added that amortizations should not be serviced with more than 15% of income.

“You add up all of your assets. For example it comes up to about P500,000. Six months later you add all your assets again, if it gets to P600,000 from P500,000, it means that you have started to succeed. If it did not, then you need to be more honest with yourself,” he said.

After sorting out the diagnostics and with enough savings, employees can begin investing.

Ferreria said one month of expenses should be placed into disbursement account, another month of expenses into time deposit for unforeseen circumstances, and 30% of income into a fixed income mutual fund yielding 8 to 12%.

“You can’t go wrong if you stay with the top 3 banks. On a regular basis, whatever is in excess of your income, you just put it there,” said Ferreria. -- With a report from Melissa Gecolea, ANC

source: www.abs-cbnnews.com

5 Reasons Why You're In Debt Up To Your Eyeballs

We've all seen the LendingTree commercials where the guy sarcastically says: "I'm in debt up to my eyeballs. I can barely pay my finance charges. Somebody help me!"

If that sounds like you, read on. Here are a few reasons why you're swimming in debt and what you can do about it.

No spending plan. Without a plan or financial goals, you're headed down the road to digging yourself deeper into debt. A spending plan establishes goals and principles. If your goal is to save $20,000 for an emergency fund, then you need to avoid more debt along the way. Since debt must be paid back, it would take away from funding the $20,000 goal.

Keeping up with everyone else. Your neighbor just pulled into his driveway with a new Ford Mustang, and you immediately think about buying the new Infiniti luxury sedan. That's what we know as keeping up with the Joneses. But it doesn't stop there. Your sister tells you she just picked up the latest purse in the Louis Vuitton spring line, and you think about that Chloe bag you didn't really want until now. We do this to ourselves because we don't want to feel we're missing out on the finer things in life. But what we miss is the reality of the Jones' financial situation. If they're living on credit, you'd never know because you're so blinded by their bling. Take a step back and assess the real reasons behind your newest impulsive purchase, and then take action.

Lack of discipline. Just as you begin to think about purchasing a new car because your neighbor recently bought one, hopefully you have enough restraint to consider the impact on your spending plan. If your goal is to get out and stay out of debt, then discipline will play a major role in your daily financial life. Financial discipline will help you assess your goals and consequences when faced with a decision that could potentially take you off the plan. Discipline is your friend. Embrace it.

Buying a new car every few years. Remember the car your neighbor bought? Well, let's just say you're about six months from paying off your current vehicle, but you've now convinced yourself that it's time to get a new car because "I deserve it." This is a classic reason why so many people dig in and remain in debt. Most people relish the idea of not having a car payment, and others relish the new car smell and feel every few years. You must decide what's more important to you -- living a debt-free life or cruising in the latest model.

In your world, credit is king. You enjoy a little retail therapy because you've had a hard week.But your bank accounts are overdrawn. Not to worry, you've got good ole MasterCard coming to your rescue. The problem? Your cards are mastering you and not the other way around. You've become so addicted to the plastic that you hardly recognize your spending plan anymore. As with the guy from the LendingTree commercials, your life is largely financed by your debt. But it's driving you crazy and will cause many sleepless nights ahead.

Here's the thing about getting out of debt: It requires a strong but realistic spending plan that you can stick with through the end. This is a "living" plan that will change along the way, but that's the beauty of it all.

Forget keeping up with everyone else, and cut up your credit cards. Spending your time trying to impress people who don't factor into your bottom line is a waste of money and will impede your financial goals. Assess your financial goals, and decide if having a new car is truly worth the money spent. Remember, it's no fun being stressed because your finances are out of control. Take control now, and enjoy the fruits of your efforts along the way.

source: dailyfinance.com

5 Counterintuitive Financial Tips That Work

Russell Holcombe, a certified financial planner based in Atlanta, says he's tired of constantly warning clients against making bad money choices. Part of the problem, he says, is that popular financial advice is often wrong. That's why he finds himself urging people to rethink purchasing houses that would max out their budgets, or putting so much money into retirement accounts that they're unprepared for emergencies.

"I had a certain level of exhaustion from having to protect people from a bad decision-making process," he says. Through his work with clients, he says he realized that their ability to recover from negative financial events depended more on how they had structured their lifestyle than on any investment strategy. That's why in his book, "You Should Only Have to Get Rich Once," he offers counterintuitive advice that's centered more on life decisions than stock market ones.

Holcombe offers these five under-the-radar strategies to help you avoid what he calls "financial suicide":

Buy a smaller house. "During the housing boom of '04 and '05, you would hear people go out with real estate agents who said, 'Your income lets you buy an $800,000 house,' " Holcombe recalls. Most people would go ahead and buy a house at the highest end of what they could afford, while just a fraction would hold back and say, "We're only going to buy a house based on one income," Holcombe says. The people who made that choice ended up coming out ahead during the turbulent economy, when many people lost jobs, he adds.

Don't save for retirement. Okay, save for retirement, but don't tie up so much of your savings in post-tax retirement accounts like 401(k)s that you can't weather financial storms when they hit, Holcombe advises. "The ability to survive is based on the ability to adapt," Holcombe says, and tying up money in certain types of restrictive savings accounts, such as retirement and college savings accounts, means you have less flexibility to invest in other things or pay bills.

Many people end up paying fees and penalties when they have to withdraw from retirement accounts early, Holcombe points out. So yes, save for retirement, but don't forget to prioritize shorter-term savings accounts, too. If you're an entrepreneur, you might want to consider investing in your business instead of your retirement account, he adds.

Forget about stocks. "For financial advisers, all roads lead to stocks," Holcombe says, adding that such a one-track mindset is a problem. "For the people that I know who are successful and endure financial traumas, the market is irrelevant to them. It's not the reason for their success, it's a tool," he adds. So while investing in stocks might be part of a larger financial strategy, Holcombe recommends against getting too preoccupied with investment strategy.

Instead, focus on a "perpetual income stream." Holcombe says everyone should consider how they can build their own "perpetual income stream," which consistently pays out cash over time. A doctor might buy a medical building that generates rent, a writer might generate royalties off of a book, a retiree might invest in a dividend-paying portfolio. "Perpetual income streams are the holy grail in business, from Comcast to Netflix. Everybody is trying to move to that model because they get paid whether you tune in or not. Some people have the talent to create them and some don't," he says. "There's no one size fits all," he adds.

Holcombe urges people to avoid traditional investments that generate income, like annuities, because he says "they are super expensive and you can't change your mind."

Calculate your "lifestyle cash flow." When people try to get on top of their money, Holcombe says they often start tracking all of their expenditures, from gas to food, or their net worth. He calls such calculations "totally meaningless." Instead, he says, people should focus on the expenses that can't be changed quickly, including a mortgage or debt payments. "It shows how quickly you can adapt to a traumatic event [like a job loss]," he says. He uses the term "lifestyle cash flow" to describe the cash flow required each year to pay the bills.

As long as you're earning enough money to cover those expenses, then you can feel relatively financially secure, Holcombe says, adding, "If you're spending money on something that's not making you happy, then kill it quickly."

source: dailyfinance.com