This has always been a problem to most of us OFW. Most often our salaries are just enough to buy food, clothes, send money to the Philippines and a few savings (if ever there is).
My salary is 3000 dirhams. I pay 500 rent every month plus dewa. I have a 10,000 credit card loan. I need to send 800 dirhams to Philippines. I buy 1 pack cigarettes a day. I commute to metro. I buy personal supplies, etc.
So how in the world can I save and INVEST? Forget about it? Think again. The system below requires a lot of discipline and you can amend it to suit your personal interest.
I've been doing this system for quite a while and it works 99% all the time. Here you go.
When you receive your salary, you must divide it into six categories. Buy six envelopes and mark them each with the title below.
1. Spiritual Fund. (85 dirhams)
Give back to God. Any form of help like giving money to foundations, to your uncles in need, to the church or to the poor. It should be specific e.g 1000 pesos (85 dirhams) a month. Money is just a symbol of value. The more you give, the more it will come back to you. It is one of the natural laws of life. Others call it Law of attraction. Once your money increases, please give more to this fund.
2. Retirement Fund (515 dirhams)
Buy a piggy bank and put your monthly savings there. Once it reaches 2500 dirhams, go and apply for a Citiseconline account (this is where I do my stocks transactions). Once you have send your money to them, never ever touch that until you retired from working. The reason why this is the second envelope and not the last one is because we need to save first before spending our salary to various expenses. Yes, this is a must to do task every time you receive your salary.
3. Emergency Fund ( 500 dirhams)
Maybe you have savings every month but when an emergency comes in, all are gone. And you are back to square one again. You save again, an emergency comes in (e.g. the roof is leaking, tuition fees, children school projects, relatives in the hospital, etc) and you go back to square one again. It's a cycle. It's a VICIOUS CYCLE that if you won't do anything, nothing will change. So set aside an emergency fund so that when the emergency comes in, your savings are not touched. You have a fund that will take care of them. If this fund reaches 500% of your salary (3000 dithams multiply by 5 times = 15,000 dirhams), you can invest the 50% (15000 dirhams divide by 2 = 7500 dirhams) to the stocks.
4. Daily Expenses Fund (500 dirhams)
You need to buy a napkin, toothpaste, shampoo, soap, perfume, food, etc. Cost is let's say 500 dirhams. Ok, maybe that is not realistic because perfume alone cost 200 dirhams. Well, I have friends who live on a 100 dirhams a week. That is 400 dirhams in one month. If they can do it, you can do it also. I'm adding 100 dirhams for miscellaneous expenses.
5. Remittance Fund (800 dirhams)
One of the reason why we go abroad is because we want to help our family back home. We want them to live a better life while we continue to live in misery here in abroad and far away from them( just kidding). Of course we need to send money for our siblings/children's tuition fees, their allowances and daily expenses there. You have their daily expenses there and you also have yours here. Double whammy isn't? Well, when you are at your deathbed, you will never regret that you have given all of what you have for your family.
6. Rent Fund(600 dirhams)
Of course we need to pay this wether we like or not. Otherwise we will sleep under the bridge just like what Aga did in the movie Dubai.
Total = 3000 dirhams.
If you have a credit card loan, you need to PAY them as fast as you can. In this case, your 515 dirhams (Retirement Fund) should be used for paying the credit card. There is no logic in saving while you have a mountain loans to pay. Loans are good only in BUSINESS but never in personal consumption. Do you know that if you only pay the minimum amount, the actual interest that bank is charging you every year is actually more than 40%? Yes, that is why most banks will encourage you to pay the minimum only.
Do not take credit cards! The maximum credit cards you should have is one and you should pay them before even reaching the monthly statement date.
My salary is 3000 dirhams. I pay 500 rent every month plus dewa. I have a 10,000 credit card loan. I need to send 800 dirhams to Philippines. I buy 1 pack cigarettes a day. I commute to metro. I buy personal supplies, etc.So how in the world can I save and INVEST? Forget about it? Think again. The system below requires a lot of discipline and you can amend it to suit your personal interest.
I've been doing this system for quite a while and it works 99% all the time. Here you go.
When you receive your salary, you must divide it into six categories. Buy six envelopes and mark them each with the title below.
1. Spiritual Fund. (85 dirhams)
Give back to God. Any form of help like giving money to foundations, to your uncles in need, to the church or to the poor. It should be specific e.g 1000 pesos (85 dirhams) a month. Money is just a symbol of value. The more you give, the more it will come back to you. It is one of the natural laws of life. Others call it Law of attraction. Once your money increases, please give more to this fund.
2. Retirement Fund (515 dirhams)
Buy a piggy bank and put your monthly savings there. Once it reaches 2500 dirhams, go and apply for a Citiseconline account (this is where I do my stocks transactions). Once you have send your money to them, never ever touch that until you retired from working. The reason why this is the second envelope and not the last one is because we need to save first before spending our salary to various expenses. Yes, this is a must to do task every time you receive your salary.
3. Emergency Fund ( 500 dirhams)
Maybe you have savings every month but when an emergency comes in, all are gone. And you are back to square one again. You save again, an emergency comes in (e.g. the roof is leaking, tuition fees, children school projects, relatives in the hospital, etc) and you go back to square one again. It's a cycle. It's a VICIOUS CYCLE that if you won't do anything, nothing will change. So set aside an emergency fund so that when the emergency comes in, your savings are not touched. You have a fund that will take care of them. If this fund reaches 500% of your salary (3000 dithams multiply by 5 times = 15,000 dirhams), you can invest the 50% (15000 dirhams divide by 2 = 7500 dirhams) to the stocks.
4. Daily Expenses Fund (500 dirhams)
You need to buy a napkin, toothpaste, shampoo, soap, perfume, food, etc. Cost is let's say 500 dirhams. Ok, maybe that is not realistic because perfume alone cost 200 dirhams. Well, I have friends who live on a 100 dirhams a week. That is 400 dirhams in one month. If they can do it, you can do it also. I'm adding 100 dirhams for miscellaneous expenses.5. Remittance Fund (800 dirhams)
One of the reason why we go abroad is because we want to help our family back home. We want them to live a better life while we continue to live in misery here in abroad and far away from them( just kidding). Of course we need to send money for our siblings/children's tuition fees, their allowances and daily expenses there. You have their daily expenses there and you also have yours here. Double whammy isn't? Well, when you are at your deathbed, you will never regret that you have given all of what you have for your family.
6. Rent Fund(600 dirhams)
Of course we need to pay this wether we like or not. Otherwise we will sleep under the bridge just like what Aga did in the movie Dubai.
Total = 3000 dirhams.
If you have a credit card loan, you need to PAY them as fast as you can. In this case, your 515 dirhams (Retirement Fund) should be used for paying the credit card. There is no logic in saving while you have a mountain loans to pay. Loans are good only in BUSINESS but never in personal consumption. Do you know that if you only pay the minimum amount, the actual interest that bank is charging you every year is actually more than 40%? Yes, that is why most banks will encourage you to pay the minimum only.Do not take credit cards! The maximum credit cards you should have is one and you should pay them before even reaching the monthly statement date.
hey check my post at http://investinginphilippines.blogspot.com/2010/06/how-to-start-investing-even-if-you-have.html we same to have the same topic :)
ReplyDeleteclassmate, i will check your blog.
ReplyDeletei just checked your blog and i think it is already complete with all the requirements of sir jomar. still a long way to go for me but im expecting an overflowing blessings on this one.
ReplyDelete