Category Archive: Household Tips
Subcategories: No categories
I’m excited to tell you that I have just been invited to be a guest contributor in Rainy Days and Mom Days. Yay!
The article is about 12 ways to teach kids about money. These are simple but practical ways of teaching your kids. These activities should be incorporated in your everyday life. Kids don’t really listen when you lecture them so it’s better to show them.
I’m not going to share the tips here so do head to Rainy Days and Mom Days for the full text.
Browsing through Pinoy Money Talk, a thread caught my eye. PMT member ahock posted a hypothetical question regarding being laid off. In a nutshell (and editing it), here’s ahock’s question:
Can you give an unsolicited advice for people who will be laid off and don’t know what will they do with their money? These are the scenarios and assumptions:
* Two kids are in elementary
* Wife is a homemaker
* No emergency fund
* Will take one year to get a job
* 1M net is the separation/redundant pay of the father
* No debt except for mortgage/rent
Earlier, I posted an entry on how to survive the economic crisis (see link). Given the assumptions and hypothetical scenarios that ahock posted, these are my suggestions:
1. Determine the fixed monthly expenses.
These should be electricity, water, rent, grocery, insurance, car maintenance, etc. Because the assumption is that two kids are in elementary school and the missus is a homemaker, you need to determine how much are the annual tuition of the two kids and then divide it into 12.
Let’s assume the fixed monthly expenses of the household, including tuition, is at P40,000. When you arrive at a number, multiply it by 12 (meaning 12 months it will take daddy to get a job) and save it at a high-interest time deposit or special deposit account (SDA).
With P480,000 earmarked for emergency fund, you will have about PhP520,000 left.
2. Cut the fat and stick with the budget.
Because the dad is laid off, it is important that all family members are updated on the financial status of the company. Dad and mom should lay the cards on the table and tell the kids what they need to contribute to the well-being of the family. The kids must forego buying their lunch at the school cafeteria and just make do with mommy’s homecooked meal. Mommy has to stop getting her weekly spa until Dad gets a regular job. Daddy has to stop souping up the family car.
Whatever sacrifices you commit to do, keep in mind that you are doing this for the family.
3. Decide on what to do with the remaining money.
PhP520,000 is quite a sum of money that you can grow easily. If you choose the safer track, you can place the entire money in a high-interest time deposit like First Country Bank’s Katuparan Special Savings (see related link). PhP520,000 at a 90-day holding period will give you PhP8,580 every quarter. Kept for one year, you will earn around PhP37,000.
If dad or mom doesn’t have a life insurance in place, I suggest that they get one. Some life insurance have low payments and short paying periods. My own life insurance from Sunlife has a premium of PhP300,000 with a quarterly payment of PhP2,300, payable in 10 years. The life insurance is important in case something happens to dad or mom.
Personally, I’d prefer if the remaining money is placed in a safe and sound investment instrument until the dad finally gets a job. Because the family is in an unstable position, the money should be accessible anytime needed.
4. Start a small business.
To augment the family income and since dad is still searching for a job, you can allot a small amount of money and start a business. A cell-phone load business can be set up for PhP10,000. If you don’t want to touch your money, you can also gather items from your home that are still in good condition but you no longer use. You can set a Multiply or eBay account and sell them online (see Earn extra through online selling). The idea is to make money out of items that you and your family no longer use. You can also hold a garage sale. You can gather your kids’ old toys, your husband’s old pants, sell the bags you no longer like, and make money out of it.
Two days ago, I read in Inquirer website that Jomari Yllana and Pops Fernandez have parted ways. No, it wasn’t because of a third party, a common reason of showbiz break-ups. Showbiz sources claim that the separation was because of M-O-N-E-Y.
Yesterday, Jomari Yllana confirmed the break-up and was published by Ricky Lo in his Philippine Star column. Yllana denies that it was about money, stating that the reason is because of “irreconcilable differences.”
Money problems among couples (whether married or not) are common. In the US, money is one of the top reasons marriages end up in divorce. It’s not really a mystery why this is so. We all come from different backgrounds, culture, biases. Most of the time, the money lessons we learn from childhood are the same lessons we apply in our married life. If you grew up in a family that lacked money, you may grow up trying to fill that emptiness by being a spendthrift. Or maybe you saw your parents struggle with money that you learned to be a miser.
But whatever your background or views are about money, it is important that you and your (soon-to-be) spouse are on the same financial page. My tips are lessons I’ve learned observing my parents, aunts/uncles, and married friends. Feel free to add to the list.
1. Come clean.
Before you even take the plunge and marry your true love, come clean with your financial mess. If you have credit cards, tell your fiance/e how much debt you have. If you are a shopaholic, let him know, as well. You should tell your partner as soon as he proposes to you or you propose to her. NEVER tell your partner the night before the wedding.
2. Agree on a budget.
Suze Orman recommends that couples should divide the household expenses based on equal percentages (and not equal amounts). In a two-income family, 99% of the time, one spouse outearns the other. How do you do this?
First, determine the net income you and your spouse makes. Then, list down all the monthly expenses. If the income of one spouse comprises 20% of total family income, then that spouse should shoulder 20% of the expenses. The other spouse, therefore, shoulders the 80% of the household bills because essentially, his income comprises 80% of the family income.
3. Decide on how to pay for household expenses.
For some couples, they prefer having their own separate savings accounts and another account for household expenses. The household expenses account is where the couple places money earmarked for household expenses.
You can also opt not to have a household expenses account and just be in charge of paying the expenses that you’re assigned to. This requires that you have done tip #2.
In my case, my husband gives me all the money for household expenses and I just pay for these. If you prefer this kind of arrangement, make sure your spouse is okay with the chore of paying and that s/he is responsible enough to make the payments. You don’t want to wake up one morning, realizing that your spouse has spent all the money on jewelry when it was earmarked for your mortgage, car payments, and credit card debt.
Personally, I took on the chore of paying the expenses because I pay the bills online via BPI Express Online and BDO.
4. Decide on your discretionary funds.
Most of the time, one is a spender and the other is a saver. Because of these family dynamics, friction arises because the saver can’t stand the spender wasting their money on unnecessary items. The spender, meanwhile, can’t stand the saver because s/he feels that s/he has the right to enjoy the money s/he earned.
To avoid this conflict, decide how much each one can spend in a month without prior consultation. If your wife wants to spend PhP2,000 a month for her regular spa, manicure and pedicure, are you okay with that? If husband wants to subscribe to his favorite comics, does he need to consult you?
Also, decide on the amount that should be discussed with your spouse before buying. Personally, I prefer that big-ticket items like a car, TV set, laptops, including renovations need to be discussed before buying. After all, you don’t want to arrive at home with a new set of home entertain system.
Yes, learn to relax. At the end of the day, ask yourself if arguing with your spouse over money is worth it. If the purchase is quite reasonable, then maybe it’s better to just let it go. If the purchase didn’t make a dent in your emergency savings, then maybe you should just cool it. Before you bite your spouse’s head off, breathe deeply and ask yourself if this is really more important than anything.
Anyone who hasn’t realized that the world is in a financial crisis must be living under a rock. Day in and day out, we hear stories about companies going bankrupt or closing shop, and employees getting laid off. If you’re a little bit lucky, your company may have just suspended giving out incentives and bonuses, or implemented a “freeze hiring” to keep everyone afloat.
Whether your head is on the chopping block or not, it is best that you and your family are prepared for the worst. These are very difficult times and you must make drastic moves to keep you afloat.
1. Make yourself indispensable.
Yes, I have heard of the cliche “no man is indispensable” and this is truer now more than ever. But to increase the possibility of you keeping your job, you need to step up and make yourself so important to your organization that management will think twice of terminating you. If it means being the first person to arrive in your office and the last person to leave, do so. Do an excellent job and make sure your boss knows it.
My brother, who works in HP, saw two people from his department got laid off. Although he is on a consultancy basis, he was fortunate that he wasn’t the first person to be removed. And thankfully, because he is quite smart and hardworking, he just took on the jobs of the two people laid off. Yes, it means more work for him but he can breathe a little easier that he still has a steady source of income.
2. Talk to your family.
Call a family meeting and lay the cards on the table. Stop sugarcoating (parents are always guilty of this) and tell the truth. If your job is in danger or money is tighter, let them know. Make them understand where you are coming from and where the family stands. That way, expectations are managed.
3. Make a family commitment and cut the fat.
Once your family has fully understand your financial situation, it’s time for unity and action. List down all your monthly expenses and identify which ones are “needs” and which ones are “wants.” Be honest when doing this because you might be tempted to say that you “need” a pack of cigarettes a day or your wife “needs” her weekly spa.
Once you have identified your needs and wants, decide which “wants” should be eliminated or reduced immediately. Instead of your weekly manicure/spa appointment, make it once a month. Ditch your daily Starbucks treat. Enforce once-a-month downloading of PSP games. You need to make drastic changes to ensure that you stay afloat.
4. Beef up your emergency fund.
If you still don’t have an emergency fund, shame on you! The best time to start an emergency fund is when everything is going well. If you have delayed doing this, it’s best to start today. While you are still earning a salary, save every peso that you possibly can and save it for the rainy day. Suze Orman strongly recommends that you must have at least eight to 12 months of emergency fund to keep you afloat in case the worst happens (see related story).
If you already have an emergency fund, revisit it and see if you need to beef it up. Add more to your fund so that you have a nice financial cushion in case of emergency. Transfer some of your money in a high-yield time deposit account like PSBank (see related story) or Chinabank (see related story). You need your money to be safe, sound and, at the same time, easily accessible.
5. Make more money.
Go through all your stuff and see which ones are still sellable but usable. Hold a garage sale or sell them online (see related story). Any money you make should be socked away and saved for a rainy day. Remember that one man’s trash is another man’s treasure.
If you can take on other jobs like blogging, freelance writing, reselling, that’s equally fine.
An emergency fund is a requirement to financial independence. Everything starts here. If your family still doesn’t have an emergency fund, start saving for it this 2009. Or if your emergency fund is still not enough, beef it up for the new year.
But many people are still confused about emergency fund. How much should be your emergency fund? How long should it last? How do you compute for it? Why should we have an emergency fund?
There is no clear rule on how to set up your emergency fund. There is also no clear rule on how long should an emergency fund last. Financial planner and personal finance author Suze Orman recommends having an emergency fund of at least eight months. But because of the US economic crunch, Orman recommends having as much as 12 months of emergency fund.
Filipino personal finance author Francisco Colayco, meanwhile, recommends six months. It’s really up to you which one to follow. Personally, I follow Suze Orman’s eight-month rule.
What is an emergency fund for? Simply put, if you are not able to work, if you become unemployed, if you become sick, an emergency fund should be able to tide you over while you’re not earning money. An emergency fund should allow you to pay for your household bills and other payment obligations.
So how do you compute for your emergency fund? Basically, there are three approaches.
Option 1. Identify your fixed expenses monthly.
Identifying how much are your fixed monthly expenses will not take more than 10 minutes. List down all the bills you need to pay monthly. This should include household bills, grocery bills, insurance payments, loans, amortization, etc. If you’re paying some bill on an annual basis, just divide it by 12 (for 12 months).
Option 2. Use your gross income as benchmark.
This is a lot simpler. If you’re earning PhP30,000 gross monthly, just use this as your benchmark. Using your gross as a standard, this allows you to have more breathing room. However, if you’re earning a lot of money, let’s say PhP100,000, this means you should have at least 800K of emergency fund and this may take you a long time to achieve it.
Option 3. Use your net income as benchmark.
This is also simple as you only need to look at your payslip and see how much is your net income monthly. The tricky part is that many of us tend to spend more than our net income. Just notice how often we dip into our savings because we already run out of money two weeks after we received our salary.
When you have already chose which option to use as benchmark, just multiply it by how many months you think your emergency fund should last. So if you’re earning 30K gross monthly or have a fixed expense of 20K a month, just multiply it by six or eight months.
Recent articles in Business Mirror and Malaya indicate that more and more Filipinos are cutting back on expenses for fear that they may lose their jobs or other sources of incomes. A study by global market research company Synovate shows that 94 percent of Filipinos have made cuts in their spending.
22 percent of the respondents said they gave up eating out while 29 percent gave up purchasing big-ticket items (bye, bye plasma TV!) and high-tech gadgets.
Hubby and I ourselves are feeling the crunch. Because my husband had to change jobs, we had to dip into our savings since his last paycheck would be delayed until he is cleared by his previous company. We had to tighten our belts until he receives his first paycheck on Dec. 5. But even then, we would still continue to be cost-efficient until we have recouped all the money we had to take out the entire 2008 (2008 was and is an expensive year for us).
How about you? What measures are you taking to cut costs?
Good help is hard to come by. But when they do, they are such a great blessing to families. Especially at a time when both parents must work because of the economic crunch, a household helper is very critical to ensure that the household runs smoothly and effectively.
Being a household helper is no joke. The work is demanding (not to mention the bosses), the hours are long, and they pay is very little. I’ve seen several household helpers come and go in my family and we’re lucky to have at least two helpers spend most of their life with us.
If you’re looking for other benefits to your helpers, you can give them the Fortune Care HELP Card. It’s a special healthcare coverage for household helpers at a very reasonable price of PhP2,800 annually. For such a small amount, your helper can already avail of the following:
* One-time hospitalization per year up to PhP30,000
* Unlimited medical consultations at any Fortune Care clinic
* Laboratory and Diagnostic examinations
* Personal accident insurance coverage of PhP10,000 and more
I just availed of this plan for my part-time household helper recently. She’s been with our family for 11 years already. Prior to us, she worked for my aunt for 12 years. She’s very trusted and smart, too, as she can handle errands to government agencies, processing papers, etc. I plan to renew this health card every year as this is just a small price to pay for her loyalty, trustworthiness and efficiency.
If you want to know more about HELP, just visit the Fortune Care website.