Tag Archives: emergency fund

How I Discovered the Importance of Emergency Funds: A Simple Guide for Filipinos

24 Saturday Aug 2024

Posted by in Personal Financing

≈ Leave a Comment

Tags

, , , , , , ,

I have to admit, I had no idea what an emergency fund was until I stumbled upon a YouTube video from ANC Money. They broke it down so well that it finally clicked for me. So, what exactly is an emergency fund? It’s basically a stash of cash that you can tap into when life throws a curveball—whether it’s an unexpected medical bill, car repair, or even a job loss.

Emergency Fund

According to a financial adviser featured on ANC Money, your emergency fund should ideally cover 3 to 6 months of your monthly expenses. This got me thinking: “Do I even have enough saved up for a rainy day?” Spoiler alert—I didn’t.

Here’s something else I learned: your emergency fund doesn’t have to just sit in a savings account gathering dust (and barely any interest). You can actually put it in an investment portfolio that allows you to withdraw within three days if needed. This was a game-changer for me! All along, I thought a bank was the only place to keep an emergency fund, but it turns out there are better options out there.

The key is to find a place where your money can grow faster than it would in a regular savings account. It’s like hitting two birds with one stone—you’re prepared for emergencies, and your money is working for you.

As for me, I’ve got stocks through COL, but no emergency fund…yet. My plan is to start saving 10% of my salary every month until I build up enough to cover 3 to 6 months of expenses. It might take a while, but I’m determined to get there.

Investing Even in Debt?

20 Wednesday Aug 2014

Posted by in Personal Financing

≈ Leave a Comment

Tags

, , ,

InVEST Can Help Logo JPG

Image Credit : investprogram.org

Seminars about investing and YouTube videos about investing are now easily accessible. Facebook post and updates talks about investing and savings. In reality it makes our drive to invest as soon as possible more.

So what if you want to start investing and yet you are filled with credit card debts, Will you start investing in Mutual Funds or stock market even if you are in a big financial mess? For me it’s a big NO.

What I meant is that paying of your credit card debt or any debt is the start of your investing. While paying your credit card, you will start the habit of saving a portion of your salary or income to pay off your debt. Normally I recommend 70, 20, 10. 70 % of your income is for expenses, 20% of your income is for your investment and 10% of your income for your Tithes or Love offerings. Use the 20% to start paying off your debt.

When time comes that you have paid off your debt, you will then be in a habit of saving a portion of your salary. The same amount that you used to pay your credit can now be used to build you emergency funds. After the emergency funds then you can go into Mutual Funds or even stock market if you can take the risk.

The idea is that you should not be investing in Mutual Funds or Stock Market if you don’t have Emergency Fund and still in debt because if time comes that you need money due to emergency, chances are you will get your investment even if it is still losing.

So be wise in your investing decision. In addition you need to set your goal prior to Mutual Funds or stocks investing. Knowing your goal will determine the amount of risk that you can take. Knowing your risk, may allow you to determine the type of investment portfolio will you go.

So be wise and Happy Investing. Study first before investing.

How Can I Start Investing if I am in Huge Debt?

25 Thursday Apr 2013

Posted by in Personal Financing

≈ 1 Comment

Tags

, , , , , , ,

Debt ManagementThe question mentioned in the title, is a common question from readers of this blog as well as messages from my Facebook Page and personal account.

When people started learning about Financial Literacy, they want to start immediately. NEWS that they are hearing as well as different comments that they are reading in the forums triggers them to do so.

Many want to start immediately but due to their debt they think they cannot start investing.

Did you know that you could start investing indirectly even in debt?

Let me explain what I mean with that statement. Well this is how you start investing even in huge debt.

First Pay off your debt, paying your debt is like investing, just imagine if you have paid off your debt earlier than what you expect, you have already earned those interest that was supposed to be given to whom you are in debt.

You can do this in two ways, either increase your cash flow or decrease your expenses. Know the priority.

When everything goes well. It only means that you have already earned from paying off your debt by not giving more interest.

As an example, if you are in debt of Php 100,000 with 20% interest per year. And you paid the Php 100,000 earlier than 1 year let say 6 months, the effective interest will now only become 10% of the capital (20%/12 * 6). So you save the 10% interest which is supposed to be given as part of the interest for the whole year.

Next, since you have already made a decision to pay your debt chances are, you have change your lifestyle and learn about delayed gratification.

Decide to have a mindset that even you are not in debt you need to continue doing things while you are in debt like delayed gratification, less wants, less social life and more, and now your money that was saved because you have not changed your lifestyle can now be placed in your emergency fund (3 months of your expenses).

Next, after completing your emergency fund, start getting Insurances, Mutual Funds and if you want more, go to the stock market.

Just a friendly advice, don’t start in stock market while in debt, especially if you are in debt, specially in debt with  credit card or debt to people which is commonly know us as “5-6”.

There is a very small chance that your earnings in stock market could beat the compounded interest that is being given by those credit card company.

I know that the steps I mentioned above is not easy to do, but if you have your goal for your family and for your retirement I believe that you can do it.

Remember the following verses:

Proverbs 22:7

“The rich rule over the poor, and the borrower is servant to the lender.”

Romans 13:7

Pay to all what is owed to them: taxes to whom taxes are owed, revenue to whom revenue is owed, respect to whom respect is owed, honor to whom honor is owed.

Paying your debt is not easy, it takes courage and determination. So to avoid being servant of lender, pay off your debt and prioritize your payment. First pay those debt that yield the highest interest.