New years are befitting of great beginnings. As you promise to exorcise personal demons and execute a new world order, have you looked at how much you’re really worth? Ultimately, changes command financial viability – so be armed with the five financial equations below.

I. Savings » A Sustainable Bank Accounts

Proper partition of income and allowances is key to a bank account that actually grows, not merely dwindle. Here’s a simple equation:

Income – Savings = Expenditure

Or if you want to be snide about it:

Reality – Delusion x Sacrifices = Money for a Rainy day

Cutting corners is a good step towards liquidity. Substitute brand name products (clothes, food, even shoes) for cheaper alternatives. Living within one’s means should not equate to a vow of poverty. It’s more like allocating your resources properly, instead of wasting too much on unnecessary stuff.

II. Investments » Make Money Work For You

A crusade to the stock market may be cheaper nowadays, but it is not for the faint of heart. To know your investment appetite, use this formula:

Disposable Cash / Risks = Investment Appetite (Low, Average, High)

Taking in your Investment Appetite, identify your kind of mutual fund:

Investment Appetite + Purpose = Your Mutual Fund

Mutual funds are perfect for financially naïve investors, which accounts for everyone but those from the financial service sector. You not only let your money work for you, but you get the wisdom of an investment manager for a fraction of the cost.

III. Insurance » Living Protection

Long has it been established that insurance is for the living, not for the dead. Before your own financial grave starts getting deeper, keep this in mind:

Beneficiaries x Dreams = Insurance Policy

Of course, if you’re feeling a wee bit selfish:

Personal Worth / Beneficiaries = Insurance Policy

Insurance policies have already adapted to the changing times, where consumers need not wait a lifetime to enjoy its benefits. Whether you want long-term or short-term, traditional or laced with investments, you can easily find the perfect fit for your dreams.

IV. Health Plan » Best Medicine

An apple a day may keep the doctor away, and a reliable medical plan can stave off monetary destitution. Prove that your health is wealth by:

Lifestyle x History (Dependents) = Health Plan

But if a scare tactic is what drives your determination:

Vices + Virtues / Responsibilities = Health Plan

Hospital bills can easily eat up your rainy day fund. Diagnostic exams can also put a big dent to your budget. And we’re still not talking about emergency procedures due to accidents. Save your loved ones from these woes by availing of a health plan that suits your lifestyle.

V. Retirement » All of the Above

Your nest egg is that comfortable place in the not-so-far future, where the knees are weak but the pockets are still deep. No matter what equation you choose to adapt, you can finally achieve:

Savings + Investment + Insurance / Health Plan = Security

Oh for goodness sake’s, here’s a more truthful formulation:

Life – Savings – Investment – Insurance – Health Plan = Insecure You



1.  Understand and overcome the obstacle to building wealth.  It all starts with knowing what true wealth really means and changing your attitude towards wealth building. You have to breakdown those psychological barriers.

2.  Know what you want and dream big.  Successful people are dreamers. They know exactly what they want to achieve and they set high goals for themselves.

3.  Find out where you are and what you have.  If you are not aware of where you are, you will not know how to get to your destination. Having a good grasp of your present situation will help you identify what needs to be done to accomplish your goals.

4.  Make saving a lifelong habit.  Saving is the foundation on which you build your wealth. So it should be as regular as breathing.

5.  Spend your money wisely.  It’s not just about how much you earn but how much you spend and keep that will determine if you can achieve financial stability.

6.  Get out and stay out of debt.  Huge debts can cripple your financial health for life so it should be managed properly.

7.  Find ways to earn more, to save more.  Lack of income should not be a hindrance to becoming rich. There are many ways to boost your income at work or in your business.

8.  Prepare for life’s financial challenges.  Accidents, a major illness or untimely death can happen anytime and wreck havoc to your finances if you are not ready.

9.   Plan for a hassle-free and comfortable retirement.  If you can’t achieve wealth in your 40s and 50s, at the very least do something to retire in comfort.

10.  Grow your money through smart investing.  Saving is not enough. You should make your money work for you so you can reach your goals faster.

11.  Take care of your health to enjoy your wealth.  It may be a cliché but health is really wealth. An unhealthy lifestyle can cut short your life even before you can enjoy what you worked hard for.

12.  Share your blessings and receive more riches.  Grow richer by giving more to those who are truly in need.

 If you still think it’s not possible to build wealth on any income then you are just making excuses. Just because you can’t or you won’t doesn’t mean it is impossible. If some people have done it then there’s no reason why you or anyone else can’t do it.

Source: 12 Steps to Build Wealth on Any Income  By: Alvin T. Tabañag, RFP

The last episode of Pesos and Sense. Learn about Diversification and Metro Pacific Investment Corporation (MPIC).

By: Alvin T. Tabañag, RFP
Business Mirror

YOU are probably among the millions of Filipinos who feel richer during the holidays because of the extra cash from your 13th month pay and bonuses. There’s nothing wrong with using your bonus to make the Christmas season more fun and enjoyable for the whole family.  You’ve worked hard all year and you deserve to reward yourself.  However, it would be to the best interest of your family if you use some of the money on things that offer more valuable and lasting benefits.  Here are 10 suggestions.

 1.  Pay off your debt.  Begin the New Year with less financial burden by paying off some of your debts.  Pay a significant portion of your credit-card debt or the whole amount if possible. You can also consider paying extra on your real-estate loan so you can pay it off faster.  Strive to lower the level of your debt so you don’t use more than 20 percent of your monthly income for debt payment.

2.  Buy self-help guides and reference books.  Investing in knowledge is one of the smartest uses of your money. There are lots of good books out there that offer valuable lessons which can give your career, business or personal life a much-needed boost.  Invest also in a few books that will help you manage your finances and teach you how to prepare for a better and more secure financial future.

3.  Attend a seminar.   You can also enhance your skills and acquire new valuable knowledge by attending various seminars that are being offered year-round.  The amount you spend for these seminars is small compared to the potential financial benefits you will gain by applying the lessons.  Some seminars help you start your own business which could be your ticket to getting rich.  Consider also enrolling in a program that grants a professional certification which can help you get ahead in your career.

4.  Open a savings account.  Maintain this account for as long as you work and keep adding to it every month.  If you want to achieve financial security, you will have to learn to save regularly and not only when you get a bonus.  Consider putting some of your money in a long-term (five years or longer) time-deposit account.  You may also invest in government securities which offer interests comparable to long-term TDs that are very safe.

5.  Buy a life-insurance policy.   Every working person should have a life-insurance policy, especially if there are people depending on you financially.  Ideally, your life insurance coverage should be 5 to 10 times your annual income.  But a lower coverage is all right if that’s what you can afford. You may also consider buying an investment-linked life insurance policy which includes an investment component.  Even if your company covers you with a group-life insurance, it’s still a good idea to get extra personal coverage so that you still have protection even if you leave the company.

6.  Buy a medical insurance/health-care plan.  You are more likely to get sick or seriously injured before you die.  Hence, you should also have a medical insurance or a health-care plan.  Don’t just rely on your PhilHealth coverage; it’s not enough.  If your company has an existing healthcare plan, you might still want to get additional coverage for you and your family.

7.  Insure your home.  If you own a home, you should have it insured to avoid a financial disaster in case it’s damaged by fire, lightning, typhoon, flood or earthquake.  A few thousand pesos will already insure your home for a year.  This is a small amount to pay in exchange for your peace of mind.  A little extra payment can also get protection against explosions, damage by vehicles, robbery, riots and malicious acts.

8.  Invest in a pre-need plan.  Despite its tarnished reputation, pre-need plans still remain a viable investment option for Filipinos.   Pre-need plans, which include pension, educational and memorial plans, can be considered as a form of “forced savings” and you will have to wait before you can get your hands on the proceeds.   Pre-need companies are better regulated now so your money is safer.

9.   Invest in mutual funds, UITFs or stocks.  Mutual funds and unit investment trust funds or UITFs offer a simple, affordable and less stressful way to grow your money.  Earnings in these funds are not guaranteed and you can lose money.  However, it is a good long-term investment.  You are likely to earn substantial returns if you hold it for at least five years.  It’s not unusual for a fund to earn more than 30 percent in one year but it can also lose 10 percent to 20 percent within the same period.  You may also consider investing directly in stocks but stick to the good ones with a proven track record.

10.  Start a business.  If you’ve been dreaming of becoming an entrepreneur, now would be a good time to set aside money to finance your own business.  Before you venture into any business, make sure you have studied it well because it is a risky investment. Consider starting a small, part-time business and go full-time only after you’ve learned the ropes and are absolutely convinced that it can succeed.

As you continue with your celebrations, remember not to go overboard with your spending.  You don’t need to spend lavishly to enjoy the season.  Surely, you wouldn’t want to meet the New Year with a nasty financial hangover and wondering where all the money went.


Pesos and Sense Episode 12. Aya Laraya talks about Social Cost of Investing.

Quote of the Day no.3

Posted: December 20, 2011 in Inspirational

“If you don’t change,

reality in the end forces

that change upon you.”

≈ Stuart Wilde ≈

We’re human. Therefore, for many of us, we don’t change our eating habits until the doctors or diseases force us to. We don’t change our spending habits until we have to sacrifice the things we love. We don’t always embrace spirituality until our day on earth are numbered.

Pesos and Sense Episode 11. The OFW’s trip to success through investment options.