Why is it important to save for retirement?

Not so many people save for their own retirement. Usually people save for the next 6 months or even for the year then it stops. In other words, a lot save for short term and not for the long term.

In the Philippines, when you are 60 years old and not able to work, money would stop flowing in most cases. Who would take care of you? Your children financially. Trust me, when I was not financially educated this was my plan, that to spend money as much as I can, buy this and that and when I get old, I’ll let my children support me.

I realized that this was not the right thing, why? My future children will have their own life, own family, own plans and children. Envisioning this in the future, I would love to see my children enjoy their life to the fullest, I would not like them to get worried about me specially financially, I would not like to ruin any budget they would prepare.

There was this joke I heard that normally, when you have grandparents they would be shared to your family members, maybe, and there are 2 type on how to share:

1. If grandma and grandpa have no retirement money, the family members would offer grandma and grandpa to another relative. “Hey sister, mama said she misses you, don’t you miss mama? Wanna take her?”.

Unfortunately, this kind of situation actually happens.

2. If grandma and grandpa are rich and has so much retirement money, relatives would call and offer their homes! “Hey sister, I miss mama and papa, do they miss me? I have a bedroom with 1 big bed, maybe they can have a vacation here?”.

And truly, this actually happens too!

I am not saying that we should save for retirement so that situation # 2 will happen to us. My point is that we should be aware that we are not getting any younger each day, we grow older each day. In life, we are forced to grow old and retire.

My friend told me a story once that he knows of a retiree who has a pension with SSS, I was told that every month, this retiree would only receive 2000 Pesos! Oh my, this is not enough.

As Financial Planners, we also hold seminars (Wealth Academy) to people who wants to start investing and saving, one time, there was this 60 year old guy listening to our seminar. After the talk, he cried, the speaker approached him and asked why he was crying. “If only I knew this when I was still young.” he said.

Right now, while we still have the energy to work, energy to earn money, let’s work hard and save wisely. Earn as much as you can and save as much as you can while you still can! We are not meant to last forever, every minute, every hour, every day counts.

Let's prepare for our future together!

Happy saving!

Cheers!

All credit goes to *StarSweep for the Old Couple picture on http://browse.deviantart.com/art/Old-Couple-254084689

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Saving Money 101

Hello all! My name is Neil and nice to meet you! I used to be an Associate Financial Planner of the Philippines (certification expired, just needs renewing) and here I am, writing this blog to share what I know to aspiring investors!

Back in my college days which is not too long ago (really not too long), I thought of building a business, investing in stocks. I was thinking of many ways to earn money, to make myself rich! Then I found out that in making that dream come true, I have to save money and use that money to make money grow, here is a pretty simple rule:

Basics on investing and rule # 1: You gotta have cash! Yes! To make money work for you you have to have...Money!

People often ask me “how could I save if I have a lot of expenses?”. This line is very, very common.

Now to start off and you might have heard of this before, we do have a very simple formula to start saving money!

Here it is:

 100%      10%      20%           70%

Income - tithes - savings = expenses

So for example, my salary is 10,000, I take 10% of that for tithes which is 1000 Php. I take 2000 Php which is for my savings and finally I am left with 7000 Php for all my expenses. Save first before spending and not the other way around! That simple.

You may wonder where we got this. These are Biblical.

Now when payday comes, net of tax, you receive 100% of your pay. The tithes which is 10% is Biblical, as this is giving back to the Lord. (If this is not your faith, your 10% may go to a family in need or charity.)

Why 20% savings? This is also Biblical, when Joseph interpreted the dreams of the Pharaoh, it was said that the Pharaoh should keep ⅕ of the crops to survive the 7 years of famine, which in percentage is 20%.

Then the remaining should be for all your expenses. This formula sounds very simple but for some, it’s not easy to do but as the famous Nike quote say, “Just do it”.

Saving takes discipline and it is a habit, if spending is a habit so is saving. So take a turn, make saving money a habit, remember, this is the stepping stone to investing, if this is achieved then investing is not far from you!

Cheers!


Credit goes to Chocoholikitty from http://browse.deviantart.com/art/Kawaii-Piggy-Bank-97990926 for the piggy bank picture.

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