Is Financial Freedom Achievable?

Financial Freedom is an overly used term, especially in the internet or social media posts. Truth is, most scammers used this term to lure innocent investors. But what exactly does it mean? Do you have to seriously take measures to achieve it?

Achieving the so called 'Financial Freedom' is no easy task as it involves not just one or two steps but a series of steps that must be done 'one slice at a time'. Below are some measures you can commit to doing so you'll get closer to achieving 'Financial Freedom'.

1. It is a long-term commitment - You need clear goals to keep you on track in order to be successful. On a piece of paper or computer document, make a list of each goal that you want to reach in order to be successful. Some examples are to pay off your credit cards, save money for a down payment for a house, or retire at a certain age.

2. Make a Budget - A budget is your playbook for how to spend your money. You need it to keep your spending within reason and help you to ensure that you have enough money to cover your current needs as well as to save for your long-term goals.

3. Resolve to live debt-free - If you are currently in debt, plan your budget so that you can get out of debt more quickly by making extra payments. If you are not in debt, continue to live that way by putting off your purchases until you have saved enough to cover them.

4. Reduce your expenses - Cutting spending by even a small amount on a regular basis will make a big difference in the long run. Live frugally by learning to recognize the difference between want and need.

5. Increase your income - It is wise to have more than one source of income, both to increase your savings more quickly and as insurance in the event that you lose your job. There are a number of ways to supplement your income, from working a part-time job to developing streams of passive income (your VUL insurance policy passively earns income).

5. Invest your money - Your money will grow much faster if you invest it rather than leaving it in a savings account. The increase in value will enable you to reach your goal of financial independence much more quickly.

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Controlling Weekend Spending

We tend to get excited every weekend. Though, the problem with the weekend is that it’s much easier to spend money because there is typically a lot going on. Whether it’s going out for a bar hopping or going out to eat at a local restaurant with your friends, colleagues or family, the opportunities for spending money are seemingly endless, whew!

But do you want to start saving money over the weekend? We share some tips on how you can save money on the weekend.

1. Focus on free or inexpensive activities and entertainment - like inviting your friends to your house to watch movie, etc.

2. Only go out one night a weekend (if it can't be helped) - Some of us live for the weekend and love the social scene. If you go out every Friday and Saturday night it’s bound to take a toll on your wallet. Consider changing your habits by staying in or having friends over one night a weekend.

If you must go out both Friday and Saturday every weekend, make small changes to spend less. Order cheaper food and drinks at restaurants.

3. Set a weekend spending budget - No one likes to be confined by a budget, but budgeting can be extremely effective if your goal is to reign in spending.

One thing you can try is the cash method of budgeting. Set aside your budget for each weekend, but set it aside in cash. if that cash runs out, you can no longer spend money on entertainment or restaurants that weekend (remember, avoid using your cad, if you have one!)

Having a goal like this in mind will provide some extra motivation to stay within your weekend spending budget.

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Understanding Mutual Fund

How much profit would you earn in a mutual fund?

Some gain higher returns, some get thousands while others millions. It really depends upon the fund invested, the period it is invested and the performance of the fund.

Income or losses are computed via NAVPS (Net Asset Value Per Share) from the time you opened your account to the time you closed or redeem.


 

Apparently, the higher the investment and the longer it is invested, the higher the return or profit. It is recommended to invest in long term.

It is also recommend to check the past performances of the mutual funds so you know which one performs better.

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Is your Emotional Spending takes a toll on your finances?

Emotional spending occurs when you buy something you don't need and, in some cases, don't even really want. as a result of feeling stressed out, bored, under-appreciated, incompetent, unhappy, or any number of other emotions. So if there are ways to control emotional spending, these must be them:

1. Cut Down Impulse Buys ---
One way to cut down on emotional spending is to avoid making impulse purchases - and that doesn't just mean you should avoid buying gum in the checkout line at the grocery store. Whenever you're at a store - whether brick-and-mortar or online - and you find yourself wanting to buy something you didn't already want before you got there, don't buy it. Make yourself wait at least 24 hours, if not longer, before making a decision about whether to buy the item. You'll often forget about the item as soon as you leave the store. If, after 24 hours, you still really want it but a nagging voice in your head is telling you that you don't need it or can't afford it, try to postpone the purchase for a week or a month so you can think more clearly about the decision. If it helps, keep a wish list of the items you've refrained from buying so that you can ask for them when your birthday comes around or pick them up when you know you can afford them.

2. Focus on Saving ---
And sometimes, spending can mean saving, by investing. There are better ways to spend your money like put it in an investment that will grow it overtime (investments like in a Mutual Fund is ideal).

3. Close you eyes to Temptations ---
The next step is to limit your exposure to the situations that tempt you to spend. If it's the mall, plan to visit only a couple times a year, or try shopping online instead. If online shopping is the problem, find other, non-shopping websites to occupy your time, or replace some of your internet time with another activity. If you always find yourself spending more when a particular friend or relative is around, try to schedule free or inexpensive activities with that person, like getting coffee, cooking dinner, or going for a walk.


The goal here isn't to stop buying anything fun - if we didn't occasionally buy enjoyable things with our money, it would be difficult to get up and go to work every day. However, by becoming more conscious of your shopping habits, you'll develop greater control over your finances and you'll be able to really enjoy the purchases you make without the dread and guilt of having spent too much.

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OFW? You need to ask these 3 things before buying Life Insurance.

3 Things OFWs Should Ask Before Signing A Life Insurance Policy
 

So if you you are an OFW either still out of the country or already here in the Philippines, before you sign that life insurance application form, keep in mind these three important details: 

1. Is the person you're talking to a licensed financial advisor? 

According to the Insurance Code:

No person shall act as an insurance agent or as an insurance broker in the solicitation or procurement of applications for insurance, or receive for services in obtaining insurance, any commission or other compensation from any insurance company doing business in the Philippines, or any agent thereof, without first procuring a license to act from the Commissioner, which must be renewed annually on the first day of January, or within six months thereafter.
Someone who is acting as an insurance agent and is soliciting life insurance applications needs to be licensed by the Insurance Commission to do so.

So if the person you're talking to is soliciting life insurance applications from you, make sure that they're licensed first.

After all, it is your money. It's only right that you protect it. 

2. Is the life insurance company you're signing with authorized by the Insurance Commission of the Philippines? 

Take a look at this list provided by the Insurance Commission - if the company that your acquaintance is introducing to you is not authorized by the Insurance Commission, you need to stay clear. 

Based on Section 187 of the Insurance Code: 

No insurance company shall transact any insurance business in the Philippines until after it shall have obtained a certificate of authority for that purpose from the Commissioner upon application therefore and payment by the company concerned of the fees hereinafter prescribed.

3. Are you signing in the Philippines? 

You're signing your life insurance application form with the intent of securing a life insurance contract with the insurance company. 

What's the importance of the contract? It's to "obligate" the insurance company to give you the benefits that you availed from them. 

As per the Civil Code of the Philippines: 

Art. 1159. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. 
For the life insurance company to have an obligation to you, your life insurance contract needs to be governed by the law in where they are executed. 

In this case, your life insurance contract is governed by the Philippine laws, so you need to sign in the Philippines - or it can be rendered void. 

Meaning, no benefits! It's as if you didn't sign anything.

Also, going back to the Insurance Code of the Philippines, about your life insurance advisor's license: 

Such license shall be issued by the Commissioner only upon the written application of the person desiring it, such application if for a license to act as insurance agent, being approved and countersigned by the company such person desires to represent, and shall be upon a form prescribed by the Commissioner giving such information as he may require, and upon payment of the corresponding fee hereinafter prescribed. 

Your financial advisor's license to act as an insurance agent:
- needs to be approved by the company (doing business in the Philippines) and,
- is issued by the Insurance Commissioner (of the Philippines) 

Your financial advisor's license is only valid in the Philippines.

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How do you Work Out your Finances?

1. Commit to a small savings goal. A small step forward is better than a giant leap forward couple with a loss of motivation. Think of the tortoise and the hare — slow and steady wins the race. Instead of creating a massive savings goal that’s hard to reach, make smaller commitments and turn them into smaller daily or weekly goals.

2. Implement a “cooling off” period. If you’re an impulse buyer, one of the best ways to change your spending habits is to implement a cooling off period – make yourself wait a week or a month before you buy the item you “desperately” want. If you still feel you need it after the preset time, then go ahead! Otherwise you’ll probably forget about it, and saved yourself a lot of money.

3. Avoid temptation. It’s a lot easier — and less stressful — to avoid temptation vs trying to resist it. If you like to shop but tend to overspend, limit how many times you enter a store. If you enjoy eating out, take a different way home from work so you don’t have to drive by your favorite fast food spot.

4. Focus on one goal at a time. For the majority of the population (including me) it’s nearly impossible to multitask successfully. Likewise it’s hard to make any progress on your financial goals if you spread out your focus. You’ll gain momentum much faster if you focus your effort and hone in on one financial goal at a time.

5. Find a mentor. Treat your finances like an investment, and find someone who can mentor you throughout this process. Not all of us can afford to hire expensive financial planners, so turn a family member or close friend is has expertise in this area. Or, you may get a financial advice from a financial or insurance advisor. If you’re comfortable opening up to them, they can help you realize the error of your ways and check-up on your progress.

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"A Letter from your Life Insurance policy"

~~A letter from Life Insurance Policy to its Policyholder.~~

  

I am your Life Insurance Policy.

You and I have similar purposes in this world.

It is your job to provide food, clothing, shelter, schooling, medicine and other things for your loved ones. You do this while I lie in your safe deposit box.

I have faith and trust in you. Out of your earnings will come the cost of my upkeep. At time, I may appear insignificant to you - but someday (and who knows when) you and I will change places.

When you are laid to rest, I will come alive and do your job. I may provide food, clothing, shelter, schooling, medicine and other things your family will continue to need, just as you are doing now. When your work and labor are done, mine will begin. Through me, your hands can carry on.

Whenever you feel the price you're paying for my upkeep is burdensome, remember that I can do more for your family than you will ever do for me.

If you do your part, I will do mine.

Sincerely yours,

Your Life Insurance Policy

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Common Misconceptions about Life Insurance

With less than just 2% of the Philippine population actually bought Life Insurance (another 10% are covered by their companies), we've listed 3 common misconceptions about buying it.

Objections:
1. No Need.
2. No Money.
3. No Hurry.

 

To better understand Life Insurance, we will explain why you should actually have a Life Insurance even if you have these excuses:

1. No Need - When you say no need, you might think you are healthy, you are earning, and you think you can well provide for your family, the truth is There is a need to protect yourself from unforeseen risks and If you have dependents, there is a need to protect your income.

2. No Money - 'I don't have the money now', 'It's an unnecessary expense', are the common excuses that people have when presented with life insurance. Again, truth is premiums for life insurance doesn't have to be expensive, some of them are actually very affordable. Most premium can actually be paid in term let's say quarterly or even monthly. Whereas if you don't have an insurance and you suddenly things turn bad (accident, sickness), the amount of money that you will pay for the hospital bills are just huge.

3. No Hurry - Especially for young people and single, you might think you don't have to hurry in buying a Life Insurance. Well, think again. Eventually you will get married and it is always cheaper to buy a life insurance WHILE you are still young. You might not need it now, but the need will come later on. And if you think you are healthy enough that you don't need an insurance have to consider people who were actually healthy but suddenly accident or even sickness may happen - you need an insurance to cover this.

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Allocating Monthly Income

Here's a simple advice on how to manage or allocate your monthly income:

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The Formula for your Income

Learn to prioritize saving and investing above others when it comes to managing your finances.

 

This might be very difficult to practice at first, since you got used to spending all your salary. It may mean adjusting your current lifestyle to accommodate your new investing habit. Do you really need to buy that Starbucks coffee or iPhone 6+?

If the 70% will not be enough to cover everything you need, you can be flexible in doing this just as long as you set aside even a small portion for your investment.

Remember, saving and investing for your future requires discipline. It is not easy, but this small act can make all the difference.

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Can you buy life insurance for your significant other?

Most of the time when we’re asked, “Can I buy life insurance on my significant other?” the person is asking the question because their partner just won’t get life insurance on their own.

It could be because they don’t:

- Think they need it.
- Don’t like doctors.
- Don’t trust insurance companies.
- Or think it’s too creepy to talk about how the will one day eventually pass away.

Truth is people will make up a million different reasons to avoid buying life insurance but that doesn’t change the fact that one day, everyone including your significant other will die.

Fact:
100% of all people will eventually die, of those only 52% will have life insurance in place when they do.

So by asking “Can I buy life insurance on my significant other?” what one is usually asking is:

“Can I get life insurance on my partner without him or her really taking an “active” role in the process?”

Short answer: Yes.

Complete answer: It depends.

Typically, when we’re asked the question “Can I get life insurance on my boyfriend or girlfriend? Can I get life insurance for my significant other?” it’s usually because the person calling in is worried about what would happen if the their partner passed away without any life insurance in place. So if you are like this, it's important to know how you would like to protect your significant other, right?

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Cell-Phone o I-Pon?

Gadgets are everywhere now, and most of us are willing to sacrifice hard-earned money to satisfy this expensive craving, worst, some would really wait for the 'newest' gadget to be available!

But the thing is, can you really benefit from this? What's the big difference from your gadget that has been brought last year, to the newest gadget available in the market? Do you really need it?

Our advice, do not buy into temptation.

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Should I Crack my Piggy Bank?

How to react to Unexpected Expenses?

"Assess your situation to find ways to close the budget gap."

1. Assess your savings -
If your emergency savings won’t cover the expense, take a close look at your other savings. If you have money set aside in a savings or money market account, this may be the time to tap those funds. However, if your money is tied up time deposit, retirement account, insurance or investment, there may be penalties for withdrawing those funds.

2. Revisit your budget - 
Being hit with an unexpected expense can offer a good opportunity to take a closer look at your budget. Categorize your expenses into needs and wants, and find ways to reduce your unnecessary expenses. Although it may be tough to cut back, look for items you can give up for the short term or something you can cut to make up part of the shortfall.

3. Look to your available credit -
Figure out how much credit you have and the total amount that is available. If you still find that you’re coming up short, consider asking your lender to increase your credit limit. 

Using a combination of these strategies, you may be able to get your budget back on track. If you still find yourself strapped for cash, there are other emergency funding options you can consider.

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How to Keep on Track on your Finances

Manage your debt with these seven advice:

1. Live within your means
Meet the golden rule: Don’t spend more money than you earn. And overdraft is not part of living within your means.

2. Balance transfer to reduce costs
If you’re carrying balances at high interest rates, do a balance transfer to a less expensive form of credit.

3. Pay more than the minimum
Making minimum payments each month will keep you in debt for what seems like forever. You must pay more than the minimum to dig yourself out of debt.

4. Automate your savings
Paycheques can disappear all too easily, so put some cash away before you have a chance to spend. Arrange an automatic debit from your main bank account to a savings account.

5. Create an emergency fund
And emergency means emergency. It’s not a new pair of shoes you like or a weekend shopping spree. It’s a layoff, sickness, or some other unexpected event that strains your finances.

6. Check your credit history
Regularly check your credit history (at least once a year) with your bank or a financial institution.

7. Start a savings jar
If you save P500 by shopping smart and then spend that P500 on something else, you haven’t saved anything. Each time you use a coupon or save by buying on sale, take your savings and add to your savings jar. Each time you get to P500, move it to your emergency fund, retirement savings, or education savings.

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Don't Grow Old Without Money

Don't regret getting older, it is actually a privilege for you. But if you are getting older without money, it is a different story. While you are young and still can work or do business, give your best shot so that in the future, you have something to reap.

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The Importance of Having a Life Insurance

Life Insurance is very important as it protects your loved ones after you if some mis-happening occurs. Here are some other reasons why you need a life insurance now--

1. To Protect Your Family and Loved Ones:
If your loved ones depend on your financial support for their livelihood, then life insurance is a must, because it replaces your income when you die.

2. To Leave An Inheritance:
Even if you don’t have any other assets to pass to your heirs, you can create an inheritance by buying a life insurance policy and naming them as beneficiaries. This is a great way to set your kids up for a solid financial future and provide for any monetary needs that will arise.

3. To Pay Off Debts and Other Expenses:
In addition to providing income to cover everyday living expenses, your family needs insurance to cover any outstanding debts, like the mortgage, credit cards and car loans. Other expenses include funeral and burial costs that can easily run into the tens of thousands of dollars. You don’t want your spouse, parents, children or other loved ones to be left with any extra financial burden in addition to the emotional burden they’re already suffering.

4. To Add More Financial Security:
Like most parents you probably want to know your kids will be well taken care of when you’re gone. You not only want them to get a quality college education, but to provide for other life ventures like getting married or starting a business. For this reason, additional coverage is absolutely essential while your kids are still at home.

5. To Bring Peace of Mind:
No amount of money can ever replace a person. But more than anything, life insurance can help provide protection for the uncertainties in life. Without a doubt, having life insurance coverage will bring you and your family peace of mind. It’s one thing you can be sure of and no longer question if they’ll be taken care of when you’re gone. None of us know when we’ll pass away. It could be today, tomorrow, or 50 years into the future, but it will happen eventually. Life insurance protects your heirs from the unknown and helps them through an otherwise difficult time of loss.

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The Life Insurance Linggo

Insurance addresses the gap between the money you have and the money you need in case of unfortunate events like illnesses, accidents or calamities. It’s a wise investment that will help protect your wealth and health while you are alive.


But how about your family? Who will protect them if something were to happen to you? This is where life insurance comes in.

A life insurance policy will ensure your family is well taken cared of. Some life insurance policies offer not only death benefit, but also investment features.

Before availing of one, familiarize yourself with common insurance terms through this infographic.

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From 'MU' to 'MF'

What is a Mutual Fund?

It is a type of investment wherein you join other investors and corporations to form a massive fund which will be handled by an expert/professional who is called fund manager for diversified portfolios of stocks, bonds, securities, money markets and other mutual funds.

Things are mutual just like a budding love and relationship. Are you familiar with MU (a.k.a. Mutual Understanding?) After you get to know each other and fell in love with MF, you still need to get to know MF and trust MF. Since you have a mutual bond, when the fund incurred loss, you incur loss too and when it incurred profit, you incur profit. Either way, you still invest.

Mutual Fund is like riding a bike with your lover. He/She drives and you just hug him/her as you journey along… You are going somewhere and obviously you just let him/her drive till you both reached the destination. Like a Mutual Fund, you let the Fund Manager drive his way and execute strategies to make your fund grow and maximize earning potential until you reap profit on your target period.

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Critical Illness Benefit discussed

The danger that lurks in your Heart.

What is a CRITICAL ILLNESS RIDER?

Critical Illness health plan is something that could be taken along with your life insurance or a variable investment product as a rider. It is just an extra premium along with your regular plans. It pays a lump-sum money in case of a diagnosis of any Critical Illness stated in the policy. Some examples of diseases covered are: Cancer, Stroke, Heart Attack, Renal Failure, and 30+ more dread diseases you don’t want to have.

So how does it completes a financial plan?

Imagine this:
When you get sick, (critically ill?) What happens to your life insurance/retirement plans? Can you still afford the premium?

Can you still continue to invest? Or you now need to liquidate all your investments to help you with your treatment?

The bottom line here is. If you think the above story will NOT happen to you and you will live a long, healthy life? Think again. According to statistics, 90% of Filipinos (that is 9 out of 10) have 1 or more risk factor for the number 1 Disease of Filipino: (Cardiovascular Disease):

- Smoking
- Drinking Alcohol
- Have High Cholesterol
- Inactivity (No exercise)
- Have High blood pressure
- Have Diabetes



Do you have 1 or more risk factor from above? If yes, then better check if your plans- does it have a critical illness rider attached to it? If there is, is the amount would be enough if in case you will be diagnosed with any dread disease in the future?



“A Single hospital bill can wipe out years of saving.”

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Which is better, Time Deposit of Mutual Fund?

We Filipinos have a common notion when it comes to saving money: keep it in a savings or time deposit account. We usually set aside a portion of our income, just let it sit there, and access the money when we need it.

Putting our money in time deposits gives us a sense of security, knowing that there's a fund that we can dip into for household needs and emergencies. But should we be happy and content with the interest that we're getting from our time deposit account?
If we want to grow our money, we need to complement it with a long-term financial instrument such as mutual funds. These could boost our money’s value and help address long-term goals (usually 3 years or more) such as funding for retirement, education, a dream vacation or even a business idea.

This is where the practice of diversifying comes in. We can have our time deposit account for immediate or short-term needs (usually 6 months to 1 year), and we can have another basket taking care of our money for the future.

The latter not only ensures that our money’s value is growing at a good rate; it also helps us combat inflation, or the general increase in prices of commodities and services.

A lot of us keep our money in a time deposit because it's "safe." The amount that we put in remains intact and the interest is guaranteed. Think again. There's a silent thief called inflation that slowly depletes the value of money over time. So if a time deposit gives 1% annual interest and the inflation rate is 3%* this means that the real value of money actually shrinks by 2%.

If we’re looking to beat inflation and at the same time be financially prepared for the future, then it’s high time to re-allocate a portion of savings or time deposit to invest in mutual funds.

So which is better between the two? The answer is we need both - time deposits for immediate expenses and short-term needs; and mutual funds for long-term goals. Each has a different objective and time frame.

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No Spend Day

Have you heard of this: "NO SPEND DAY" ?

 

This is a tip where you should set at least 1 day in a week to NEVER spend (or at least only your basics like transportation and food). Do you think you could do it? Technically, even if you don’t open your wallet, you’re still spending money on things like rent, subscriptions, and gifts — you just didn’t count them. But that’s even more of a reason to create a “No spending” day on the money in your wallet: because you can actively control it.

Take this scenario: if you use a car to go to work everyday, try gassing up your mobil at Sunday. As well as hitting the grocery for a week's worth. And then starting Monday till Friday, dedicate at least one day where you don't have to spend any of the peso in your wallet.

It might sound challenging but if somehow you managed to have a control on your spending habit in that particular day, you will know to yourself that you can actually save more the next time you will go to a grocery. And from that, you will worry lesser since you have the savings you'll need to pay for bigger bills at the end of the month like water, electricity, and even your life insurance.

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Ways to Prepare for Retirement

Putting money away for retirement is a habit we can all live with. Remember…Saving Matters!

1. Start saving, keep saving, and stick to your goals
If you are already saving, whether for retirement or another goal, keep going! You know that saving is a rewarding habit. If you're not saving, it's time to get started. Start small if you have to and try to increase the amount you save each month. The sooner you start saving, the more time your money has to grow. Make saving for retirement a priority. Devise a plan, stick to it, and set goals. Remember, it's never too early or too late to start saving.

2. Know your retirement needs
Retirement is expensive. Experts estimate that you will need at least 70 percent of your preretirement income – lower earners, 90 percent or more – to maintain your standard of living when you stop working. Take charge of your financial future. The key to a secure retirement is to plan ahead.

3. Consider basic investment principles
How you save can be as important as how much you save. Inflation and the type of investments you make play important roles in how much you'll have saved at retirement. Know how your savings or insurance plan is invested. Learn about your plan's investment options and ask questions. Put your savings in different types of investments. By diversifying this way, you are more likely to reduce risk and improve return. Your investment mix may change over time depending on a number of factors such as your age, goals, and financial circumstances. Financial security and knowledge go hand in hand.

4. Don't touch your retirement savings
If you withdraw your retirement savings now, you'll lose principal and interest and you may lose tax benefits or have to pay withdrawal penalties. If you change jobs, leave your savings invested in your current retirement plan, or roll them over to your new employer's plan, or save them in an insurance policy or mutual funds.

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