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by Stephanie Dychiu
1. Tame the paper tiger. Start the new year right by tidying up your financial house-literally. Lynette, a 28-year-old magazine illustrator, realized the dire consequences of bad record-keeping when she was trying to get a US tourist visa. "You know how they (consuls) ask for all sorts of papers, right? Well, I couldn't find any of mine," she shares. I never found my bank statements and income tax returns amid all my clutter in time for my scheduled interview at the embassy and got denied, of course. That's over P2,500 in application fees down the drain." Bank statements and income tax returns need to be stored for at least three years in a filing cabinet at home. Irreplaceable personal documents like birth and marriage certificates, bonds, and stock certificates need even more protection so keep them in a safety deposit box in a bank close to where you live for hassle-free retrieval.
2. Kick the credit habit. Leave all credit cards at home until you pay off the entire-not just the minimum-outstanding balance. Inability to delay gratification is the root cause of out-of-control credit card spending. "I could never wait till payday," sighs Maya, an executive assistant. "I'd go into a frenzy with my credit card during midnight madness sales kasi di ba the discounts are 'for one night only.' Then I couldn't pay the full balance at the end of the month, so the interest charges piled up." Credit cards are convenient for those who don't want to carry too much cash. The monthly statement also provides an automatic record of your expenses, which is useful for budgeting. Credit cards should never be used to live beyond one's means. Once all outstanding balances have been settled, close all credit cards and maintain only one, ideally with an affiliate of the bank where your payroll is deposited, so you can arrange to have part of your salary automatically deducted to pay your credit card balance every month.
3. Don't bust your budget. Try this little exercise to see how much should be spent on different expenses. Multiply your monthly take-home pay by these percentages recommended by financial planners: These percentages can be adapted to your unique situation, the point is to have a very clear idea of where your money is going so you feel in control. Those who live with parents probably don't pay for rent or food, and singles without dependents generally don't need life insurance yet, so the extra cash can be added to savings or spread out over other expense categories.
4. Pay yourself first. Make an arrangement with your bank to transfer a fixed amount into a separate non-ATM savings account or time deposit-make it as difficult as possible for you to tap into that stash of rainy-day money. Aim to keep at least three to six months worth of pay in this account. This should be enough to tide you over in case you suddenly lose your source of income, either through retrenchment or serious illness. Why? Because it usually takes that long to pick up the pieces and get back on your feet after a major setback.
5. Brush up on business buzzwords. You can't be a ignorant about money matters forever and expect to become financially independent. Build a working vocabulary of commonly used financial terms like the following:
Once you've gotten the jargon down pat, practice reading the financial pages of your daily paper. You might pick up a lucrative tip or two.
6. Be your own boss. Or at least find a sideline. Some people like 27-year-old Annette, a bank teller, don't feel confident enough to quit their jobs and start a business but want to find extra sources of income. "My job at the bank is my safety net, it puts food on the table every month. But it's been three years since I got a raise, with the crisis and all. Prices of everything keep going up but my salary stays the same. I can't keep up anymore."
To find a sideline to work on during weekends or after office hours for some extra money, try the Technology and Livelihood Resource Center (TLRC). The center offers training courses and even loans money to promising entrepreneurs. Learn a new skill like making native delicacies, food catering, soap and candlemaking, or manufacturing crafts and garments for export, and turn it into money-making ventures. Malice, a lambanog-based sparkling beverage; and Kindlecraft, a company that manufactures decorative candles, both started when their owners took classes at the TLRC.
Contact the center for the latest class schedules at 6374108 to 12, 6374018 to 22 local 607 or 609, or visit their office at 709 City State Centre Building, Shaw Boulevard, Pasig City. Who knows, you might be the next bazaar queen!
Reprinted as authorized by Cosmopolitan Philippines January 2001