For today’s blog, let’s go back to basics. A lot of beginners to personal finance can feel overwhelmed because of all the options, like which investment to get or which bank to choose. But before you start on any of that, you must have a healthy cash flow first.

“The inflow of cash should always be greater than its outflow.” It sounds simple, but many people don’t have this step down yet. If you’re living paycheck to paycheck, then your inflow is exactly equal to your outflow. If you’re living paycheck to paycheck and you have debts, then your cash flow is negative.

This is where having a healthy cash flow comes in. Learning how to manage your cash will be the single greatest factor in improving your financial future, because if you don’t have extra cash, how can you start saving and investing?

In personal finance, cash flow is all about income and spending. If you’re spending more than you earn, you’ll have a negative cash flow. How can you improve this? Earn more, spend less.

Again, sounds simple, but it’s not that easy to do. To help you out, here are a few ways you can improve your cash flow:

1.  Make more money. The most straightforward way to have more money is, well, to make more money. So invest in your best asset — yourself! Read books, widen your knowledge, improve your skills to expand the range of income streams you can have. For me, it was reading books that improved me; I became a better writer and teacher through reading, and I also learned a lot of things directly or indirectly related to my profession. Having more marketable skills will increase your earning power and positively influence your cash flow.

2.  Invest in learning. This is a part of investing in yourself. The more you know, the more ways you can find to make money. Whether that’s by improving yourself in your current company or learning ways you can start your own business or sidelines, learning is an investment that will never go to waste.

3.  Be enterprising. I’ll admit that I don’t think entrepreneurship is for everyone. However, I still think that more Filipinos can go into entrepreneurship. But it’s important that you go into it armed with knowledge — among others, you should read about the business you want to get into, observe the market, make sure your business plan is solid, and have an exit plan. It would also help to start small, such as basic buy and sell or commission selling. There are many opportunities for the beginning businessman (or woman); these 9 businesses you can start for less than P50,000 is a good jumping-off point. The number of SMEs in the country is increasing, and it’s always heartening to hear success stories. If you prepare correctly, and with God’s grace, you could be one of them. A successful business or sideline will do wonders for your cash flow.

4.  Spend less money. Making more money takes time and effort. It may take months for you to get that pay raise, or even longer for your business to start raking in profits. You know what takes less effort and has immediate effects? Spending less money! I’ve said it so many times that you might feel like I’m a broken record, but it’s still true — the way to wealth is spending less than what you earn and investing the difference. If you do this for the long term, you’re sure to meet your goals.

While it may take objectively less effort to spend less than to make more, it also feels a lot more painful. We Filipinos have a culture of spending. How many times have we promised ourselves that we’d be more diligent about spending, only to go out and make unnecessary purchases?

The thing we must remember is spending on things we want, as pleasurable as it might be, is only temporary. This doesn’t mean that you should never spend money on “unnecessary” things, but you should never let it affect your financial well-being. Track your spending, identify where you can cut back, and control your spending — don’t let it control you.

Ready to get a handle on your cash flow? Having read the above, you can start by preparing a budget so you can see where your money is going and what your net cash flow is every month. Cash is the lifeblood of personal finance, so make sure yours is healthy.

Tip: Learn how to manage your finances better by reading my book No Nonsense Personal Finance: A Step by Step Guide. To order, send us an email mia.tiongson08@gmail.com

The business process outsourcing industry (BPO), especially IT-BPO, is one of the fastest-growing industries in the country, expected to earn $25 billion and generate 1.3 million new jobs by 2016. Many young people now work as BPO call center agents, earning more than the usual salary for other entry-level jobs. BPO agents and OFWs are now two pillars that hold up a significant portion of the Philippine economy.

Of course, the good pay comes at a price: working irregular shifts, having long working hours, and having to deal with irate customers. But the benefits are undeniable: besides the salary, many BPO agents are entitled to bonuses when they perform exceptionally.

With all this earning power, BPO employees should start building their financial future. Here are three ways BPO employees can grow their wealth:

1. Automate your savings and investments.

Automation is a saver’s best friend, because why worry about saving when it can be taken care of automatically? Savings accounts like BPI’s Direct Save-Up will automatically take out a certain amount that you set from your payroll account, and move it to a savings account where it can gain interest. Even if you have it set to something as low as P1,000 every month, that’s still P12,000 you can save every year without even trying. Check your bank for similar products.

You can take it to the next level by investing a pre-determined amount in UITFs or mutual funds on a timeline of your choice. Ask your bank what your options are, and start putting a certain percentage of your income automatically towards investment. By automating your savings or investments, you can prepare for your financial future and you won’t even feel it.

2. Save or invest 50% of your performance bonuses.

One big perk of working as a BPO employee are the generous bonuses given for outstanding performance. When you receive one of these, you should be proud! But before you spend all of it by treating all your co-workers and family members to an extravagant dinner, consider putting half of it in an investment like a UITF or to build up your emergency funds if you don’t have one yet. When you combine putting away some of your bonus with regular saving and investing, you’ll reach your financial goals faster.

Then, you can still use the leftover 50% of your bonus for shopping, entertainment, or whatever you want. So you can still enjoy your money and save at the same time.

3. Invest in learning.

Many Filipinos don’t like trainings and seminars, and this is a big mistake. Always take the opportunity to learn more, either in your industry or in something else. When I was a young insurance agent, I took a special certification program being offered. Many people thought it was a waste of money and time in something they saw as useless. Instead, even if it wasn’t perfect, the program made me a better insurance agent and gave me a thirst to learn more, and I was able to improve my revenue as a direct result.

So seek out programs that will give you the skills to rise in your organization; even if you spend thousands of pesos on a good program, the return on your investment will pay off in exponential ways.

Being a BPO employee is hard work, so make your hard work pay off by making good financial decisions. And remember, saving doesn’t have to be a drag; if you do it right, you can save for your future and enjoy your extra income at the same time.

Make your sacrifices count!

How do you maximize resources? I am now featuring the post of The Cristobal, the powerful financial advocate couple Tristan and Carmi Cristobal. A truly helpful post for everyone….

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When I was single and while in college, I never had an interest of working abroad. I was confident that I’ll be able to sustain my life once I got my degree and passed the board exam. Now, I’m married with one kid – I am working abroad. I realized that I was so young, back then, and wrong to think that I don’t need to go abroad but here I am working abroad while my family is in the Philippines

I am not here abroad without any reasons. I am just one of the OFWs who decided to leave the country with many reasons on hand. Here are our few reasons, as OFWs:

1. To earn more to be able to support our family
2. To pay off debts
3. To be able to save for the future
4. To achieve certain goal like establish a business, buy a house and lot, etc..

There are too many reasons to list and for sure, it will be unlimited but one thing that we have in common – To eventually come back home to our family or Philippines with enough savings. To achieve this, we – OFWs have to work hard for it.

The sad reality…

According to the survey of Philippine Statistic Authority, only 2 in every 5 OFWs were able to save from their cash remittances from April to September 2014 – A sad reality that 60% of OFWs don’t have savings. This gives us no doubt, why there are OFWs working abroad for 20 years or so. OFWs spent most of their lives abroad than with their family in the Philippines.

Reality Check…

There are too many factors to consider because life is not just about money. Life is also about having a life, good relationships, strong faith, and other things. Yes, we work abroad for money but in fact, nobody can really tell if one is successful or not. Why? An OFW can be financially successful but he/she might not be successful in relationship with his/her daughter, sons, siblings, etc. An OFW might be successful now but after 10 years no one can really tell.

A reality that an OFW should consider and know how to protect all the sacrifices not only for money but also the relationship, faith, etc…

The point is…

Let’s not waste our sacrifices while working abroad. An OFW should know that everything that you do in your personal life has a financial impact in your life, maybe not now but on the later stage of life.

Being an OFW is an opportunity that we should maximize. We should maximize the resources that we have – Time, Talent, and Treasure according to our goals.

How to maximize our resources?

On a personal note..

Firstly, we – OFWs should have reasonable financial plan from the time we become overseas worker up to retirement period. This includes increasing your skills, income, and values.

Secondly, an OFW should have an escape plan as well for being an OFW because we will not be OFWs for life.

Thirdly, start your financial plan from the famous saving formula which is: Income – Savings/Investments = Expenses.

Lastly, if you feel like your finances are not improving, don’t be depressed but rather focus on something that you know can help you achieve your financial goal.

We can use our time and treasure while abroad by investing…

We can say that all kinds of investment, as long they are legitimate, are best for OFWs to invest in. The reason is that investments have the potential to grow one’s money and help one achieve its financial goal. OFWs can invest on the following:

1. Business Investment,
2. Stock Investments,
3. Mutual Funds/UITFs,
4. Cash Equivalents (Time Deposits),
5. Protection (Variable Unit-Linked),
6. Bonds
7. Other legit investments

In addition to this, try not to commit the common money mistakes of OFWs while working abroad such as overspending, availing bank loans without proper payment plans, buying during sales without budget, etc…

And yes, it’s a reality that not everyone can be rich but everyone can be wealthy and deserve financial security. Nobody will give you financial security but only you.

Regards,

The Cristobal

Tristan is an OFW while Carmi is based in Philippines.

The couple is an accountant by profession. Tristan works as a Senior Compliance Officer in Jeddah while Carmi is an Accounting Manager in Philippines.

On the side, the couple is both active volunteers of Angat Pilipinas Coalition for Financial Literacy Inc. – a global non-profit organization of personal finance advocates. Carmi is the current President of the organization while Tristan is the Mission Director in Western Region of KSA.

Tristan is also a volunteer in PICPA – Western Region of KSA as  VP  for Professional Development and Board Exam Reviewer while Carmi is a Certified Investment Solicitor and currently pursuing her RFP.

1. Please visit www.thecristobal.info for more information about life, relationship, business, investments, and personal finances. The website is a family oriented site. The founders’ story is a typical story of one Filipino who decided that one should go abroad while the other partner should stay in Philippines.

The founders authored two e-books entitled:

1. How to understand OFWs and help them go back home – which is being given for free. One just need to sign-up to grab the copy
2. Discover the five year Plan of an OFW – One of the objectives of the couple is to share their secret formula for every OFWs on how to go back in Philippines and to answer the question “Hanggang kailan ka magiging OFW?”.