A few years ago, I met Arnel Pepito in a small group in our church. He was shy and timid then and now but he has an amazing journey towards financial empowerment. Today, Arnel is a colleague in the financial advocacy environment and I am truly proud of this young man. I am sharing you his story in his own words…

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“I was so broke that countless times I skipped meals and didn’t pay Jeepney fares.”

My story is not a bragging right to share but perhaps it will inspire those who experienced and still experiencing lack in life.

A few years ago, I can still remember those times that I was enduring a tough life. I was caught off-guard! I had a job, I don’t drink, I don’t go to party but I was financially broke. I was so broke that I had to skip meals and never paid jeepney fares, countless times… 1,2,3, GO! (Commuters know that well)

I could not imagine the feeling of going to my destinations empty-handed. All I could do was just making “poker-face”. I was always praying that jeepney drivers would be too complacent so I can always sneak-out…If I was caught that time, my life would be in jeopardy. Many times I had to walk long distance to reach places and had to live with 10 people in one small room…

I dread those days! Looking back, I promise myself not to go back to that life, AGAIN!That was like a bad dream…

Finally, I found a way out and I was able to escape! I learned that being broke does not just happen overnight! It is a process and for us to escape it, is to really change our lifestyle and fill in the loopholes. It’s even so ironic that people who are broke today, don’t have any idea how they got there.

Money Mistake #1: I did not save earlier.

Saving is now my daily habit but few years ago that was just an alien to me. I hate budgeting before and saving was just an elusive dream. Only moms do that, I am single who would not care to think of it. That was my mindset back then but when unexpected expenses and emergency happened, it came to my senses. I suddenly realized the importance of Emergency Fund. I finally believed what Zig Ziglar said,” Money is not everything but it is relatively close to Oxygen”. We appreciate something when we needed it the most.

Action Taken:

I went back to basics and practiced saving starting from baby-steps. I only have one thing in mind, ” Do not save what is left after spending but spend what is left after saving”. I made it my mantra and made saving as my top priority. I always set aside an amount when I earned something, usually 30%-40%. Being “Kuripot” is not a bad thing as long as you will not deprive yourself with things that are very important.

Income – Savings = Expenses… and this is the right formula

Money Mistake #2: Unnecessary Spending.

I did not take seriously that little but misguided spending could affect my finances. I wasn’t even bothered to think if what I was going to spend is a “need” or only my “want”…

A little ticket in the cinema, a little amount for an expensive coffee, and few beers can sum-up to a big amount. I was a movie person and part of treating myself was to always go to the cinema every weekend. I love the sounds, the screen, the place! When I was in the mall, the door of the cinema was always calling me, “Hey Arnel, get inside”! Little did I know that it was already part of my destructive spending. Earning money takes 15 days but to spend it will only take few minutes.

Action Taken:

I identified “NEEDS’ VS. “WANTS” then I categorized them. ”Needs” most of the times are all followed urgently and “Wants” are all validated and given a timeline. When I got into investing, my saving habit orchestrated with it. I have something to look forward to. So the more I saved, the more I have the opportunity to invest. That excites me! I suggest you start investing the time that you start saving because the two goes hand in hand!

Money Mistake #3: I was a One Day-Millionaire.

I had an attitude of a one day millionaire, my mentality before was to treat myself first and treat others (splurge). For me treating myself means gadgets and more gadgets! I sold our property years ago and I bought it some gaming gadgets and computers.

After a year, I forcibly-sold it with very low price because I had to pay other debts. It piled-up and did not happen just once. It became a bad habit and resulted to chain-reactions.

Action Taken:

I just realized that “treating yourself first” and “Paying yourself first” are two different things. Treating yourself means, buying valuable things to make you happy and look good, or going to a vacation to feel good. Paying yourself first, on the other hand, is setting aside a small amount, to save for the future.

Money Mistake #4: I couldn’t refuse Borrowers.

That was my struggle back then! I did not know how to refuse especially if that is my relative or a friend (even though many times I knew for a fact that the money is intended for a week-budget). I just realized now that it was already a form of pride! Pride because I wanted others to know that I have more than enough.

Action Taken:

I decided to refuse borrowers especially if I am on a tight budget and at the same time I also made a commitment not to borrow if not necessary. Now, I am setting aside some extra amount for things like this for somebody who will borrow (for situations like emergencies). It is nice to help someone without thinking of when he/she will return it because those are only extra money.

Money Mistake#5: Poverty-Mindset.

I grew up in a working-class family and in a poor neighborhood. I was having hard time managing money. I did not think much of saving and investing. So when I earned something, I spend it to the last centavos. I wasn’t brought up in a financially-oriented family so I had already a negative impression on money. All I know was money is earned today and I will spend it tomorrow.

Action Taken:

I sought mentors and engaged myself with fellow investors. I found out through personal finance seminars that poverty starts from the mindset, so me being broke was just a limitation I put to myself. So things have changed since then. My entire character was transformed. I always believe that being in a very supportive small group helps me changed my perceptions from the inside-out.

I engaged myself in both Financial and Spiritual community. My Victory Christian Fellowship (VCF) family and my church-mates are always there to guide me and opened doors for me to have a harmonious growth in all aspects as I’m working on my real purpose which is to always bring back God’s glory.

The biggest investment conference is back! #iCon2017 — details HERE

Firstly, allow me to greet everyone a Happy New Year! My prayer is that 2017 will be a great year for you and me.

People always think of having New Year’s resolutions at this time – some will come up with new ones while many will revisit old ones. Personally, I think New Year’s resolutions are great because it allows us to focus and look forward. The challenge is the discipline it involves until those resolutions come to fruition.

Allow me to share my 5 tips for 2017. Since I am a personal finance advocate, you will see that most of my tips will be related to money so here goes:

1) Review you cash flow and create your budget. I know you have heard this time and time again and I have also said this time and time again. But, when it comes to helping you achieve your goals, your budget and cash flow is your most important and a very critical. Learn how to allocate your funds properly but be practical as well. Some people will come up with a budget plan that is ‘too good to be true’ which will only look good on paper but very difficult to execute. You know yourself the most, so create a budget that you can follow. As you create your budget, make sure that having savings is your ultimate goal.

2) Start or increase your equity investing. Due to the massive correction of the stock market in 2016, it is an opportune time to accumulate good quality stocks or equity laced mutual funds, unit investment trust funds (UITF) or variable universal life insurance (VUL). There are good bargains among some quality stocks which you may want to invest in, or you may opt to invest via pooled equity funds (mutual funds, UITF, VUL). If you are not sure if buying stocks or buying funds is for you, read here.

3) Start that business that has been brewing in your mind for a long time. The Philippine economy will continue to grow in 2017 and that will continue to bring entrepreneurial opportunities. You don’t need to quit your job to start a small business, what is important is that you start. Make sure that you do enough study before you actually start your business. If you are wondering if you should be an employee or an entrepreneur, read here.

4) Get a skills upgrade. It is always wise to focus on learning and 2017 is a great time for you to do so. Why? Competition is becoming more and more fierce! Our economic growth has ushered much opportunities but it also made the battlefield more intense. Mediocrity will kill all of us, now more than ever. Attend more seminars, read more books, listen to more podcasts, watch more educational videos and find a mentor or two. The more you focus on building your skills, the better your financial future will be (assuming you know how to handle your money). You may want to start the year right and learn from Francis Kong. Visit www.successoptionsinc.com for details.

5) Be generous. Regardless of your situation, being generous is a good idea. Why? “The generous will prosper; those who refresh others will themselves be refreshed.” Proverbs 11:25, NLT. “And I have been a constant example of how you can help those in need by working hard. You should remember the words of the Lord Jesus: ‘It is more blessed to give than to receive.’” Acts 20:35, NLT

Have an amazing 2017 and it’s time to be a new creation!

Question: Hi, Randell. I know this sounds very simple but every time I try to save up money, a new gadget comes out and makes me want to use my money in order to keep up with the trends. I think that I should be upgrading my smartphone all the time because it is related to IT. I also get pressured by my colleagues.

How do I stop the urge to buy a new smartphone all the time and have more self-control when buying gadgets in general? Hope you can help me with this. Changing this habit will definitely help me save more money in the long run.
Thanks! Asked by Louise, 30 years old, via e-mail

Answer:
Hi, Louise. There are many factors that affect why you want to buy more expensive gadgets. It could be because you feel the need to keep up with your peers. It could also be the temporary feeling of satisfaction you get when buying a new gadget.

I also hear other people tell me that they are investing on expensive gadgets because they need them for their jobs. I don’t see buying a gadget as an investment because a gadget depreciates in value quickly and if you really need it, your employer would have easily provided it for you.

In certain instances, when you do need a gadget to perform your job, you can get better results using a cheaper alternative compared to the expensive one that you just bought. You can also choose to borrow or rent gadgets like DSLRs if you will only use them a few times.

Investment simply means that the value of what you have saved will grow over time.

Gadgets do not increase in re-sale value and depreciate fast because that is the nature of technology. For instance, buying a P35,000 smartphone because it has a sharp camera—and maybe prestige—may not be the wisest thing to do. You can buy a smartphone with the same specifications but of a different brand for P17,500.

You can then use the P17,500 difference for investing in the stock market, mutual funds, UITFs or for opening an online business that can earn you more money in the long run.

There is nothing wrong with buying top-of-the-line gadgets when your savings and cash can afford them. You can get the latest gadgets when your multiple streams of income are already earning money. This can justify your getting the latest model since the amount will just be a fraction of the total earnings that you get per month.

Personally, I like smartphones and I also like the latest ones. However, I have learned to skip models because gadgets are really wants and not needs. Sometimes, it is not an issue of buying an expensive item but an issue if it is a wise thing to do, especially when your finances are not yet that ideal.

People always say that finance advocates like me are cheapskates or ’kill joy’ and that we do not find pleasure on spending on wants. That’s not true.

Personally, I still buy wants because I like to reward myself or other members of the family from time to time and it can be a source of motivation.

However, buying wants—and gadgets are definitely one of them—is an issue of propriety and not an issue of buying or not buying. Buying wants should be dictated by your objectives and your cash flow. Always remember that balance is key.

And remember, you should be known for your work ethic and not for your gadgets. Make yourself valuable because of your skills and your behavior and not because of your material possessions.

Here’s a brotherly advice: Spend on wants occasionally, but save consistently. You will thank yourself in the future.

Catch me with the Philippine’s top inspirational speaker, Francis Kong along with Carlo Ople, Hidilyn Diaz and Jodi Sta. Maria this January 20, 2017 at the Samsung Hall in SM Aura. Visit www.successoptionsinc.com for details and registration.