Reading up on financial education

Question: What are the best books on personal finance that you can recommend? Thank you, sir.—Honney Natividad via Twitter

Answer: Best is a relative term and I may not be the right person to give you a qualified answer. However, I can give you my opinion on some books that I personally find insightful and helpful. Finance, even Personal Finance, is a very broad subject matter involving many disciplines and there are many good books out there that are very good read.

There are books that write about the technical aspects of personal finance and zeroes in on specific subject matter, i.e., investing, estate planning, stock market, insurance planning, accounting and the like. There are also books that tackle the broad spectrum of personal financial planning. There are also many books that tackle behavioral issues on finance that belongs on the motivational or self-help genre. Then there are the hybrids that try to give you a more balanced view on the technical as well as the behavioral issues on the finance and I personally go for these books.

Perhaps the most popular finance books are those written by Robert Kiyosaki, which were brought about by the highly popular Rich Dad Poor Dad bestseller. The book is so popular that it created some sort of cult-like behavior among many, which is quite disturbing if you ask me.

Rich Dad Poor Dad and Kiyosaki’s succeeding books have some good points but they are quite over-rated for me because they lack some specificity and many readers question the validity of his claims. Like any book, we should learn to eat it like a fish, we get the meat and throw away the bones, as the saying goes.

Let me give you a list of books that I highly recommend because I like the way they were written—balanced and grounded on solid financial principles; yet they can still help you get motivated. Sorry, Kiyosaki fans, you won’t find his books on my list.

1) Total Money Make Over and Financial Peace by Dave Ramsey—OK I admit it, I’m a Dave Ramsey fan boy and for a good reason. I like his straightforward approach on personal finance. His books, particularly Total Money Make Over is very practical and it is full of real stories of people who overcame financial difficulties.

Ramsey is a no-nonsense finance guru yet you can really sense his sincerity in trying to help people get out of the financial mess they are into. These two books are great starter books that will open your eyes and give you hope.

2) Pwede Na! The Complete Pinoy Guide to Personal Finance by Efren Ll. Cruz—Hands down, Efren’s books are the best personal finance book ever written by a Filipino. It is a concise yet surprisingly comprehensive book that will guide the reader in the many facets of financial planning and financial instruments. As the title connotes, it is indeed a complete guide, yet it will not overwhelm you as you find yourself glued to the pages.

3) Millionaire Next Door—by Thomas J. Stanley and William D. Danko. This is an iconic book that discusses the behavior of Millionaire in the USA. It is not only insightful, it will actually shatter many of our misconception on wealth and wealth accumulation. I particularly like this book because it is based on solid research. This is a good financial behavior book that may help you change your mindset.

4) Automatic Millionaire by David Bach—this book by a best-selling author gives you an overly simplistic view on achieving wealth and yet it is effective in its message that in eating an elephant, we need to do it one bite at a time. Simple, practical and sensible.

5) Money Matters by Larry Burkett—Financial counseling is the most effective route toward achieving financial security but many do not have access to good financial counselors or advisors. Money Matters is a form of counseling book and I like the question-and-answer format. The questions are very practical and real, not superfluous or ambivalent. The answers of Mr. Burkett are successful in providing advice in an emphatic way; yet, you will find that his answers have sound financial grounding.

6) Till Debt Do Us Part by Chinkee Tan—another book written by a local author that I highly recommend. Chinkee’s book deals with an issue that plagues many Filipinos and yet one that is hardly discussed openly. The author successfully convinces the reader that debt is not a good thing and yet it gives us hope that being truly debt-free is within the reach of the average Pinoy. I like the practical steps in finding a solution to the debt trap written specifically for the Pinoy psyche. Chinkee has written many best-selling books but Till Debt Do Us Part remains to be my favorite.

There are so many other good books and reading them is definitely a good idea. Just make sure that you are objective in reading the book and it does help to check the authenticity of the author. Many are led astray by what they read so I want to reiterate this concern. Notwithstanding the many “bad” finance books out there (local and foreign), I implore the Pinoys to get a book on personal finance and read. One good idea can change your future and redirect you to the path to financial peace.

I am in the process of writing a book myself but recommending it here will be self-serving so let me just stick to the six I mentioned. Financial wisdom will be yours if you seek it. Hope this helps.

Appears in Philippine Daily Inquirer

Question: I’m an OFW in Singapore, 24 years old and starting to be serious aboutmyfinances. I have started to save already but sometimes I feel like a ‘bank’ needing to send money home most of the time. I am now torn between helping my family and preparing for my future. I already built my emergency fund, what’s next for me? – M.B. Pangilinan, via e-mail

Answer:

Firstly let me get this off my chest and say “mabuhay ka M.B. Pangilinan!” Being an Overseas Filipino Worker is hard and difficult and yet you endure all of it. In my eyes, you guys are truly modern day heroes and I’m not just riding the band wagon, I mean that from the heart.

Let’s see how we can sort out your sticky situation. Firstly, it is very noble of you to help your family despite your young age. Our society is a unique one when it comes to giving family support, we have burdened our children into providing for us, and yet it is also very noble of us that we do not abandon kin that needs our help. I don’t know you personally nor do I claim I understand your family’s situation. What I can say is to look for some sort of balance, a middle ground of some sorts. While we can argue that it is not your obligation to provide for the other members of your family, I don’t think that ignoring their plea for help with let you sleep well at night also. I suggest you have a nice talk with the folks, respectfully telling them about your willingness to help but respectfully telling them of your situation, goals and aspirations. Look at your cash flow, how much money can you send home and still have enough left for you to prepare for the future and start investing? Only you can discern that percentage of your income that you can send home. By continuing to send big amounts of money home, not much will be left for you to prepare your future with; and I believe that too much dependence on your income will prevent other members of your family into being productive. An honest to goodness talk with the folks, done in a very respectful and loving manner will keep the harmony in your relationship with your family.

Moving on to your next concern, what’s next for you after you have established your emergency funds? That’s the fun part brother – you can now slowly build your portfolio and make your money work for you. Every dollar you set aside and invest is a step closer to achieving your dreams. Start by identifying your goals, what is it that you really want? Do you see yourself retiring earlier than customary retirement ages, say 50? Do you envision coming home in a few years to settle down and put up your dream business? Knowing your goals is the first step into investing. Your financial objectives should determine every action you will take in finance. What is your risk tolerance? Would you consider investing aggressively or do you see yourself as a conservative player? In investing, yields are determined by the risks you take – the higher the potential yields are, the higher the risks and vice-versa.

It would be good to allocate a regular amount, part for savings and part for investing. A good suggestion for you is to look at pooled funds. If you plan on investing in Singapore, there are a plethora of choices there, just be careful that you investigate the funds you are investing into. Many of them are termed to be ‘exotic funds’ and might not be consistent with your objectives and risk preferences. Should you decide to invest in the Philippines (and I pray you do), you can also look at the pooled funds here being offered by way of local mutual funds or Unit Investment Trust Funds (UITF) being offered by the bigger banks. They are investment funds professionally managed and you can opt for conservative, moderate or aggressive risk. Pooled funds are good starter investors especially for young OFWs like yourself since it allows you to invest in small amounts and you will have access to professional investment management. While you are still trying to discern the path you will be taking, it is prudent that you start planning and execute those plans. “The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty.” – Proverbs 21:5, ESV

Just in case you will be home for the holidays, why don’t you send me a message so we can sit down and discuss further or better yet, join us for the Happy OFW Christmas, a blow out gathering for OFWs on December 16, 2011 from 1 to 6 pm at the Philamlife Auditorium, U.N. Avenue, Manila. This is a project with the Blas F. Ople Policy Center, an advocacy I truly am part of.

I continue with my search for products that provide us with good value. I know that I often say that we should save, save and save (and invest too) but we also need to spend. It is very impractical to say that we should not spend on things we need… what we should do is to make sure that what we spend on is of good value — and gives us a bang for every buck we spend on, so to speak.

Although I am a personal finance person and the resounding theme of what I write and speak about is money, its proper use and its growth; but I am also a dude and what does most dudes like a lot is fashion, not! While many of us, specially the married men, do not ogle at other women anymore (I only stare at my wife), we do so with cars. Cars remain to be one of those things we like to look at, drive and own.

I’m on my 3^rd car which I was blessed to review and this time, I was able to use and enjoy the mighty Honda Jazz. The Honda Jazz is one of those ‘iconic’ vehicles that a lot of people simply go ‘ga-ga’ over. Personally, I was not a big fan since I’m not into small cars, owing to my body frame. When my friend called me and asked if I would want to test the 2011 Honda Jazz, I agreed but was not really too ecstatic, it’s just a small car after all.

All my pre-conceived notions about the Jazz were instantly thrown out of the window the moment I sat in the driver’s cockpit. Firstly, the Jazz is not as small as I thought it was. I’m not sure if it’s just optical illusion but I was really delighted that the Jazz was really roomy – even for a big guy like me. The biggest come-on of the Jazz is its roominess relative to its size. I love the leg room, head room and its over-all spaciousness. The riders at the rear will likewise enjoy the space. It is amazing how the Honda Jazz can have so much space considering it is a sub-compact car. I particularly enjoyed the folding seats so you can load bigger cargo. The ease of folding the rear seats is also a big plus and so convenient.

So the car is roomy, a big benefit — but space is not the only criteria for value right? I like looking at the interiors of the car, particularly the dashboard since a driver spends a lot of time inside a car and a functional and ergonomic panel that is pleasing to the eye helps us stay sane amidst the stressful Manila traffic. A great sounding stereo where I can plug my iPod plus an air conditioning system that keeps the whole car cool despite the scorching Philippine heat is definitely a win-win combination for me.

The car is nifty, the car is spacious and the car is functional… but does it drive as good as it looks? While many reviewers like to test cars by taking them outside Mega Manila, the real test for me is how the car handles in our city streets – after all, I spend more time driving in the city than I do outside. My best gauge of driving pleasure is that if at the end of the day I am not exhausted from driving, the car gets two thumbs up from me. After traversing through the crazy streets of Metro Manila, going to places for meetings from one after the other, and the occasional request from my wife for unscheduled errands, the Jazz was such a dependable partner. Was I tired after ‘playing’ with the Jazz for a whole day? Not at all! I was actually looking forward to my wife asking me to do errands because it is an excuse to use the definitive Honda for another spin.  With only a 1.3 L displacement, the response of the Jazz was impressive – it is zippy and handles the streets like it was hugging the road. The suspension was also smooth even if it is on a small platform.

Like I said before, the acid test of any car for me is how my family enjoys it. I got twoyoung boys who love to tag along with me and they were raving about the Jazz, from how it looks from the outside and in the inside. My Teenage girls also liked the car a lot, even asking me to buy one each for them – well, I told them that after they graduate and earn their own income, they can get themselves their own Jazz with their own money – but with my blessings! Since my wife drives a lot too, I asked my wife to drive the Jazz as well and did she approve of the popular car? She said just said that she wouldn’t mind having one for herself to replace our older cars – that’s one of the best endorsement any car can get.

I never really got why the Honda Jazz was a very popular car and why its owners rave about their cars with cult-like behavior. A few days with this diminutive yet grand automobile, I have become a huge fan of the Honda Jazz.

My only issue with the Jazz is its cost — the model I tested, 1.3 L A/T, has an SRP of Php 792,000. But I suppose one needs to pay the price for the quality and value the Honda Jazz brings. After all, you get what you pay for.  Oh, before I forget, the best feature of the Jazz for a personal finance guy like me is its fuel consumption! Is it efficient? You bet! I estimate about 14 kms. to a liter and that city driving with insane traffic at times!

The Honda with all its Jazz, got themselves a keeper.