Question: I have been reading your articles and other posts about finance. While I find most of them very informative, I find them difficult to apply. How do I find the discipline to follow the rules that you, finance advocates, always talk about?-Joshua via Facebook

Answer: Let me start by saying this, “money is behavioral and not mechanical.” It is too challenging for us to follow the money “rules” because we think we can just flip a switch and be on our way like a computer program. The famous author Dave Ramsey said, “Money is 80 percent behavior and only 20 percent skill.” The struggle will always be about our behavior and how consistent we are with such behavior. The money “rules” may be very simple such as “do not spend more than what you earn,” “live below your means,” “invest early” and so on. However, simple is not the same as easy and therein lays our struggles.

Finance advocates can give ideas that seem very sound but can sometimes be impractical. For instance, you will hear us say, “do not drink expensive coffee, do not upgrade your smart phones etc.” They are logical ideas, but hey, where’s the fun in that? I am a father of four kids and I know how important rules are, without them our household will be in constant chaos but my wife and I also learned how to set rules, relax the rules and be flexible—in other words, we are trying to strike a balance. With regard to money matters, it is the same—balance is key.

Having a budget is very important, you will need to track and allocate what you should be spending on. One of the many reasons why people are in a financial mess is that they are unaware they are over-spending. By the time they realize they are, it may be too late. A budget tells you where money should go, not just where it went. Allocating your money is critical to you being able to achieve your financial goals.

However, your budget should not be too stringent that it does not allow ‘fun’ items. Some finance advocates will give you very strict recommended budgets that even many of them can’t follow themselves.

For instance, you might have heard or read experts telling you that you should not spend your 13th month pay on buying gifts and festivities and just save and invest all of them. While it is a good suggestion, it’s actually easier said than done. We are people and we need to have fun, removing it will make us feel money is a hard taskmaster and we will find ourselves rebelling.

How do you strike a balance then? Unfortunately, there are no hard and fast rules on this. You will have to experience trial and errors until you find a balance that works for you. If your budget is too stringent that you feel like you are missing out on many things, adjust your budget. When you look at your bank account and you get stressed because your funds are so small, adjust your budget.

Know your priorities, we should all be responsible about our future. You should not sacrifice long-term gains by enjoying short-term benefits. After several trials and errors, I am sure you will find a balance that will allow you to enjoy the fruits of your labor, without sacrificing a comfortable future. After finding that balance, you will still need to recalibrate it from time to time—that’s what life is all about.

Be part of the country’s most empowering investing conference – #iCon2017 this May 27, 2017 at the SMX Aura. Join me and the country’s leading experts and let us help you build your future! For details, visit www.bit.ly/ICON_2017

Most Filipinos are always on the lookout for seat sales because it’s an affordable way to go abroad. Who wouldn’t be tempted? A ticket from Manila to Cebu can cost up to Php4,488.76 for a regular flight but can cost as low as Php402 when booked through a seat sale. That’s a total of Php 4,086.76 in savings.

This will be applicable in the near future because most of us will be booking our seat sales for the upcoming holiday season. Most airlines are releasing their seat sale promos as early as now to entice people to book their flights.

What most people fail to realize is that one can save on all aspects of the trip. There are many reasons that one can still overspend during the trip because of the emphasis that they already saved on the airfare. Some reasons can also be overlooked because it doesn’t seem it was an opportunity to overspend, but in reality, people spent more than they should have.

Here are the instances you spent more than you should on a seat sale trip:

You did not save on the other aspects of the trip.

Were you able to book discounts for your hotel or hostel? Did you get a group discount for tours during the trip? There are a lot more expenses in the trip that you can get discounts for. Some hotels offer big discounts when they are filling out accommodations in the building. One example is 27% off at Dorsett Mongkok in Hong Kong during summer because the hotel is filling out accommodations in the 27th floor of the building.

Your credit card incurred interest.

If you paid for your seat sale ticket through a credit card and got an interest charge from the bank due to late payments, you will incur additional expenses. The amount may seem insignificant since monthly interest rates on credit cards are usually 3-4%, but this would still equate to lost money no matter how small the amount is.

You extended your trip because the cheaper seats are pegged during weekdays.

A longer vacation due to finding slots for cheaper airfare can equate to having more expenses with a longer travel time. This includes accommodation, fees for activities, and food.

The travel dates that you’ve taken will be non-paid leaves.

“If you are taking a non-paid leave from your full-time job for the trip, you end up losing money,” says Kristine Cenidoza, an HR professional who loves to travel. For example, with a daily rate of Php1,000.00 for an employee and booking a flight out during a Thursday morning, that could equate to Php2,000.00 if those leaves are not paid and you shelled out Php402 for the airfare.

Final Thoughts

Overspending can be avoided through proper planning. Think a lot first before doing impulse buying on seat sale flights. This should make you free from worry and make you enjoy your vacation more instead of getting buyer’s remorse after the trip.

Plan trips properly and always remember that balance is key. Why enjoy today and suffer tomorrow? Budget your money well. If you have properly saved up for a trip and that trip will not cause financial turmoil, then go and enjoy that vacation you have always wanted. As with anything related to personal finance, wisdom is key.

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What is financial freedom? It sounds like a heavy word. In reality, financial freedom is being able to afford and do what you want, when you want it. This could be having the ability to buy material things without thinking about the cost. This could be retiring early, way before you hit sixty. This could be having the power to quit your job and pursue passion projects, be it starting a business or giving back to the community. Financial freedom sounds like a dream, but if you look around, you may know of some people living the dream, living financial freedom. Do you want to reach financial freedom as well?

Here are 5 points to determine if you are on the right path to financial freedom:

1) You don’t worry about last-minute emergencies

Car broke down? Are you feeling aches and need a trip to the doctor? Other people may hold off having car repairs and medical trips because of the expenses they will incur; however, if you have an emergency fund and even health and car insurance policies, you won’t even think twice of taking your car to the shop or having a doctor’s appointment. If you find yourself panicking during emergencies because of finances, then that’s a sign that you have money problems. If you’re on the right path to financial freedom, you find yourself having the monetary means to pay for last-minute emergencies.

2) You have a positive money mindset

There are people who balk at the idea of having credit cards or loans. “Credit is evil and should be avoided at all cost” is an exaggeration but a very true statement you may hear. It’s time to change that mentality. Credit can be good for you if you use it to your advantage. This means paying your credit card balance in full or taking out loans to set up your future, such as taking out a house loan to buy an investment property. By having a positive money mindset, you’ll learn to make money work for you.

If you want to build a positive money mindset, you can start with reading online blogs, such as mine, and educate yourself on personal finance. At present, self-education is easier than ever what with the multitude of resources available. Even when it comes to applying for a credit card or a house loan, the information and resource you need can be found through comparison websites, such as MoneyMax.ph. The availability of finance-related resources makes talking about money more accessible. The more you read about personal finance, the more you realize that money isn’t as scary or evil as you may have originally thought.

3) You have a healthy savings account

Do you know someone who earns so much and yet always complains about being broke? At the same time, do you have a friend who may not earn so much and yet never complains of not having enough? Between the high and the low-earner, the latter is the one closer to financial freedom. Having a large salary becomes futile if you save 0%. What happens during retirement when you’re not earning a salary anymore? To be closer to financial freedom, start with having a healthy savings account. This means saving a portion of your salary every month. It’s even better if you have a large income; this means you’ll be able to save more. Remember, you cannot invest what you do not save.

4) You know how to say ‘no’

Whether it’s saying ‘no’ to that new pair of shoes or saying ‘no’ when your friends chide you to treat them to another round, having the ability to say ‘no’ can do wonders for your finances. If you track your expenses, you will notice that the little things add up. A cup of Php 100 coffee may not seem much, but drinking one every day of the working day adds up to Php 2,200 a month, or Php 26,400 a year. By learning to say ‘no’, you’ll be able to do your finances some good. Learning how to control your impulses and building the habit will have positive effects not only when it comes to your finances but yourself as a person.

5) You’re making money while you sleep

You may find yourself raising an eyebrow. ‘Making money while I sleep? Is that even possible?’ Yes, it is, and it can be done through investing. I mentioned earlier that employees lose their primary source of income when they reach retirement. This means they won’t be earning a salary anymore, and yet, they’ll continue to spend. If you reach retirement and you have insufficient savings, how will you cover your expenses? You can start investing.

However, don’t start investing when it’s already too late, start as soon as possible. To stay on the right path to financial freedom, make you money work for you while you sleep, and this can be done through investing. You can put your money in a time deposit or a bond wherein you’ll earn interest. You can also invest in stocks, real estate, or a business wherein the value of your investment grows; however, it’s best to note that investments are not guaranteed, and you can lose money as well. This is the importance of starting as soon as possible. The earlier you start investing, the more time you have to spread your risk through the years. The longer your investment, the less riskier they become.

The road to financial freedom

The road to financial freedom is not easy but nothing worth it ever comes without hardships and difficulties. What is important is you take the first step, be it opening a bank account or saving a small percent of your monthly salary. Once you take the first step, you’ll start building the discipline and the habit to continue making smart money choices, and before you know it, you’re already financially free.

As you experience financial freedom, always remember that money is only a tool, not the end goal. Be generous and always be a blessing to others. Wealth and the ability to create wealth comes from the Lord, and it is not for our own purpose, it is for His.

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