PERSONAL FINANCE 101 FOR PINOY FREELANCERS
By: Benedict Baluyut, RMT, REB, RFP
“Casting all your anxiety on Him, because He cares for you” - 1 Peter 5:7.
But though freelancers or independent contractors have flexible time and can enjoy their assignments or work than in regular employment, they have disadvantages too, from uncertainty of work to income, company benefits, paid holidays and even bonuses.
Are you prepared? Are your experiencing mishaps arising from unforeseen circumstances and that require utmost urgency?
Here are ten ideas that you can use in preparing yourself for the best or worst in life.
- Make goals and set time frames – There is nothing wrong in dreaming, but planning your goals requires a realistic approach, such as what you will do in the next 365 days and beyond. Short, midterm and long-term goals should have deadlines too. After jotting it down, your goals must have deadlines and are posted in a conspicuous place where you can see it daily.
- Apply the 10-20-70 budgeting – This is a budgeting system to help you allocate your income. 10% goes to savings, 20% goes to your personal spending, and the 70% is used for daily living expenses (e.g. payment of credit card, utility bills etc). You can modify this if you want to exercise total financial control of cash flow.
- Learn to invest – you can convert your savings into a stream of income by investing your hard-earned cash. There are mutual funds, unit investment trust funds, and bonds. These streams of income are used for buying your home, car, initial startup capital for business, vacations abroad, your child’s college trust fund, and even for retirement. There are free seminars and other information regarding these financial products on the internet. However, just take precaution when venturing into it by doing research.
- Change your views and perception of money – There is nothing wrong in becoming rich; it is the notion or idea that money is evil. The truth about wealth transfer, managing finances, investment, debt, gift giving, and others financial aspects are always spoken of in the Bible 250 times. One such example is taken from 1 Timothy 6:10: “Money is NOT the root of all evil but THE LOVE OF MONEY IS THE ROOT OF ALL EVIL.” In short, change your mindset on money.
- Know your S.A.L.N. – What is S.A.L.N.? The acronym
stands for S – Statement, A – Assets, L – Liabilities and N – Net Worth.
You may not be a politician or public figure, but you can list down
your S.A.L.N. to determine your financial fitness. Start by writing down
your Assets and Liabilities on a piece of paper. Write the
corresponding values of the assets and liabilities you have. See an
example of SALN below:
Example of Statement of Assets and Liabilities.
- Build a contingency fund – in times of real emergencies where you’re in need of cash, you need funds that can be used immediately. This fund is not to be used for personal gratification. To abstain from using this, it should not be tied to an ATM card to deter you from accessing it.
- Protect yourself and your family – health insurance and HMOs are very useful for emergencies wherein you and your family’s health are at stake. Let’s break it down:
- Getting covered with a social health insurance policy provided by our very own Philippine Health Insurance Corp. (PHILHEALTH) could be useful as it extends the illness coverage to other dreaded diseases. Philhealth contributions for self-employed or voluntary members are at P1,800 annually (as of 1st Jan 2013).
- Health Maintenance Organizations (HMOs) are a managed health care system in which subscribers pay a fixed monthly fee + co-payment when you see a doctor. HMOs can refer to one physician acting as a gatekeeper and can only refer to other specialist-physician within the HMO network.
- Preferred Provider Organizations (PPOs) are enrollment-based managed health care services that have agreements with an insurer or a third-party to provide medical care services at reduced rates.
- Pay your debts – Lessening your debt requires commitment and discipline. Make it a point to pay above your minimum required payments, hide your credit cards to avoid impulse buying, and pay the amount on time to avoid penalties. A quote from the bible from Exodus 22:14 says that: “If a man borrows anything from his neighbor, and it is injured or dies while its owner is not with it, he shall make full restitution.”
- Teach your kids money management – if you were never taught about personal finance as a child, it’s never too late to do so for your own. Let your kids adopt positive monetary habits. The basics of saving their allowances, water, and electricity are useful ideas you can teach your children. Other than that, you can also show basic entrepreneurship in order to get the entrepreneurial spirit running in them.
- Consult a financial advisor or financial planner – Still troubled or puzzled with organizing with your personal finance strategy? You can ask a financial planner for help. A financial planner or advisor can give you expert advice on different aspects of financial planning and goal setting, recommendation of investment, and debt restructuring of your finances. They can help you build comprehensive and written financial plans with realistic approaches. Remember that dreams have deadlines too. The desire to fulfill these dreams requires discipline, hard work, and commitment to achieving your financial goals.
CRB Benedict Baluyut, is a certified real estate professional (Real Estate Broker) a regular member of Registered Financial Planner - Philippines. He writes from time to time with Registered Financial Planner Column at Business Mirror. Catch his Facebook page Pinoymoneyvantage | Follow him at Twitter | Google + or visit his official blog at http://www.pinoymoneyvantage.net.
Copyright 2008 - 2013. PinoyMoneyVantage| Personal Finance Help Philippines