If you want to retire young, assuming you can earn 15% p.a. on your investment, you need an investment fund equal to 6.7 yrs. (347 weeks) worth of living expenses to match your present living expenses.

If you want to quit you job and become full-time entrepreneur, assuming you can earn 30% ROI on your business, you need a capital equal to 3.3 yrs. (173 weeks) worth of net salary to match your present salary.

Since the ave. savings of pinoys is only 9 weeks, no wonder there are few young retirees and entrepreneurs.

it seems i’m on the right track. i set aside money before anything else and i have a separate account for savings.

the last item is what i always tell my friends– it’s not easy to increase your income but it’s easier to limit your spending particularly on non-essential stuff.

a month or two ago, i wrote an e-mail to BPI Online about a suggestion of setting up a quick and easy means to help people save. it’s something that is common in most banks in europe. it’s called a “smart-save” account, a deposit based savings account that is being funded by another account of which regular cash flows (i.e. wages, remottances, etc) comes in. person should be able to dictate the amount and the schedule of the funds transfer (ideally in sync with payroll date or remittance date from offshore, etc). the thought here is that a typical person manage his lifestyle based on resources available to him/her and not the other way around… manage his/her resources based on the lifestyle that he/she wants.

the smart save account should not have an ATM card tied to it so discourage the person from drawing out cash just because.

i likewise argued to BPI that I think this is a win-win situation, as the bank would have a regular (and almost guaranteed) savings in-flow and at the same time helps people to save.

salve, 9wks’ rainy day fund truly is scary! but before reading about financial independence, etc, that is exactly how we were…we are sad that we learned late, but still glad that it is never too late to start on being wise re finances.

remember, i said i have taught our medical residents re basics of saving? 1 medical resident and 1 surgical resident took lecture to heart. as of last year, they both were able to save P100T each - untouched! lucky kids, learning so young!

believe me, i have 2 doctor friends who are already practising - and they are specialists! one has only P10T in savings; the other only has millions of debts. they go to coffee shops 2x a day, change cars every 2 years, eat only at fancy restaurants, and live as if money will be coming in forever, as if there is a word called “retirement”, as if life is perfect without sickness, death, accident, etc

here’s to more people like you who help us save as much as we can while enjoying life

error : i meant “as if there is NO word called “retirement”…

pinoy investor, capital seems to be a major hurdle among our entrepreneur wannabes. going into something is difficult with borrowed money, yes? i met a lot of entrepreneurs last week, wannabes actually, who have bright ideas but have no capital. no emergency funds… sayang.

paetechie, funny i was just speaking with a group of colleagues yesterday and was saying exactly the same thing. but i ran into a concrete wall as they kept saying they are mostly spending on essential stuff AND paying huge debts. debt really can choke people who want to save, that’s what i noticed during our little discussion.

C_A, I just heard from BPI yesterday that they no longer offer passbook-only accounts. All their new accounts have ATM. But I think some banks still offer passbook-only accounts and they do allow automatic fund transfer, the date and volume is set by the depositor. you know, automated savings is by far the simplest and most effective tip i have seen on how to increase savings. it removes the pain from having to set aside money regularly.

femaad, doctors are not the only ones…many professionals also exhibit similar disregard for financial health because they feel that they can always earn big money. but we all know life is not as predictable as people often think!

you know i just realized that reading and learning is one thing, actually doing what you learn is another. if you guys are not doing your stuff at your end, everything in MoneySmarts will be useless! hehe.

Salve, banks will not normally lend to startups. The business must be in operations and has positive cash flows to qualify for loan. For startups, you have to rely on your own savings and those of your family and friends (angel investors) assuming you can convince them to invest. (Of all people, my biyenan entrusted me her money. I couldn’t convince my wife, she has her own business.) :-)Venture capitalists also require counterpart equity from the entrepreneur. Capital formation is the start of entrepreneurship.

salve, what i suggested to BPI was not necessarily a passbook type S/A. it can simply be another BPI direct online account. what they (BPI) could easily do is enable the account holder who has online access to easily setup an online smart-save account wherein they can set everything up in terms of funding account, amount and frequency of transfer. if the account holder needs to take money off that smart-save account, then he has to go to the branch where he/she originally opened an account or to BPI head office in Makati and present the same IDs as on his record

I’ve always been an avid preacher of emergency funds. It’s hard to convince most Filipinos to build one up! It’s strange that it’s difficult convincing most people because it’s a very logical step and personally it has saved me from financial trouble so many times.

Last year, my emergency fund was half-gone because of unexpected medical expenses. I’m building it up again and have 4 month’s living expenses saved up, although my goal is for 1 year.

I also keep my emergency fund separate from my retirement savings. I remember that one of the bank tellers laughed at me for saving up for retirement because I’m only 24. She can laugh now, but I’ll be the one living worry-free for the rest of my days.

Emergency funds are a real must! You’ll never know what the future holds.