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SORRY TO start off your week with a couple of sad stories, but these stories beg to be told. Mind you, they are true stories, which happened here in Manila recently. Story 1 A widow in her sunset years has a small house and lot in her name. That is her only asset and it was given to her by her late husband. The widow entrusted the land title to her daughter for safekeeping, who kept it in her own home she shared with her husband. The husband has a good accounting practice and put up a small restaurant-bar. Over the years, the business did not prosper as expected. One day the widow received a document from the bank saying that her house and lot will be foreclosed. Without her knowledge, her son-in-law used the land title and forged her signature to get a loan from the bank. His wife did not know about it too. In the end, the widow had to vacate her own house. She then spent her remaining years renting a small home with her daughter, who by then had separated from her husband. She died penniless. Story 2 A young single mom in her 20s borrowed money from several relatives, saying she needed money for her son's tuition and other expenses. Concerned relatives extended help. At a family get-together, someone remarked that she saw the young woman at a mall the other day with a handsome man, and they were shopping. Then someone said she and her boyfriend are frequent casino visitors. One concerned relative brought up the matter to the young woman's own mother, who was shocked to hear the news. Confronted, the young woman owned up to the debts to other relatives, which ran up to six figures so far. Worse, the guilty young woman confessed that she is neck deep in debt, and that she doesn't know how to pay for the bank loan, which was secured by the family's land title. It turned out she forged the necessary signatures and was able to secure the loan without her parents' knowledge. The parents have started paying off their daughter's loans to relatives, and hope they will be able to pay off the bank loan. The mother has been crying and couldn't believe this has happened. Do you know where your documents are? These include land titles, certificates of time deposit and other forms of investment, and the like. If you don't know where they are, don't stop looking until you find them. Sometimes they can get into the wrong hands... right in your own home.

IT IS no secret that a lot of marital conflict is due to the way money is handled in the family. Sad, but true. At the recent “Money Sense Live! Family Finance 101” seminar organized by Learning Curve, Heinz Bulos, editor-in-chief of Money Sense magazine, says the reasons why couples fight over money include: *  having different money personalities *  valuing money in different ways *  both parties wanting to take charge or one is clueless or not interested *  both parties still live as if they're single *  having difficulty trusting *  being irresponsible Having different backgrounds may be the root cause of money fights, but the real root cause when you look into it is the lack of unity. Ambie Bulos, wife of Heinz, and a trainer, shares that couples should start thinking of themselves as “one unit.” She quotes Genesis 2:24 in the Bible, which says: “For this reason a man will leave his father and mother and be united to his wife, and they will become one flesh.” Thus, being of “one flesh” is being “one unit.” There are 4 C's to making money problems a thing of the past in marriage, according to Ambie: 1. Communicate. Understand where you're coming from. Share your dreams and goals. Ambie even recommends having a planning session every year just between husband and wife where money goals and plans will be discussed. Communicate regularly and openly. 2. Create. Plan together for the future. Divide money tasks. Whoever is good at handling money should be in charge. Merge your finances—this is for married couples only. Ambie warns singles not to go into having a joint account with a girlfriend or boyfriend. She also recommends that married couples have a joint account. Without it, wives may have a false sense of security, not knowing the state of the family's finances, or husbands may feel that they work and work and spend for everything, not knowing where the money goes. 3. Commit. Stick to your plan. Share sacrifices equally and enjoy privileges together. 4. Compromise. Sometimes things cannot be resolved. Agree to disagree. Find ways to compromise, such as giving each other an allowance which may be spent as one wants. Should conflict escalate and show no sign of being resolved, get professional help. In closing, Ambie says, “Money is not worth fighting about. Love one another. Think as one.”

WHEN one is single, one can pretty much live for the self. There's more money to go around to buy that new cellphone and that new pair of shoes, and to go out with the barkada for gimik nights. But when one starts a family, everything changes. Suddenly, there are responsibilities: mouths to feed, bills to pay, and future needs to prepare for. The days of frivolous spending are over. As financial journalist Salve Duplito, pioneer Money Smarts blogger, wife and mother of four said, “Motherhood made me realize that 'irresponsible with money' and 'good mother' don't go well together. As parents, it's up to us so the family won't get buried in debt.” This "spending addict" has reformed and is on a crusade to help others learn to handle their finances well. In her recent talk at the Family Finance 101 seminar organized by Money Sense magazine, Salve shared these basic tips to handling family finances responsibly: 1. Use things sparingly, carefully and thankfully. The things that we have and buy are blessings and should be used up wisely. Salve advised that kids (and dads) be trained to take care of their stuff well so they will last. She also believes in the “simot” mentality: Go through your pantry and use up what you can until your next scheduled grocery day. No emergency trips to the grocery to buy one missing ingredient because chances are you will buy more than just one ingredient. Also, don't overdelegate to the maids, who may not be conscious of saving. 2. Think long term. How much will a latte a day for a year cost you? It may be money better spent on tuition. Salve warned the audience against careless spending. Even buying a toy to shush up a wailing child may have long-term consequences in terms of finances. 3. Make smart plans. Salve's precious tips include: * Save 50 percent on transportation or gas weekly by being on time and planning trips wisely. * Watch where you buy. * A weekly meal plan can reduce food wastage to zero and cut your food expense by 40 percent. * Convenience and quick fixes are very expensive. 4. Be a wise consumer. Don't go to the grocery when you're hungry. Killing electric vampires can eliminate at least 25 percent of your electric bill. If you're a spend-a-holic, avoid going to the mall with cash and credit card. 5. Know your numbers. A spending plan is the foundation of financial wellness. Create and use one that works for you. Salve advised the audience to skim off the top—to take out from the paycheck once received—your savings before you spend on anything. Anticipate balloon expenses (such as tuition fees) by saving up for them. 6. Enjoy yourself. “Good money management is important but it should never go before family and relationship,” said Salve. She ended by asking the audience, “Can money buy happiness?” The answer is yes, she said, “but only when we learn to let go of it. It's not what we have that matters. It's what we can give.”

WHEN personal finance coach Randell Tiongson asked the audience at the recent Money Sense Live's Family Finance 101 seminar how many have made decisions they regretted later on, a number of hands went up. Randell was quick to admit that he, too, has made bad decisions in the past. “People can be logical in business but illogical in the house,” he says. “At the end of the day, it's how we use money in the house that determines the quality of life. So treat your house like a business.” Randell explains this further: “The household is an enterprise that operates like a business.” For instance, households have revenues (your income) and non-discretionary costs (bills). It needs efficient use of cash flow and wise allocation of resources over time. A household has assets and liabilities which must be taken into account in planning out one's personal finances. Just like a business, the household calls for people to make logical decisions and promote efficient operations. To do that, here are some valuable tips he offered: 1. Money that comes in must be bigger than what comes out. 2. Be objective-oriented. 3. Observe the 20/20 rule: Prepare for retirement 20 years before you actually need to retire. 4. Come up with a budget. Don't take out wants; otherwise your budget will be like a New Year's resolution that doesn't get carried out. Prioritize needs. 5. Reduce consumer debt. “You can't even start investing if you have liabilities.” 6. Use the liquidity ratio. “If the ratio of your expenses to income is 85 to 90 percent, that is too high. The solution is not always to increase income.” 7. Set goals. 8. Use the integrated portfolio approach for financial decision making. Don't use emotions in financial planning, especially in investing. Wise words from a wise family man.

SOME years back, when my friends and I were starting families, talk would inevitably go to family finances. How much is your monthly electricity bill? How much do you spend on groceries every month? Where can you buy the best bargains? How are you saving up for your children's tuition? These were just some of the questions we would ask each other, and because we were friends, we had no qualms about basically revealing how much we were spending on everything.

Those talks helped because we would each give tips on how to save precious pesos and where to put our money so it would grow.

For instance, one friend said instead of buying a preneed education plan (premiums were high since her children were already in grade school), she would just put money monthly equal to a preneed plan premium payment in a high-yielding time deposit. It's basically a do-it-yourself way of saving up for tuition.

Another friend said my electricity bill was high, and when we compared our usage, we realized the electric stove and airpot (which was turned on the whole day) were the culprits.

Still another friend said that while you can buy school uniforms and school supplies at low prices in Divisoria, you'd be better off buying at a department store in the mall nearby to save on time, parking, and gas or taxi fare.

Nowadays people have more access to personal finance information from experts via the Internet, newspapers, magazines, books, and seminars, which is good because we all need helpful tips on how to manage our finances, especially since these impact our families. Read money blogs, not just this one, and pick advice that would best suit your needs. Financial literacy is one of those things that would benefit us until we grow old. (Karen Galarpe)

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Win a free seat to the Family Finance 101 seminar!
Want to learn how to secure your family's financial future? Money Sense magazine is presenting its latest Money Sense Live seminar on July 11, and this time it will be on Family Finance 101, with a panel of experts including Money Smarts pioneer blogger and Money Sense columnist Salve Duplito.

To register for the seminar and find out payment details, go to http://iluvlearning.com.

To win a free seat, be one of the first five people to post their own family finance tip here AND signify their intention to attend the seminar. In the comment section below, just say: “I want to win! Here's my family finance tip ...” The seminar organizer will then contact you as to how to go about claiming your free ticket.

The Family Finance 101 seminar will be held on Saturday, July 11, 2009, 1:30 to 5:30 p.m. at the AIM Conference Center in Makati City.

HOW do smart dads handle money? In time for Father’s Day, we asked some dads to share valuable tips to you fellow dads out there. Here are some wise advice: 1. Live within your means. “The general tip is really ‘living within your means.’ It is an attitude that should not be equated to being stingy; rather, it entails planning the family’s lifestyle to cover the basic necessities, leisure activities, and savings. It is also an attitude that makes the family define its own happiness instead of being dictated upon by the happiness of others.” -- Noel M. Cortez, head of marketing and graduate school professor Dad to Popet (11), Peping (7), and Kimi (4) 2. Spend for experiences rather than stuff. “As dads, we have a tendency to lavish our kids with material things, partly out of guilt for not spending enough time with them and mostly because we just enjoy seeing the smiles on their faces. But their excitement is gone weeks or even days after getting something they want. So instead of buying more and more stuff, spend for experiences--trips to the zoo, the park, the beach--since memories of happy experiences last much longer than the fleeting enjoyment of toys and gadgets. Plus you get to spend quality time with them. More experiences, less stuff.”-- Heinz Bulos, editor-in-chief of Money Sense magazine and dad of Kimi (2). 3. Cut down on your unnecessary spending. You’ll be amazed at how much you can save. And don’t get discouraged when times are bad. A downturn also creates opportunities to earn good money.-- Benjie Oliva, commercial banking director for a leading multinational bank, and dad too 4. Teach kids about money early on. “Train up a child in his ways and when he grows old he will not depart from it. Teaching our kids financial literacy at a young age is very important. The best person to teach children about handling money is you. We cannot leave our child training to the TV, to teachers, to MTV, to their idols. It is the dad’s main responsibility.”-- Chinkee Tan, lifestyle trainer (www.chinkeetan.com) and author of the personal finance book “Till Debt Do Us Part” Dad to Kayla (8), Jethro (6) and Destiny (4) Happy Father’s Day to all dads!

My daughter is so not a baby anymore. She’s taller than I am, wears shoes that are two sizes bigger than mine, raids my closets and wears a lot of the girl stuff she fancies there, and loves teenager music. I don’t mind that, but what mother would not worry about (whispers) the boy stuff? Lately, I’ve been worried about how to get her through college. Most financial projections assume an 8% tuition fee inflation for college education. If she gets into the University of the Philippines, that means we would need at least P300,000 for tuition for a 4-year course. Add around 80% of that for other expenses like books, clothes, allowance and I roughly expect half a million for a 4-year UP education that starts three years from now. As you can expect, the figures can get really scary if you’re thinking of an Ateneo or a De La Salle University education. That can easily mean at least P1.5 to P2 million per child. And that’s a conservative estimate. When she was a baby, we bought and fully paid for a College Assurance Plan contract. Yep, that’s an investment blunder I have, as the Filipinos say, charged to experience. So, three years ago, my husband and I also invested in a life insurance policy with guaranteed cash value to help us with the tuition expenses, but I know what we will be getting will not be enough to get her through college. What we need to do is to ramp up our savings and make whatever we set aside grow more aggressively. With the markets as it is now, though, the options are not too great. I only have three years so I have to stick to guaranteed investments. I heard some banks are offering 7.5% annual return guaranteed, but I still have to check whether that’s true. And you won’t see me going for any guaranteed investment with abnormally high returns, no matter how attractive, in a bank with financial background that's not easy to verify and whose capital adequacy ratio is questionable. My mutual fund returns are not too great, but I have kept a long-term view on that. I’m expecting that money to fund my second child’s college education around eight years from now. For the first child, what would be your suggestions? More importantly, how are you preparing for your children’s college education?

In with the new, out with the old--so goes the saying for the New Year. It is also this time of the year when I keep the pack rat in me at bay (at least, I try to) and figure out what financial documents to retain and which things to feed to the shredder. It’s not the most exciting item in my to-do list. I hate those paper cuts. Plus, I have a problem with letting go…weird as that may sound when we’re just talking about piles of paper! So, I walked over to our accounting department and picked their brains. Here’s what I came up with:

• Keep your tax records for three years, at the minimum. This is required by the Bureau of Internal Revenue, but I personally recommend keeping all tax records since you started working.
• Credit card records should be kept for at least a year but keep the ones that record major purchases like appliances, along with receipts.
• Bank statements are good for a year, too. Records of deposits and bank transfers should always be crosschecked with statements and then shredded.
• Keep insurance records well, make duplicates and send copies to beneficiaries. Make sure your spouse knows where they are.
• Investment records like mutual fund statements, brokerage reports, and other documents should be kept in separate folders and well-labeled, just in case something happens to you and your spouse or other beneficiaries need to see them. This is a common problem especially among old retirees who have forgotten their investments and have not kept their records well.
• Loan documents should be well preserved, together with payment records. Needless to say, you’re better off keeping them forever.
• Do keep current warranties and throw away those that are no longer current. But I recommend keeping a directory of the contact numbers of repair shops.
• Shred all ATM receipts and other financial documents. You never know where they can end up if you just toss them in the trash. I don’t think the dumpster divers have crossed over from the US to the Philippines, but better safe than sorry.

It has been more than a week after the crazy rush of Christmas past. That’s ample time to figure out the lessons that can be gleaned from under the Christmas tree. Which gifts have you truly found enjoyable and useful? Which ones were a waste of money and time? Did the price tag matter? Come on…honestly? I found myself thinking about these questions as I took down the tree and wondered about my Christmas spending and plans to begin saving for the 2009 holidays. Here are some realizations that surprised me (or maybe they shouldn’t have??):

1. Children end up spending as much time with small, inexpensive little toys as with expensive ones. The miniature little toy guns went sleeping on the same favored spot as the walking, expensive Iron Man action figure. Long after the shiny remote control cars lost their luster, broken little mobile phone toys are still tucked into tiny pockets when they go to the neighborhood park! Could it be that when we buy toys as gifts, they are actually for the child in us, that’s why we end up overspending?
2. Recycling gifts, when done properly, can save you a lot of money. Some still find it distasteful and perhaps that’s because of the way it’s done. For one, at least remove the original tag or something that has your name engraved on it, for goodness sake, and don’t give away something you’ve used—even once. That doesn’t hold true, though, for electronics like giving a used laptop to a relative who can’t afford to buy a new one, or big items like a second-hand refrigerator. (Give me a second hand car anytime!) Second, I spend a lot of time matching the gift with the right person. At least, find someone who will not give the item to someone else (what if it finds its way to the original giver!).
3. Gifts that show careful thought, time and effort are the ones that really bring pleasure to the receiver. My husband’s surprise Ipod Touch gift was a sure hit with me because now I can read Bloomberg and New York Times wherever I am (you know how mommies always get stuck waiting for the doctor, waiting for an appointment, waiting for the children to finish THEIR appointments etc.) It’s my latest prized possession! But the gift could also be a trip, an experience, a scrapbook page, something you made yourself—and they don’t have to have a high price tag. (Have you heard that the Brangelina family members don’t give store-bought gifts to each other?)
4. It’s of course nice to feel remembered during the Christmas holidays, but I find that giving expensive gifts outside the family circle is totally overrated. Having to give gifts just because you are reciprocating or to join the bandwagon is absolutely NOT a good reason to get into debt. So, if the bank account shows there’s no room for gifts, then that’s that and just put a big smile on your face and real warmth in the verbal greeting. You’re not about to cross someone off your friend list just because you didn’t get anything last Christmas, are you?

On a side note, the Brodett story might be fodder for tabloids or soap operas, but they show an ugly side to family finance that is unfortunately too common in society. How do you deal with family disagreements over money? Or inheritance, for that matter?

“How do you teach children the difference between wants and needs?” a viewer texted ABS-CBN’s Shoptalk yesterday after host Pia Hontiveros and I spent the better part of an hour talking about financial literacy for kids. The studio lights felt warm on my face and the ticking clock made me mumble a couple of excuses for an answer. My daughter and best critic who was watching assured me I did good, but in the harsh reality of 24-hours-after, I am now mortified at how I missed the opportunity to dissect a very important personal finance dilemma for parents. Forget teaching most adults about wants versus needs. Most of us are hopeless. But children? The spending habits we instill in a child will make more impact on his financial life than any investment he may make in his future. I can’t even begin to explain how critical it is for a child to have a clear grasp of this concept. How? I search inward at my own parenting efforts. Have I been a good example? Have I taken the time to at least discuss the seeming lack of difference between a need and a want at the exact moment the wanna-have-it gremlins are making such a ruckus in his mind? That when he is an adult, he would be torn between bigger things than a Timezone caper or a drum set? That eventually, his decisions now will define him as a person later on? In hindsight, here are the things that I think I should have told that viewer and that I aim to do more often in the future:

1. Teach him to delay the purchase and take time to think together. An infant needs instant gratification. When he cries for a feeding or because he hates the feeling of a soiled diaper, or when he wants a cuddle, I believe parents should give it to him immediately. A child, on the other hand, has to start learning the survival skill of thinking first if his desires need to be instantly gratified or not. While foremost a money lesson, this will also later on develop in him the crucial values of sacrifice and giving way to a greater good. So, take time outs. One day or two days will make a huge difference in extracting him from the pressure of the spending situation and teaching him to think about whether something is a want or a need.
2. Consider options and learn the art of being a thinking spender. A child is best taught when things are visual. List down possible options. With P5,000 given by relatives last Christmas, what are the things that he can buy? Allow him to visualize and compare prices. Let him think about what is more practical.
3. Let him think about long-term goals. Would it be better to save the P5,000 and make it grow so he can buy something he really needs? Try to teach him about compound interest and see if he wants to grow the P5,000 by investing it in a time deposit or a mutual fund.
4. Bring him to the grocery and show him how substituting works. Take advantage when the kids want to help with the grocery! At a certain age, they just want to leave that chore to mom. But while they still want to push the cart, incorporate a lesson on how substituting items can bring down the grocery bill. Come to think of it, there have been several times when the kids have saved me a couple of hundred pesos in the grocery.
5. Give him rewards when he saves instead of spends. Double his savings or give him treats. Appreciate his efforts when he asks for an opportunity to earn money to “feed” his mobile phone instead of just asking for “load”. When they feel good about doing something, they stick with it longer.

Re-reading my list, I realize kids are not the ones who will benefit from it. Do you have any you want to add? The other guests in the show were Pioneer Life senior vice-president Rolly Robles and Blue Cow chief operating officer Nanjo Berba. They talked about an interesting financial literacy course for children both companies have designed to create savers out of the younger generation. Pioneer Life and Blue Cow have also developed a comic book called Private Iris that uses the Nancy Drew/Hardy Boys-type plots to teach young ones about saving and investing. Watch a video of an interview by INQUIRER.net multimedia specialist Erika Tapalla with writer Jaime Bautista. I thought it was interesting that a financial services company is giving back to the community via education. It’s a good marketing move as well as this actually enlarges the market for life insurance and other financial services.