Why Financial Goals Are Important?

You wouldn't start out on a long trip into unfamiliar territory without a road map, yet many JUAN DELA CRUZ go through life without a concrete plan for their financial future. The road to financial freedom can lead directly to your destination or to a dead end. Specific financial goals and written plans for meeting them help you focus your efforts on the end result. The first steps are to determine your financial status today and then decide what you want to achieve for your future.

Effective goal setting should be SMART!

Goals are like the wheels on your car, they keep you moving in the direction you want to go, and you won't get very far without them. If you haven't started planning for your future, now is the time to begin, no matter what your age is. However, if you are in your twenties, you have a distinct advantage. It will give you the most powerful financial tool: TIME.You'll have to work at it a lot harder if you start later in life.

As the saying goes, "Most people don't plan to fail, they just fail to plan." Without planning, even the best of intentions lead nowhere. Start mapping out your route now. Your entire future depends on it. 

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Who Needs Financial Literacy?

This article is not mine, I read this from Pesos and Sense website. I want to share it to all so we could learn the importance of why every JUAN DELA CRUZ needs financial education. Sino ba sa atin ang ayaw yumaman? Lahat naman tayo gusto, pero ang tanong... may ginagawa ba tayo para dito? When do you plan to take action? Our ability to save has nothing to do with the size of our income... it has something to do with our discipline. If our problem is our inability to manage our earnings, no amount of earnings will solve our problem. 

http://pesosandsense.com/financial-education-for-filipinos/

Whenever the topic of financial education is brought up, most Filipinos brush it off thinking that it is only for businesspeople or for the “rich”. The truth is, we all need it. If you want to be free financially or if you want to be rich, you need to learn this!

Although we don’t pay much attention to it, it does affect our daily lives. To put a child to school, to own a house, to drive a car, to pay the bills – all of these will be affected by both having and not having the knowledge about handling money wisely.

Money and Knowledge

People think that acquiring huge sums of money will solve their problems. It may be true for some, but without the knowledge to handle it correctly, others might find themselves in a more problematic situation.

You may have heard of lotto winners who ended up being bankrupt or in a financial mess. This is what usually happens to instant millionaires who suddenly find themselves rich – in fact, too rich that they do not know what to do with the money anymore.

This is exactly what happened to Dionie Reyes who won 14 million pesos in the PCSO Lotto 6/42 draw last April 22, 2008. After winning, he lived the life of a millionaire.

He bought a P4-million house in an exclusive subdivision, drove a sports utility vehicle, and gave balato ranging from P1,000 – P850,000 to his friends and relatives. He also gambled, womanized, and went out every night. After 3 months, he spent all of his money and ended up in debt.*

People lose money for many reasons, and overspending is one of them. This is the reason why having money and financial knowledge at the same time is the key that will greatly help in improving one’s life. Money and financial knowledge go hand in hand. Just like what the author Robert Kiyosaki said, “Money without financial knowledge is money soon gone.”

Money Begets Money

Our culture has taught us that the sure way to become rich is to have a good education, get a high paying job, and live your dreams. Although that is a good advice, a lot of professionals, OFWs, and fixed-income earners know that it is a cycle of “go to work, receive your salary, and pay for the expenses”. The live-your-dream part is always set aside for the future, hoping that things will get better. They are the people who work for money.

But there are some who learned to make their money work for them. How were they able to do that? They acquired the knowledge of Smart Investing.

Know Your Options!

Did you know that you have different investment options?

Investment instruments like Stocks, Mutual Funds, Real Estate, Insurance, and others can help you achieve your financial goal. You may have heard these investments before, but do you really know how they work?

Most Filipinos, even though they want to invest in these instruments, are afraid to do so because they fear that they will lose their money. And because they don’t understand it, they will not invest at all!

As we always say, take the time to learn so you can take away the fear. Understanding the different kinds of investments available will help minimize the fear of investing.

Once you have acquired the knowledge, you will see that investing isn’t so scary after all. You can sleep better at night knowing that you are taking steps today that can potentially change the way you live your life in the future.

Educate Yourself

Gone are the days when information about money is limited. There are books, articles, websites, and seminars that teach financial education to those who need it the most – the common Filipino. These are the students who want to have a brighter future, the parents who want to provide for their children, the young professionals who want to stop working and do what they really love, the OFWs who just want to return home and watch their children grow, and the thousands of skilled Filipino workers who want to live comfortably.

Are you one of them? It is time for you to act!

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Moody’s: PH a rising star

Moody’s: PH a rising star

Set to be ‘one of world’s fastest growth rates’

By Michelle V. Remo
Philippine Daily Inquirer

The Philippines has grabbed the spotlight amid a lackluster global economy, with a think tank describing it as a “rising star” poised to record one of the fastest growth rates in the world and a credit-rating firm raising its growth forecast for the country.

Moody’s Analytics said in a report released Wednesday that the Philippines is likely to grow between 6.5 and 7 percent this year and within the same range next year, outperforming not only the anemic advanced economies but also many robustly growing emerging markets.

It also said that if favorable economic trends continue, the growth rate for the Philippines could be close to 8 percent by 2016.

“The Philippines has been among the brightest parts of a generally gloomy global picture,” Moody’s Analytics said in the report, titled “Philippines Outlook: Asia’s Rising Star” and authored by its senior economist Glenn Levine.

It said the story of the Philippines was noteworthy, noting that the country swung from being a “perennial underachiever” in Asia until the last few years.

Moody’s Analytics, a sister company of credit rating watchdog Moody’s Investor Service, said the country’s 6.6-percent growth in 2012 was achieved despite weak growth in the United States, a crisis in the eurozone and a slowdown in China.

It said the problems of the United States, the eurozone and China—

key export markets—significantly dampened the performance of other economies last year.

Sustainable growth

The Philippines, however, managed to temper the drag of a weak external environment because of a strong household consumption, a nascent rise in private investments and a spike in government spending.

S&P’s rosy forecast

“This impressive rate of GDP [gross domestic product] growth [last year] looks sustainable, as risks are low and most sectors of the economy are growing solidly. We expect GDP growth to remain in the 6.5 to 7-percent range in 2013 and 2014, making the Philippines one of the world’s fastest-growing economies,” Moody’s Analytics said.

Echoing a similar tune, international credit-rating firm Standard & Poor’s has raised its growth forecast for the Philippines for this year from 5.9 to 6.5 percent. At the same time, it said the economy was expected to post another robust growth of 6.3 percent in 2014.

S&P’s updated growth projections for the Philippines were cited in its latest report on Asia, which it said would grow by a decent pace this year and next year as a region. But, it said, the impact of external factors on individual countries would vary.

Domestic demand strong

The credit rating agency said the advantage of the Philippines—together with a few neighbors namely China, Indonesia, Malaysia, Thailand and Vietnam—was that domestic demand was strong and so any adverse impact of weak global demand on the country’s exports would not significantly harm its overall growth.

“China and the Asean 5—Indonesia, Malaysia, Philippines, Thailand and Vietnam—are more domestically driven and, therefore, continue to enjoy relatively high and stable growth rates. This is not the case elsewhere,” S&P said in the report, titled “Emerging Asia Will Grow but Won’t Be Firing on All Cylinders.”

S&P also said that unlike other countries, the Philippines and the rest of the Asean 5 were not expected to suffer from the weakening yen, a trend that has alarmed advanced economies and some Asian economies.

Weakening yen

This was because the Philippines and the four other Southeast Asian economies were net importers of goods from Japan. A weakening yen, therefore, would actually be beneficial as this would make Japanese imports cheaper.

Anticorruption agenda

Moody’s Analytics, meanwhile, highlighted the benefits of the anticorruption agenda of the Aquino administration.

It said the reform programs of the current administration had significantly improved business sentiment in the Philippines.

“The government’s 2011-2016 development plan provides a five-year blueprint for growth and development, providing transparency, predictability and accountability. The crackdown on corruption and encouragement of local and foreign investments, in particular, have worked well,” it said.

http://business.inquirer.net/118547/moodys-ph-a-rising-star

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Another first: PSEi breaks 7,100 level

MANILA, Philippines (3rd UPDATE) - Philippine stocks broke the 7,000 and 7,100 marks for the first time on Monday, April 22, hitting their 27th all-time high.

The key Philippine Stock Exchange index (PSEi) surged 2.35% or 163.38 points to settle at 7,120.48, a fresh record close and intraday peak.

The PSEi's previous record-high close of 6,957.10 was registered on Friday, April 19.

Strong corporate earnings results continued to fuel investor interest in Philippine stocks -- already "expensive" for some, but "not yet overvalued," according to others.

The PSEi last flirted with the 7,000 barrier on April 1, the first trading day after the Philippines won its first investment grade from international debt watcher Fitch. That day, the index hit an intraday peak of 6,956.92, then retreated to 6,839.59 at close due to profit taking.

The PSEi's new record close was not a surprise. Analysts had expected it to surpass 7,000 this week as investors positioned themselves for the earnings season.

Among the first that announced rosy earnings were Sy-led BDO Unibank and Pangilinan-led Meralco.

BDO said its earnings for the first quarter of 2013 reached P10 billion, a whopping and surprising 257% increase from the P2.8 billion it posted in the first quarter of 2012.

Meralco also reported its first-quarter net income grew 19.3% to P4 billion on lower cost and expenses and higher energy sales volume.

President Benigno Aquino III earlier told an audience in Switzerland he was confident the local stock market would hit 7,000 in 2013. He touted the record highs achieved by the bourse as vote of confidence on the Philippine economy. - Rappler.com

http://www.rappler.com/business/industries/210-capital-markets/27134-psei-hits-7

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Financial Planning Seminar in Makati April 20, 2013

Financialplanningph.com in partnership with LinxProvi8 will held a 

Financial Planning Seminar in Makati on April 20,2013. 

Please see details below:

We’ve been receiving a few emails, text messages and calls from time to time asking when will be the next schedule of Financial Planning Seminar. I must admit, we’ve been busy lately that we haven’t had one for the longest time. So as part of our advocacy and social responsibility, we’ve scheduled one this April 2013 .

This coming Saturday, April 20, 2013, we will be having a “Basic Financial Planning Seminar – Steps to Financial Security“ in the heart of Makati City. Again, this is in partnership with LinxProvi8, Inc.

(As I was looking at the previous seminars we did in the past, it’s actually almost a year since we last did this group Financial Planning seminar.)

We will be charging a very minimal fee of P150.00/person to pay for the venue (electricity etc.), handouts and bottled water (so hot nowadays) so I hope you don’t mind the fee as compared to the amount of learning that you can get from the seminar.

Below is the outline of the topics to be discussed.

• What is Financial Independence?
• How to Plan for your Retirement?
• How to Plan for your Children’s Education?
• How to have a plan for your Health?
• People’s behavior on Money
• Why are most Filipinos Poor?
• Fundamental of Investments
• Putting the Allies of Wealth to work on Your Side
• How Money Works?
• How to Get the Highest Potential of your Money?
• How Mutual Funds work?
• How to Open a Mutual Fund Account?
• Is Insurance a Good Investment?
• What are the Different Types of Insurance and what’s Best for me?

At the end of the  seminar you will be able to know:

• How to build a solid financial foundation regardless of your age or income level
• How to make money work for you instead of you working for money
• How to get the highest potential of your money
• How much protection do you need

For those who’d want to get started investing and sign up with Mutual funds (Sun Life), VUL or other investment, we will be bringing forms and signature cards. I will be accompanied by my team for the FREE one-on-one consultation after the seminar proper.

Just bring your ID (any gov’t issued or with picture and signature) + your initial investment (5,000 for mutual funds) and we’ll have you signed up. Receipts will be issued.

Who Should Attend:
Best for beginner and intermediate saver/investor. For best results, BRING YOUR WIFE/HUSBAND or bf/gf. Financial success is best achieved with your partner in life.  (walk ins are not allowed)

Time and Date:
1:30pm Saturday, April 20, 2013

Venue:
3rd Floor (LinxProvi8),  UG1-A The Palm Towers St. Paul Road., San Antonio Village, Makati City

How to get there via LRT or MRT

From Magallanes MRT Station

Ride the passenger jeepneys with the “PRC” placard displayed. After crossing G. Puyat (Buendia), watch for Bagtikan St. Disembark at Estrella Ave., the corner immediately following Bagtikan (right after Ambers Restaurant). Walk a few meters and turn left at St. Paul Rd to the Palm Towers.

From G. Puyat (Buendia) LRT Station

From the G. Puyat (Buendia) LRT Station, ride the passenger jeepneys with the “PRC Kaliwa” placard displayed. After crossing G. Puyat (Buendia), watch for Bagtikan St. Disembark at Estrella Ave., the corner immediately following Bagtikan. Walk a few meters and turn left at St. Paul Rd to the Palm Towers.

Registration Fee:
Minimal fee of P150/person. Payment details will be sent via text messages.

How to Register:
You may call or text thru the following numbers with the details below. We can only accommodate up  to 40 people only – First come, first served basis only.

• Name:
• Birthdate:
• Occupation:
• Email:
• Contact Nos.:
• Current Location:

LinxProvi8, Inc.
Landline No.: (02) 403-0833 / (02) 806-8816
Mobile Nos.: 0922-897-8077 / 0916-414-7400.

http://www.financialplanningph.com/financial-planning-seminar-in-makati-april-20-2013/#more-2928

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Kris Aquino tops BIR list of individual tax payers

(Updated 4:16 p.m.) In President Aquino's drive to increase tax collections, his kid sister is leading the way, according to newly released BIR data.

Kris Aquino paid the government P49.87 million in income tax for her 2011 earnings, making her the top individual taxpayer in the Philippines, more than P11 million more than the second highest tax payer, relatively obscure business executive Gregory Deane Reicho.

The Sunpower Philippines vice president paid P38.2 million while finance executive Lauro Baja III was third at P34.26 million. The original BIR list had the name of his father, Lauro Baja Jr., former Philippine ambassador to the United Nations, who denied the sizeable income tax after many questioned how a civil servant could be so generous to the government.

The top 3 individual tax payers based on their 2011 income surpassed many of those popular names in the the corporate world, according to data released by the Bureau of Internal Revenue (BIR) on Monday, the deadline for income tax payments.

However, Baja Jr. is claiming he should have been on the list. In an interview aired Tuesday on GMA News' “Unang Balita,” he said he retired 2007 and could not have earned that much in 2011. “... All my withholding tax are being withheld by DFA,” he noted, saying he pointed it out with the BIR.

In a text message to GMA News Online, BIR Commissioner Kim Jacinto-Henares clarified that the Baja on the list is... son, Lauro C. Baja III. The younger Baja is managing director of UBS Investments Philippines Inc., the local arm of global financial services firm UBS AG.

"The Lauro Baja referred to in the list is that of his son with the same name," Henares said.

The BIR chief said, "There is nothing to correct," noting that in the government's data base are two Lauro Bajas, one born in 1972 and the other born much earlier.

"if the ambassador was not born in 1972, then we are not referring to him," Henares said, adding, "We copied whatever it is that was stated in the registration of the taxpayer, which the taxpayer himself filed.

The entry on the BIR list, however, was explicit:

3. Lauro Baja, Jr. (senior diplomat) - P34,257,368.88.

"If there is a mistake in teh registration, we cannot just update it, the taxpayer, which in this case if he is the son, and he is III, then he should be the one to update his registration. Otherwise, we cannot on our own change it," Henares said.

Interestingly, some of the reportedly wealthiest people in the Philippines, who regularly appear on annual richest Filipinos lists published by Forbes magazine, are not among the nation's top tax payers.

The top 10 tax payers

Joining Aquino, Reicho and Baja in the top 10 of the BIR's list of individual tax payers are:

• Businessman Manuel V. Pangilinan who paid the government P25.99 million

• Bank of the Philippine Islands president Aurelio R. Montinola III who paid the government P24.47 million

• Manila Water president and CEO Gerardo C. Ablaza Jr. was in sixth place for paying P22.65 million

• Philippine Ambassador to Portugal and owner of the Lhuillier chain of pawnshops Philippe J. Lhuillier was seventh at P21.65 million

• Victor M. Angeles was eighth at P21.20 million

• Roberto L. Panlilio was ninth at P19.61 million

• GMA Network Inc. chairman Felipe L. Gozon was 10th at  P19.59 million.

Forbes list against BIR list

Only one of the richest Filipinos cited by Forbes in 2011 made it to the BIR's Top 10 individual tax payers, and six from the Forbes list were included in BIR’s Top 500 taxpayers in the same taxable year.

The BIR list is based on the income tax returns filed and the corresponding income tax paid by individuals, while the Forbes list ranks people based on their registered assets that include shares of stocks and other investments and, when available, proof of income.

The comparisons were made based on the individuals' 2011 ranking in Forbes Magazine and the BIR data on how much income tax a person paid for that same taxable year.

In the case of GMA Network's head honcho, Gozon was the 32nd richest man in 2011, according to Forbes.

Shopping mall tycoon Henry Sy Sr., tagged by Forbes as the richest man in the Philippines, paid  P16.58 million for his 2011 earnings which made him the 15th biggest tax payer for that year.

Lucio Tan, labeled by the magazine as the Philippines' second richest man, paid the BIR P10.79 million, which made him the 35th biggest individual tax payer.

Tan has business interests in banking, airline, liquor, tobacco and real estate.

David M. Consunji, the fifth richest man on the Forbes' list, was the 176th biggest Filipino tax payer, paying P5.91 million. Consunji is the chairman of DMCI Holdings Inc. and Semirara Mining Corp.

Eric Recto of Petron Corp., the 24th richest man, was the 61st biggest taxpayer, paying P9.15 million. Recto was recently named Petron vice chairman after resigning as its president.

Menardo G. Jimenez Jr., senior vice president of PLDT and a co-owner of GMA Network, was the 27th richest man and the 77th biggest taxpayer (P8.52 million).

Manuel B. Zamora Jr., founder and chairman of miner Nickel Asia Corp. was the 28th richest man and the 240th biggest taxpayer (P4.97 million).

Jon Ramon Aboitiz, president of Aboitiz Foundation Inc. and Aboitiz & Co., which is privately held by the family the 15th richest man, was the 381st, paying P3.97 million. He is the.

Children and relatives

The children and relatives of some of the 2011 richest Filipinos were also some of the biggest taxpayers

There were the children of retail trade magnate Henry Sy.

Hans T. Sy was 24th on the BIR list, paying P13.5 million; Harley T. Sy was 34th, paying P11.13 million; Herbert T. Sy was 54th, paying P9.51 million; Elizabeth T. Sy was 68th, paying P8.84 million; and Teresita T. Sy was 83rd, paying P8.37 million.

Another notable businessman on the BIR list is Manuel Paolo Villar who placed 403rd on an income tax of P3.88 million. He is the son of businessman and Senator Manuel Villar.

Aboitiz family members were also on the BIR list.

Erramon I. Aboitiz, president and CEO of Aboitiz Equity Ventures Inc. (AEV) was in 31st place (P12 million); Enrique M. Aboitiz Jr., father of Erramon and senior vice president of AEV, was 69th on the list (P8.83 million); Stephen George Aboitiz Paradies, chief finance officer of AEV, was 122nd (P7.02 million); Roberto Eduardo Aboitiz, senior vice president of privately-held Abotiz & Co., Inc., was 180th (P5.86 million); and Jaime Jose Aboitiz, executive vice president of Aboitiz Power Corp., was  225th (P5.18 million).

Joel Marcelo Gozon Jimenez, son of Menardo Jimenez, was 272nd (P4.76 million). The younger Jimenez, is a director of GMA Network and is also an entrepreneur in his own right.

Some members of the MVP Group are also on the BIR list. Orlando B. Vea (16th, P16.25 million) and Ray C. Espinosa (20th, P14.48 million). Vea is president and CEO of Digitel Telecommunications Phils. Inc. and Espinosa is president of TV5 and head of Regulatory Affairs and Policies Group of PLDT.

Also on the BIR list are:

• Winston Young Uy, president of tobacco manufacturer Universal Leaf Phils. (22nd, 13.98 million)

• Nickel Asia president Manuel Zamora Jr. (240th, P4.97 million)

• IPVG Corp. CEO Enrique Gonzalez (312th, P4.37 million)

• Punongbayan & Araullo founder Benjamin Punongbayan (319th, P4.33 million)

• ING Bank economist Jose Cuyegkeng (328th, P4.26 million)

• Philippine Airlines president Jaime Bautista (382nd, P3.96 million)

• SGV Group founder Washington Sycip (433rd, P3.74 million)

• Pampanga’s Best owner Angelo Hizon (479th, P3.57 million).

Politicians and other celebrities

Former President Joseph Estrada, who is currently running for mayor of Manila, ranked 490th (P3.51 million), while Mandaluyong City Mayor Benjamin Abalos is 300th (P4.5 million). Abalos owns Ben’s Burjer, a burger joint with two branches in Mandaluyong City.

A number of Kapuso celebrities are also on the list.

Eat Bulaga hosts Vic Sotto and Joey de Leon ranked 19th (P14.73 million) and 28th (P12.48 million), respectively, and Ryan Agoncillo—also a host of Eat Bulaga—placed 194th  (P5.6 million).

Actress, model and TV host Solenn Heussaff ranked 99th (P7.79 million). Earlier this month, the BIR slapped Heussaff with a P3.6-million tax evasion case.

In explaining why Heussaff was on the 2011 list, BIR commissioner Kim Jacinto-Henares told GMA News Online it merely reflected that the actress filed her tax returns for that year.

“It does not mean that when you file your ITR, you pay the right taxes. Her case is still ongoing in the DOJ,” the BIR chief said, noting that there were discrepancies in how much the celebrity really earned and how much in taxes she actually paid.

The BIR said she declared P6.73 million in gross income in her 2011 income tax return, and a taxable income of only P3.3 million for the year but a check with her clients and employers revealed that she actually earned at least P13.39 million in 2011.

Boxer, incumbent Saranggani representative and GMA talk show host Manny Pacquiao ranked 158th (P6.11 million); singer-songwriter Ogie Alcasid placed 184th  (P5.81 million), and GMA broadcaster Mike Enriquez took the 411st spot (P3.85 million).

ABS CBN president and show host Charo Santos-Concio was 33rd  (P11.61 million); Derek Ramsay at 120th (P7.08 million); Piolo Pascual at 123rd (6.98 million); Kim Chiu at 133rd (P6.71 million); Willie Revillame at 181st (P5.85 million); Sharon Cuneta-Pangilinan at 191st (P5.74 million); John Lloyd Cruz at 205th (P5.41 million).

List as a tool

The list of top taxpayers is being closely monitored and analyzed by BIR and the Department of Finance from the national down to the Revenue District Office (RDO) level.

“We closely review the top taxpayers’ lists when we analyze our tax collection data. Based on our research and benchmarks, we have expectations for the profile of taxpayers that appear on these lists and we investigate findings that diverge from our conclusions,” Finance Secretary Cesar Purisima said in a statement.

He noted that the lists are valuable tools in the drive to increase tax compliance. Movements within and from the list could be part of the reasons why the government would audit tax-eligible entities.

"These lists serve as another way to double- and triple-check income tax payments in populations that are historically difficult to track, such as the self-employed, businesses, and professionals,” Purisima noted.

“Our most successful business personalities and corporate citizens should also be top taxpayers—and if that is not the case, we need to find out why,” the Finance chief added.

Not on the 2011 list

There were notable names, including those who were on the previous list, that did not make it to the BIR’s 2011 Top 500 taxpayers.

Jaime Augusto Zobel de Ayala, who ranked 23rd in 2010, and Fernando M. Zobel de Ayala (37th) were missing from the 2011 list.

Oscar M. Lopez, chairman emeritus of Lopez Holdings Inc., was 11th in 2010 but was no longer on the 2011 list.

The Top 3 individual taxpayers of 2010—Vicente T. Lao, Rolando B. Hortaleza and Carlo J. Caparas—were also absent from the 2011 list.

Henares said the list only shows individuals who regularly file their ITR and does not translate to tax evasion for those who are not on the the list.

“The list released by BIR only showed the Top 500 individual taxpayers for taxable year 2011, based on income tax returns filed. Hindi dahil hindi sila nag-file ay hindi na sila nagbayad ng tax. May reason. For those working in companies, there are those who undergo substituted filing,” she added.— VS/HS, 

GMA News

http://www.gmanetwork.com/news/story/304049/economy/finance/kris-aquino-tops-bir-list-of-individual-tax-payers

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HOW TO CREATE A BUDGET?

Everybody has different financial goals. If you have a specific savings plan in place, your chance of meeting your goals increases. Put your goals and savings plan together, then you basically have a BUDGET.

Here are some essential steps involved in budgeting:

Identify your true income. This is your annual take home pay. Items such gifts or bonuses can be used to add to savings, help you get out of debt, or even splurge on a one-time purchase. Since you can't count on them year after year, gifts and bonuses should not be considered part of your income for budgeting purposes. 

Record all your expenses. Start with big items such as house rent, bank mortgages, car payment, etc. Then work your way down to smaller monthly bills like light bills or utility bills. Use your billing statements as your reference, you might be surprised at how many things you are paying each month. Then estimate how much you are spending out of pocket, like cash purchases for lunch, coffees, movies, vices, etc. that you might realize you are making. 

Quantify other financial needs and goals. Your monthly costs are not your only expenses. You will also have long-term needs like saving for retirement, and other financial goals like buying a car or a house. Figure out how much you need to save each year towards these long-term expenses, because they will have to be part of your budget as well. If you need to get out of debt, then paying down existing debts should also be part of your budget.

Compute the surplus/shortfall. Subtract your short and long-term expenses from your true income. This will tell you how much of an annual surplus or shortfall you are running. Since the point of budgeting is to live within your income, a shortfall means you will have to make some adjustments. 

Adjust and monitor. If you are running a shortfall, take a look at your expenses and figure out what you can cut, to get them fit within your budget. If it looks like you will have a surplus, you need to budget specifically for that surplus. It can be something as responsible as adding it to your savings account for your emergency fund. Monitor how your budget is going, and make further adjustments that become necessary as new information takes place.

Invest when you have enough savings. Do not put all your eggs in one basket. When you have enough savings transfer some of your money into investment vehicle that will give you a better return instead of putting it all in a bank. Learn how to diversify.

Start with the basics. Follow these simple steps and stick with it no matter what. It will help you manage your finances.

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THE ROLE OF MUTUAL FUNDS

The role of Mutual funds is to provide access to financial markets to small private investors but other than than, let's discuss the role it gives to our country. 

Help in the Development of the Capital Markets

Mutual funds can play a vital role in the development of the capital markets of our country by mobilizing funds from thousands or even millions of investors and by converting short-term savings to long-term sources of funds. These funds can then be used to finance long-term projects and to sustain the country's economic growth.

Stabilize the Domestic Financial Market
Time and again, we have witnessed the sudden and seemingly irrational movements in our stocks, bonds and money markets due to the massive inflow and outflow of foreign portfolio funds. A sizable local mutual fund industry can help stabilize securities prices by protecting fundamentally sound issues from speculative attacks.

Promote Savings & Investments

Mutual funds are generally sold as medium to long-term investment instruments. They, therefore, help promote savings and investments, and encourage people to plan for their financial future.

Wealth Distribution

Because of their low initial investment requirement, mutual funds provide investors of moderate means access to securities that offer relatively better returns - securities (like Treasury Bills, commercial paper, and stocks) that small investors would normally not have access to because of their limited financial resources. Mutual funds gives small investors the opportunity to participate in and benefit from the economic gains of the country, thereby contributing to our government's effort towards a more equitable distribution of wealth.

Generate Revenues for the Government

Mutual funds also help generate revenues for the national government as well as local government by the way of taxes. These include documentary stamp tax, corporate income tax, stock transaction tax, final withholding tax, municipal tax, mayor's permit, etc.

Provide Employment

Mutual fund provides job to thousand of people: mutual fund investment solicitor, portfolio managers, traders, research analysts, accountants, clerks, support personnel, administrators, auditors, brokers, custodians, transfer agents, etc.

Source: PIFA, SEC

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ADVANTAGE AND BENEFITS OF INVESTING IN MUTUAL FUNDS

Professional Management 

The service of full-time professional managers whose job is to analyze the various investment products available in the market and select those that would give the best possible returns to the fund and its shareholders affords it's investors, particularly the small ones.

Low Capital Requirement

Direct investment usually requires substantial capital. The minimum investment amounts for Treasury Bills and commercial paper, for instance, range from Php 100,000 to Php 1 Million depending on the bank or investment house you are dealing with. This holds true for stocks because while an investor may be able to buy one "lot" (shares are sold in board lots of 10 to 1 Million shares depending on the price at which these shares are traded) for as low as Php 1,000 to Php 5,000 he may not find a stockbroker who will service his account because they prefer to deal with high net worth individuals or at least with people who have substantially more than just Php 5,000 to invest. In contrast, most mutual funds in the Philippines require a minimum initial investment amount of only Php 5,000 and subsequent investments of Php 1,000.

Diversification

An important investment principle that requires holding several securities to reduce the risks associated with investing in individual securities is called diversification. When people invest in mutual fund, they achieve instant diversification because the fund is usually invested in a wide array of securities. As the saying goes " Do not put all your eggs in one basket. This adage is specially true in the world of investments which is full of uncertainties.

Liquidity

Liquidity is the ability to readily convert investments into cash. Other investment products require investors to find a buyer so that he can liquidate his investment. That is not the case with mutual fund shares because the fund itself stands ready to buy back these shares at the prevailing Net Asset Value Per Share. While the law provides that redemption proceeds must be given within seven  banking days from the date of the redemption request, most funds are able to pay the redemption proceeds within a day. Mutual funds are, therefore, considered very liquid investments.

Safety
Safety is a very important consideration for most investors. Sometimes even more important than potential returns. Mutual funds are highly regulated by the Securities and Exchange Commission under the Investment Company Act and its implementing rules. They are prohibited from investing in particular investment products and engaging in certain transactions. They also have to submit regular report to the SEC as well as to their shareholders. All of the fund's assets must be held by a custodian bank for a safekeeping.

Potential Higher Returns
Because a mutual fund is managed as a single portfolio, it is able to take advantage of certain economies of scale. For example, with it's millions under management, it can negotiate for lower stock brokerage fees or command higher interest rates on fixed-income investments. In the end, however, it is still the investment adviser who really makes the big difference between making direct investments and investing in mutual funds because very few individual investors can match the experience and skill of full-time professional fund managers.

Convenience
The popularity of mutual funds in the Philippines is fast catching up. Funds offer a variety of other services, including monthly or quarterly account statements, tax information, and 24 hour phone and computer access to fund and account information.

Transparency
Investment company advisers provide investors with updated information pertaining to the fund. All material facts are disclosed to investors as required by the SEC.

Flexibility
Investors are allowed to modify investments strategies over time by transferring or moving from one fund to another within a mutual fund family.

Source: PIFA

BENEFITS OF A MUTUAL FUNDS

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