Efren Ll. Cruz is a registered financial planner with the RFPI USA. He is author of the bestselling books, “Pwede Na! The Complete Pinoy Guide to Personal Finance” and “Pwede Na! The Complete Pinoy Guide to Retirement & Estate Planning.” He is Chairman and CEO of Personal Finance Advisers Philippines Corporation. Questions about the article may be emailed to efren@personalfinanceadvisers.com or cruise@skydsl.com.ph. Efren may be reached at the same email address for the scheduling of consultations and personal finance seminars or at (+632-216-8151).

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8 Ways to Know You are Managing Your Money Well
Efren Ll. Cruz, RFP®

Money is as slippery as fish.  Before you get a good grip on it, off it goes to fund your nourishment, sustenance and debt repayments. Some of money’s uses are necessary while some are just downright whims.

So how do you know if you are managing your money well?

1. You save before you spend – This is in essence what the adage “pay yourself first” really means. You pay yourself an income in the form of savings, the cash for which you will place in investments to fund more consumption in the future.  That payment comes in a fixed amount, crisis or no crisis.  You discipline yourself to make expenses fit as much as possible.
2. You treat money as a mere tool to achieve a greater end – You believe in the sayings that money does not buy happiness and that the better things in life cannot be bought.  Earning money is not your ultimate goal; family, friends and work are. You don’t live a life to spend.  In contrast, you spend to enjoy a full life.
3. You pay your debts at the right time and with the right amount – Debts are not diamonds; they should not last forever.  You realize that debts can cost a lot.  Therefore, you allocate a good portion of your income in trying to repay debts the fastest way possible.  When you can, you fully pay your outstanding credit card balance. You don’t miss out on your personal and housing loan amortizations, even if they be just to your friends or relatives. You minimize if not totally avoid deferred payments on credit cards, installment purchases, zero percent interest and even “5-6”.
4. You sift through the heavy sugar coating on products and services – One of the sources of debt is consumerism.  Products and services come in very attractive packagings that make them so irresistible – all the more if they go with seemingly affordable financing.  You, therefore take time to think things through with items that catch your fancy. You can think twice of thrice about a certain item before you go off buying it.  Instead of embarking on holiday spending, you launch occasional spending holidays.  That to you is holiday economics, which makes a lot of economic sense.
5. You protect your downside by buying both life and non-life insurance – You go against the grain by looking at insurance not just as a mere expense but as a vital tool for protecting you and your loved ones against various perils to life and property.  You know this only too well with the country’s recent experience with typhoons Ondoy, Pepeng and Santi. Either you study insurance policies really well by yourself or you get the help of a financial planner to know the kinds of provisions and riders suitable for your particular situation.
6. You prioritize healthcare over personal effects – While maintaining an acceptable level of external looks, you devote a good part of your budget to maintaining your health.  Regular visits to the doctor and/or dentist, buying food items that promote a balanced diet, proper exercise and a healthy dose of vitamins and minerals are just some of the things you care about.
7. You spend on the proper continuing education – You not only spend on the best education you can afford for your children, you also allocate money for spending on your continuing education.  This continuing education can come in the form of newspapers, trade magazines, books, seminars and workshops.  You know that arming yourself with additional knowledge will get you places faster.
8. You study investments carefully instead of just jumping into the hottest tip – You realize that inflation is money’s number one enemy and that the only way to fight it is through investing.  You are careful not to focus on promises of high returns on your money.  Instead, you pour over the investment documents before you sign on the dotted line and hand over your check.  Moreover, you strive to know if a particular investment is suited for you and not the other way around.

Want to know more about managing your money better? Attend the “Quick, GET RICH Schemes” personal finance seminar series.  The next one will be held on November 14, 2009.  For details and reservations, call (02) 216-8151 or 0917-530-1809.

Cheers!