Here in the Philippines, it seems that the gap between the rich and poor seems to get ever larger. It seems harder and harder to build wealth here. But is that really true? What does it mean to be rich? What does it mean to you? We all have different definitions of what wealth means, but regardless of your own definition, the system below will help you to get there. Its not difficult and it will protect you from the unexpected things in life.
Wealth step #1 – Save P10,000 for emergency savings
The first step is to build an emergency fund. This is to protect you from all of the small things that pop up to knock you off course. Having this be able to absorb those unexpected financial hits will protect you on your path to wealth. However, Remember to replace any funds that you use before moving on. It should always be at P10,000. This is enough to take care of just about all expenses except for major medical or job loss.
Wealth step #2 – Pay off all of your debts
Once you have saved up for your emergency savings, its time for you to pay off all of your debts. This includes loans, credit cards, pawn shops, etc. Make sure you get completely out of debt so that you can begin using that money to build up you expenses reserve (see wealth step #3). Having debt hanging over you won’t help you to build wealth and achieve financial freedom.
Wealth step #3 – Build up 3 months of expenses
You have your emergency savings and you have paid off all of your debt. So the next thing is to get a good cushion of protection under you. One thing that can take it all away is the unexpected. Thing like sickness or loss of a job can wipe out any wealth that you may have accumulated along the way. Te best way to shield yourself is to build up at least 3 months of all of your expenses. Notice I said at least 3 because obviously more is better. But having that amount on hand will give you time to weather the troubles that might have come your way. Be sure to include all expenses such as rent (or house payment), electricity, water, mobile phone, internet access (so you can search for a job if unemployed), food, school allowances etc.
Wealth step #4 – Begin saving for your retirement
This is an area many Filipino fail in greatly. We seem to allow for our children to pay for us after we retire. I personally feel that this is a great disservice to our children. We should all take the personal responsibility to prepare for our own retirements. Begin to save a portion of your income into a savings account like a PERA account (Personal Equity & Retirement Account). This will help you to begin saving money for your inevitable retirement.
Wealth step #5 – Begin investing to build wealth
You have finally made it to wealth step #5. You have a reserve, your emergency savings, and are saving for retirement. Now its time to invest. all major banks here in the Philippines offer investment products. Contact your bank of choice and ask them to help you open an investment account. This will allow you to purchase stocks and begin to build your wealth.
Another option is to invest in a business. This doesn’t mean loaning money to a family member to start a sari sari store. This means finding an existing business and buying into it. Perhaps a franchise or even starting a business of your own.
Regardless of your choice, you should locate an appropriate method to invest your money so it can begin to grow.
Following this path is a safe and guaranteed way to get yourself to financial freedom. You can build a sustainable wealth plan that will help you to achieve your own goals.