Being a member of the International Marketing Group (IMG), I am so blessed to have learned the concepts of financial management at this early stage of my life. I may still be starting out, but at least I've got the fundamentals of financial management correct now.
I've always believed that God wants me to be responsible for my time, treasures and my talents. I have worked hard to manage my time and talents but it is my treasures that I have no idea of managing.
My best friend in high school introduced me to IMG just this year 2007 and I am glad I became a part of the company. My blog schedule for today is on financial management so I want to share with you IMG's 6 steps to Financial Freedom and how it has applied to me:
1.) Increase cash flow
a.) Earn Additional income
b.) Manage expenses
- I have strived to follow the first step by earning both active and passive income through IMG's system. I have also managed to teach part time and at the same time explore the possibilities of earning income online. With regards to the expenses, it is important that I list down all my expenses and work within a budget. That is what I had been doing now for months.
2.) Manage debt
a.) Consolidate Debt
b.) Strive to eliminate debt
- I've managed debt by resorting to lower interest rates. I have availed of balance transfer features. The regular interest charged by credit card companies is 3.5 % per month. But if you avail of balance transfer features by "transferring" your debt to other credit cards then you can avail of 0.99 % interest per month. I have discussed this extensively in my post entitled "Getting out of the credit card debt mess."
3.) Create emergency fund
a.) Save at least six months income
b.) Prepare for emergency expenses
- This is something I have not done yet, but will be planning to do in the months or years to come. Once debt is eliminated I can now start to save at least 6 months income. This is just to ensure that you are liquid enough in case there are some things that must be bought with in cash. This could also be used for emergency expenses.
4.) Ensure proper protection
a.) Protect against loss of income
b.) Protect Family assets
- I have achieved this through availing of insurance. Insurance policies protect loss of income by compensating the person insured and his loved ones if ever the person insured losses the capacity to produce active income because of death or accident. Protecting family assets is also achieved by availing of non-life insurance such as fire insurance etc.
5.) Build long-term asset accumulation
a.) Outpace inflation
b.) Reduce taxation
- This is normally what is known as the "investment" stage. If you are "investing" in something that is less than the inflation rate then you loose in the long run. Always make sure that you are investing above the inflation rate. For some who still does not understand what inflation rate means and how it could affect you I will probably discuss it in a future post. Most experts suggest that if you are in the Philippines you should invest in something that is above 7 % (Even if now the inflation rate is below 2 % +) Currently you cannot put your money in the bank an expect a return of above 7 % since interest for savings is way below 2 % and interest for time deposit accounts is from 3 to 5 %
Clearly, the only way to achieve this is through the stock market, mutual funds investments and other types of investments giving you a return of more than 7 % per annum.
With regards to taxes, remember that the government taxes income, not wealth.
6.) Preserve your estate
a.) Help Reduce estate taxes
b.) Build a family legacy
This is something that I plan to do probably 20 years from now. There are a lot of ways to achieve this. I would probably tackle this in another post since this is a somewhat complicated topic. ]
This is the overview of IMG's financial strategy which I have strived to religiously follow. The steps must be followed sequentially. It is advisable that you should go through them one step at a time. However since I have learned about this just lately, I have managed to invest without first eliminating my debt. I should have eliminated my debt first and investe later. But I believe that it still worked out for my advantage since the year 2005 to 2010 is considered by many experts as "a window of investment opportunities" considering that the stock market is at it's highest and the fundamentals of the Philippine economy are in place. I will discuss more on financial strategies on my future posts.
Monetary Pressures Can 'Strain' A Relationship
More consumers are preparing themselves for the strain their finances will see over the Christmas period, according to new figures.
In research conducted by Engage Mutual, 88 per cent of the Britons who share their finances with a partner state that they are willing to make monetary sacrifices to keep up a certain standard of living for their significant other. The study revealed that about one out of five are ready to work extra hours in order to provide their loved ones with the things that they want. Meanwhile, just under a third (30 per cent) are looking to cut back on buying luxuries for themselves, with the taking out of a loan another possible way in which to help them to give what their partner wants.
The survey also indicated that seven per cent of those in a relationship would be willing to borrow money, whether this be through a cheap personal loan, credit card or other means, to support their partners' wishes. Meanwhile, some 21 per cent state that they are prepared to withdraw funds out of a savings account.
In addition, findings from the firm revealed that men are most likely to make financial sacrifices. More than a third (35 per cent) of males are ready to go without buying new clothes and other luxuries, in comparison to 25 per cent of women. Meanwhile, four per cent of females would consider ending a relationship, if they felt that they were under pressure to stop buying things for themselves in order to provide for their partner.
Karl Elliott, 3GB spokesperson for Engage Mutual, said: "It is encouraging that rather than taking on further debt, people are prepared to work longer hours and cut back on spending in order to treat their partner. Increased financial pressure could put strain on some relationships. However, as this research shows, preparedness amongst couples to support each other financially shows that the population are prepared to go without themselves in order to provide for their loved ones."
The research also unveiled that 41 per cent of people from the north-east of England are willing to forgo clothes and luxuries in order to save more money to help keep their other half content. Those in the midlands are most likely to give up a night out on the town to cut back on spending, as such people account for 28 per cent of those from the region. Consumers living in Yorkshire, however, are the least prepared to do this, with only 12 per cent prepared to stay in to save cash.
Engage Mutual also pointed to research carried out by the Telegraph and uSwitch indicating that disposable income has reached its lowest point in a decade. And with the festive season just a few weeks away those who find that they are struggling to save money to help provide for their loved ones may find that a loan could be an answer to financial problems.
However, should consumers consider getting a loan, they may be advised to be upfront with their significant other. A recent study carried out by Cater Allen Private Bank earlier this week indicated that 30 per cent of consumers are keeping a financial secret from their partner, ranging from having a personal loan to a clandestine savings account. Managing director Richard Dunn reported that such secrecy indicates consumers are unwilling to talk about money, despite the fact that such discussions with loved ones can often act as the first step in people getting back on their fiscal feet.
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