A common regret among Ilonggos of retirement age is failing to save money early enough. Don’t worry! With the right financial mindset and discipline, young professionals like you can start securing your future financially.
Nuri Castells-Barrios, a Sun Life Financial Advisor and Unit Manager based in Iloilo City, shares these tips on securing your future financially.
1. Live within your means
The fear of missing out (FOMO) fueled by external influences like social media is rampant among the young. Buying the latest gadget, traveling, or going on a shopping spree even if they cannot afford it just yet. They end up in stressful debt due to the irresponsible use of their credit card or getting a loan from private lending institutions or loan sharks, regardless of the interest rate.
Worried about the future but do not want to miss out on the present? The key is to learn how to live within your means.
Ilonggos are frugal and grab opportunities to save while enjoying the good life. One example is to wait a few months before buying a newly released gadget because the price is lower then. Some set aside money until they can afford a big purchase. Another example is booking a travel date months ahead to enjoy seat sales. As for dining out, Ilonggos flock to buffets to get their money’s worth versus fancier and pricier restaurants. These are some of the ways Ilonggos try to live within their means.
2. Grow your savings
“Set aside an amount for your savings every time you earn money. The goal of saving is not to spend the money so that you will have an emergency fund and a fund to address short-term financial needs,” said Barrios.
An article posted on Sun Life mentions the 50-30-20 rule as a guide in budgeting. The rule goes like this: 50% of your income goes to things you must have/need to spend on (rent, electricity, food, taxes), and 30% goes to the things you want to buy (gadgets, eating out, relaxing and watching a movie), and 20% goes to savings.
As your money grows, the more financially secure you become. The earlier you start the habit of saving, the better off you will be in the future.
3. Create other income streams
“If you are salaried, set aside a part of it to make other income streams. By building some capital, you can do something you love to do and earn from it. For example, if you like making accessories, do so and sell them online or at your workplace,” suggested Barrios.
Barrios revealed that she loves traveling. Her visit to the Holy and interactions with pilgrims inspired her to start My Light Pilgrimage. So, this business that focuses on bringing groups for Christian Pilgrimages like Holy Land tours serves as her second income stream.
Investing in mutual funds is also another income stream.
Your choice of funds would depend on your risk appetite and investment horizon or the future financial need you would like to address. The benefits of these mutual funds include affordability, higher potential returns, diversification, flexibility, liquidity, professional fund management, and global expertise.
For as low as P100, you can already avail of one of Sun Life’s Prosperity Funds, the Sun Life Peso Starter Fund.
“Investing may be used to address long-term financial needs, like building your children’s educational fund or your retirement fund. In preparing for a future financial need, inflation is a big consideration. Whatever you can buy now from the grocery for P1000, you will need P1628 to buy the same things 10 years from now. A good investment is something that earns better than the inflation rate, in the long term. Otherwise, you are just saving. The interest you are earning from your bank savings account is lower than the inflation rate, thus, it should not be considered an investment,” Barrios said.
Marie (surname withheld for privacy), a client of Barrios, shared that she started investing in Sun Life mutual funds when she was in her forties. “I started off with the Sun Life Index Fund for retirement, a long-term goal. Later on, I used part of it to invest on a second stream, the Peso Starter Fund, which I use to save for short-term goals. Nuri, my financial advisor, gave me the idea. I usually make a three-month budget to limit my spending. The Peso Starter Fund was a big help whenever I encountered unexpected expenses. I wish I started early though. So, I keep telling my nieces and nephews to start investing when they are 18 years old. They will understand the wisdom of it when they are in their fifties, sore all over, with less energy to work yet still has bills to pay,” she narrated.
4. Secure your health and wealth with an insurance policy
An insurance policy can serve one’s needs in every life stage, from liquidity, to protection, to wealth accumulation, to wealth transfer. A health insurance plan can help you recover from illnesses so you can enjoy life with your loved ones, while a life insurance policy can offer living benefits and help you fulfill your dreams for your family even after you pass away.
“An insurance policy could be a health protection plan, an educational plan, a retirement plan, an investment facility, or used for estate preservation, among others,” Barrios said.
Ilonggos may choose between the traditional insurance plans or the VUL plans.
Some traditional insurance plans have regular cash payouts, among other benefits. By owning such a plan, you are creating another income stream to augment a future financial need.
On the other hand, Variable Universal Life Insurance (VUL) offers guaranteed insurance benefits as well as potential fund accumulation over the long term.
Life is brighter when your health and wealth are well cared for. As the Ilonggos’ partner for life, Sun Life has life insurance products suited for any budget and can address expenses as you go through different life stages.
One example is the comprehensive variant of the SUN Fit and Well plan, a life and health insurance plan that offers critical illness and life insurance benefits until age 100, with a bonus health and wellness program. This New Generation Wellness plan is suited for people who want to want to keep healthy from prevention to recovery.
Life insurance can also address estate tax woes. Under the Philippine Inheritance Tax Law, an individual who inherits real estate should pay an estate tax. Otherwise, the heir cannot inherit or sell the property because a certificate of title under his name cannot be issued.
“To ensure that the heirs will have enough money to pay for the estate taxes of the properties he leaves behind should he pass on, the owner can avail of a life insurance policy with the coverage amounting to the expected estate settlement expenses,” Barrios explained.
It is a misconception that insurance is so expensive that minimum wage earners would not be able to afford it. A Sun Life advisor can help you design a financial plan and secure insurance products that would suit your budget and provide death and living benefits.
5. Do not fall victim to scams
One in every 100 Filipinos has been victimized by investment scammers, amounting to a total loss of over P25 billion, according to former Bangko Sentral ng Pilipinas Governor Benjamin Diokno in his speech at the virtual 4th Financial Education Stakeholders Expo in 2021.
So, think twice before giving your hard-earned savings, money for tuition, or cash for the house to scammers.
“If something sounds too good to be true, there is a chance that it is not true. Avoid investing in scams or offers that you did not thoroughly research in terms of credibility. Some scams give you initial payouts to earn your trust, but shortly after, would run off with their investors’ money,” Barrios said.
It’s best to engage with credible institutions that can help you safely secure and build your wealth. Sun Life is one example, having been in the Philippines for 127 years, making it the oldest insurer in the country. Sun Life has been the number one insurance company in the Philippines for 11 consecutive years as well, based on premium income as reported by the Insurance Commission.
From getting started with simple and affordable protection plans to building funds with investment-linked products to fulfill life goals, you can count on Sun Life to be your Partner for Life.
Start planning and taking steps to secure your future financially. Connect with a Sun Life advisor who can help you make a financial plan that will bring life goals to reality. You won’t regret it.
