self-knowledge: the first step

This week, I made another slightly major purchase of a 'want'. I feel giddy and guilty.

photo grabbed from Egandeula's Sari Sari's Facebook Page

So I'm sitting here on top of my uncomfortable high chair, in front of a borrowed laptop (my husband's), willing myself to start on my financial plan.

To be fair to myself, I am not starting with nothing. I have some savings. But to be realistic, I am an employee, part of the (hard) working middle class. I have two kids, one of school age (4 years old). The husband and I are bracing ourselves for a major borrowing commitment (his part of the commitment) and a major unavoidable expenditure (my commitment) in the next 3 to 4 months.

Now if I could just win the lotto. Not that thought again. :)

If you are like me, let's not despair. I have just read this article on www.brighterlife.com.ph on How an Employee Can Prepare for Retirement.

The article says if we, ordinary Juans (and Juanas), can save 20% of our net pay consistently from this day forward, there is hope that we can have savings for emergencies and a comfortable retirement fund by the time we retire at age 65.

Always practice the 3 important habits in financial planning:

1. Save as early as possible.

2. Save regularly.

3. Look for rates to compliment your need, both for short term (banks) and long term (insurance and investments)

- See more at www.brighterlife.com.ph

During the Personal Finance session that the husband and I attended last week (which I blogged about here), Randell Tiongson enumerated the following top 5 reasons for financial planning success: 

1. Honesty

2. Well-disciplined

3. Social skills 

4. Supportive spouse

5. Hard work

The list is for the self-employed but it is also applicable to employees, except maybe for item no. 3 on social skills and of course item no. 4 if you are not yet married. 

The issue on money is not simple because it stems from culture and upbringing. Many of us, especially the educated ones (lalo na siguro mga CPAs) know the time value of money and thus, the importance of saving up as early as possible. The problem with us Filipinos though is that our actual finances do not jive with our views on money. Sabi lang natin pero sa totoo lang, hinde naman natin sinusunod. 

So the first step to successful financial planning is honesty. Ano ba talaga ang tingin mo sa pera? Don't rationalize. Don't justify. If you have an issue with money, lay it down now. Analyze it, understand it, make peace with it. Until then, any attempt to financial freedom is doomed. Boom! Kinabog ako. 

Know yourself and your reason for spending. 

It's Your Money Spend It, Save It, Invest It and Lead a Debt-Free Life by Entrepreneur Philippines has this to say on the matter: 

In order for you, and not your spending, to dictate how you feel about yourself financially, recognize how you feel when spending, which in turn determines the kind of spender that you are. Once you do so, then you can adjust your financial habits toward financial well-being. Indeed, self-knowledge is self-control. 

Know yourself: What kind of spender are you?

Save but do not be a miser to avoid misery. We should learn to strike a balance between the need to save and the want for possessions. Avoid extremes. 

And for husbands out there, Randell Tiongson also shared this:

The secret to happy life is a happy wife. A major need of a woman is the feeling of security. The answer to this is financial planning. 

Now, if you would excuse me, I have some inventory taking to do. I need to account for my assets, liabilities, income and expenses and know where I am at currently. Self-knowledge is power. Let's all get a move on from point A to point B.