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Money Matters

Does financial freedom require superhuman strength?

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QUESTION: We cannot save. Our family income seems barely enough to cover our basic needs.  And now that the school year has started, our finances have again been set back by our children’s tuition fees.  I am sure we are not the only Filipino family going through such troubles.  How can we make ends meet?—Anonymous SMS through “ask a friend, ask Efren” service

Answer: Did you notice that Superman’s costume does not have any pockets?  Apart from making him less aerodynamic, the ultimate superhero has no need for pockets to put his wallet in. In the first place, he doesn’t have one. He can survive without money that ordinary mortals would otherwise need for food, clothing and shelter. Heck, he can even survive without breathing.

But despite our human frailty, we are still capable of superhuman financial feats. We just need to observe the following rules:

1. We should not compare ourselves to those richer than us. The journey to financial freedom is not a contest or a race.  Some may get there ahead of others; but we are all given not just one but many chances to reach the finish line.  We should stop peeking through our window to see what the delivery van in front of our neighbor’s house is bringing in next.  Instead, we should always be thankful for what we already have.

2. We should not compare ourselves to those below us in the economic ladder.  At the same time, we should not be thankful for being relatively more well off than others.  Financial freedom is measured not so much by what we have but instead by what we don’t need. I was recently told that most of the older generation janitors of a private school in Metro Manila are generally financially free.   Despite the fact that they had been earning a janitor’s pay all their life, they still consider their standard of living to be comfortable.  This accomplishment is backed by the personal finance wellbeing survey that we conduct for our EnRich™ training participants.  Many scored high in personal finance well-being even though their level of income was below average.

3. It’s OK to dream big, but we should start small.  Contrary to popular belief, savings are made from the little everyday expenses.  These little savings will amount to a lot when accumulated.  How did Pondo Pinoy reach P90 million in donations in just two years after its launch? They simply asked people to save their 25-centavo coins every time these coins would come into their possession.  Saving repeatedly from small everyday expenses creates the habit that leads to financial discipline.

4. Striving for financial freedom is an MFSB activity.  MFSB stands for mother, father, sister, brother.  Everyone in the family should work toward financial freedom, even and especially the young ones.  We give away piggy banks as prizes in our EnRich™ training program. One winning participant trained her two-year old daughter to always put coins in the brightly colored piggy.  Now, every time the participant would come home, her daughter would approach her to ask for coins to drop in the piggy bank. The older ones could be involved in simplified family strategic planning at the start of the year with quarterly reviews just to see if the family’s finances are still on track to hit targets for the year.  To ensure a high level of family member engagement, we should set goals and implement strategies that are relevant to each and every one.  For children, saving is easy if it is presented as a game. For teenagers, bundling modest monetary rewards or articles of clothing when targets are reached can already provide enough motivation.  To parents, achieving financial freedom in itself is already a great reward.

5. We should kill the “Now Na!” mentality.  The best way to kill “Now Na!” is to avoid the places and occasions of breaking our budget.  Just like fighting allergies, we should make an inventory of places and occasions where we are tempted to hit our budget hard.  This way, we will know what to avoid.  And through MFSB, we could pull each other away from temptations in our moments of weakness.

6. We should refinance expensive debt.  Here we would need to consult a financial expert on whether the alternatives for refinancing are truly cost effective for us.  Such experts can be found with banks, mutual funds, insurance companies and independent financial planners. We can also use Ya!man™, the country’s first personal finance mobile application to check on effective interest rates.  Ya!man™ may be downloaded from www.personalfinance.ph.

7. We should protect our downside. The probability of dying is 100 percent. Getting life insurance is, therefore, an act of insuring against a sure thing.  And we should remember that life insurance is not an expense but an asset that serves as a gift to our loved ones.

8. We should invest what we save.  Once our finances have been stabilized through proper savings techniques, cost-effective debt refinancing, and appropriate protection against the perils to life, we should start to automatically invest our savings. Many financial products providers already offer ways on how to automatically invest our hard-earned savings. We just need to look around and ask.

If you want to learn more about effective personal finance, please visit www.personalfinance.ph. There are a lot more free resources there for you to benefit from. You may also want to attend EnRich™on Aug. 3, 2013, our public training on personal finance. Details for EnRich™ can be found on the website.

(Efren Ll. Cruz is a registered financial planner of RFP Philippines, personal finance coach, seasoned investment adviser and best-selling author. Questions about the article may be sent by SMS to 0917-505-0709 or emailed to efren@personalfinance.ph. To learn more about the RFP program, attend a free orientation on July 4, 7pm at the PSE Center. E-mail at info@rfp.ph to register.)


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    Temperament and Discipline is key to successful Investing. There are a lot of experts but those who fail in Investing are surprisingly large. Go With your strengths. 100 to 500 pesos every payday can get things started. Start with what you can do and go from there



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