MANILA, Philippines--You can't be young, often reckless with money, dependent on your parents and not ever feel the pinch from such a lifestyle.

Couple Diego and Bianca didn't feel they were on shaky financial ground, but guided by a sinking feeling that there might be hidden horrors in their wallets, Bianca decided to look for help.

An article she read from INQUIRER.net jumped at her: The online publication of the Philippine Daily Inquirer was looking for volunteers willing to be mentored for one year by a professional under an experiment called Money Makeover. She applied and was chosen by a panel of editors and financial planners.

That was a year ago. The couple was then in their mid-30s and felt immortal. Bianca had just passed the bar exam and Diego was a multimedia graphic artist and instructor. They each drove a car, they owned a townhouse, doted on their daughter--and they had P5,000 savings in their bank account.

In fact, they lived on debt. They owed their parents over P1 million, they had P38,000 charged to their two credit cards and Diego still had to pay for the Toyota Hi-Lux he bought from his brother. They initially had $10,000 savings from living in the United States for four years. But they wiped that clean when they bought their three-bedroom home, appliances and such.

Now, the couple has crossed over from a payday-to-payday existence and have more than P400,000 in savings.

Bianca the other day moved to a more lucrative career as corporate counsel, while Diego continues to nurture a fledgling business grossing at least P100,000 a week.

The one-year mentoring activity has been a life-changing experience for them, the couple said. For 12 months, they met with financial planner Augustus J.V. Ferreria, senior executive vice president of Generali Pilipinas, the insurance arm of the SM Group.

Ferreria is one of the pioneers of financial planning in the Philippines, but has stopped serving clients because of his full-time work. He agreed to make an exemption for Money Makeover--it was pro-bono anyway. He said it was his way of paying forward all the persons who have helped him too.

Diego and Bianca agreed to have their story published (including all the nasty details of their money mistakes) on condition of anonymity. They hoped that the story would save others. INQUIRER.net believes people don't need another Sermon on the Mount to show that it is possible to bust the paycheck-to-paycheck cycle, and that the results of a one-year experiment could do the trick.

Know your money personality
The first baby step to saving, Ferreria said, is to understand how you spend. The idea is that people who truly understand their financial personality can get out of their little gerbil wheels of consumerism sooner. Ferreria said he doesn't focus on cookie cutter financial plans or creating balance and income statements when meeting clients for the first time. He tries to understand their genetic pool.

"It was not your run-of-the-mill first meeting. True, there were muffins and sodas and a lot of getting-to-know-you questions, but then Joe posed this query: 'Who are your parents?' And he did not mean their names," Bianca said.

Little by little, Ferreria ferreted the story from them.

"I began to understand that I am a combination of my solid, stable father who loves to gamble every now and then, and a mother who never quite forgot her less than humble beginnings. Half devil-may-care, half guilty for every little thing I spend my money on, I realized that, unbeknownst to me, I am them, and like them, I will be safe and solid money-wise, but trapped," Bianca said.

Her husband, Diego, also has quite a past. "My husband has komunista parents turned kapitalista. He's a nut case too when it comes to money--he's a rogue painter in jeans and a wanna-be entrepreneur who cannot stand leaving a single centimo in his wallet. We are quite a pair," Bianca said after the first meeting.

Ferreria asked the couple to list all their expenses for two weeks in little notebooks, no matter the amount. Buy gum, jot it down, including the time and the place, the expert said. At the end of two weeks, Ferreria met them again to see if their initial foray into understanding the couple's financial genetic pool is confirmed by the way they spend.

The prognosis: Both Diego and Bianca were, indeed, their parents combined. Diego spends everything in his wallet from sunup to sundown, the main reason why he only gets an allowance from Bianca. He walks into a mall and buys soda, C2, Jamaican patties and hotdogs--anything that smells good at the time. Bianca is more of the fine-dining type, but she can't resist spending on food pasalubong for her daughter, ballet lessons, school supplies, going to the parlor and gym membership, among others.

"You are a walking eater," Ferreria tells Diego. "And your (Bianca's) diary is typical of a mom," he added.

Diego's spending is typical of persons who have experienced prolonged periods of deprivation since Diego grew up in poverty but enjoyed his father's reversal of fortunes when he was in college. Bianca was not an off-the-wall spender, but has the tendency to be. She got both of her father's gambler personality and her mother's frugality and tendency to wallow in guilt.

"You are a very emotional spender. When you travel, you always spend a lot of money," Ferreria tells Bianca.

Practical solutions came out of two weeks of tracking their spending. Diego was advised never to leave the house hungry and to always bring a bottle of water with him. Bianca can have fun money, but with limits, and should learn to program major spending items like vacations. Understanding their financial personality and creating the habits to solve the weaknesses took up almost half of the year.

Save regularly, get out of debt and invest
Then the really hard work began. Ferreria taught the couple not to mix money for bills and for recreation and do credit substitution to pay off their credit cards. By getting a loan from the Social Security System, they can retire their high-interest debt with a low-interest one. At the same time, Ferreria advised them to pay themselves first by saving regularly--the amount was not that important. It was the habit that mattered more. He called up a bank branch near the couple's house to open an account for them. After two months, the couple hit paydirt. They helped a brother sell his house and earned P100,000 in commission, which they promptly deposited in their newly minted checking account.

"Saving one time in bulk will not help as much as saving P5,000 monthly. That way, the habit is deeply ingrained and when you come across crossroads, and you always will, you know what to do. If you had not been caught just in the nick of time for Money Makeover, you would be in Bangkok with that hundred grand with not a thought for the future," Ferreria said.

Cash is king, he said. The more savings you have, the more chances of churning everything for higher yield. Ferreria debunked the myth of turning P20,000 into a million in a few years if you are smart enough. "That's an urban legend. Truth is, you need money to attract money. Capital formation is very important," Ferreria said.

The strategy considering their personalities should be to keep saving cash and when the volume is high enough, invest smartly or set up a business. With the newfound self-confidence and a hundred grand to their name, Ferreria said the couple was ready to learn about the stock market. He tracked down well-known fortuneteller Madam Auring in Ever Gotesco mall in Quezon City and started the lesson by having their palms read.

"This way, when you think about investing, you will never forget that it is all about making intelligent guesses and the importance of hiring a real professional to do it," he said. "All that Madam Auring did was to ask questions and guess. That is the same thing with investing. When people tell you they know what the market will do next, they are just guessing," he said.

Ferreria asked Bianca to invest a virtual P100,000 in the stock market by choosing only five stocks and tracking the performance of her stock picks over a month. Bianca earned P50,000--in virtual money that is. But to make the experiment sweeter, Ferreria said he would give the couple P100,000 of his own money to play with when it's really time to work the stock market, something that made Bianca very excited and very nervous.

Entrepreneurship and getting insured
While waiting for the stock market to stabilize, fortune again smiled at the couple. A company in the United States needed graphic designers and decided to outsource the work to Diego. He immediately set up a team of artists in an office, the rent of which he split with a friend, and bought computers. He has been grossing around P100,000 a week for the last few months, and the couple's savings again got a boost.

"You have reached crossroads again. And that will continue. Now that your income is growing, I have only one last thing to tell you--don't change," Ferreria said.

The planner was talking about their lifestyle. The temptation to expand the business, buy more computers, buy a new car, plan a more lucrative vacation were staring at them in the face. Ferreria advised them to stay sane, and stay the same. Keep the business expandable and shrinkable at a moment's notice, control spending and always be on the lookout for more opportunities, Ferreria said. While the business process outsourcing business is growing, the storm clouds in the United States may change the trend and it will not do to get stuck with high overhead costs if there is a downturn.

As if life could not be more interesting, Diego's "baby monster truck" was stolen while it was parked near his office. He was devastated, and the couple learned about the need for protection. Insurance, a nuisance for them previously, has become a thing of necessity.

Life lessons
One year of Money Makeover has changed both couples for good, they said. The list of lessons learned stretched long and wide.

"Don't be afraid to make mistakes. Invest, set up a business or businesses, dream. Now, today, while you are still young and there is plenty of time to recover and try again. If income increases, expenses should stay the same. Don't shop if you're hungry. Eat at home. Talk to the rich, observe, listen. Be good to yourself. Find a financial planner that you can trust and laugh with. This is crucial," Bianca said.

Bianca and Diego's case is both unique and common. Their money lessons, however, are something that most Filipinos will have to go through. Until next year, for the next round.

(For more information on Money Makeover, go to INQUIRER.net's personal finance blog at http://blogs.inquirer.net/moneysmarts.)