Question: Metro Manila has just been placed back under modified enhanced community quarantine. I am doubtful that my finances can last another 15 days of lockdown. How can my family and I weather this challenge? Asked at “Ask a Friend, Ask Efren” Free service at www.personalfinance.ph, SMS, Viber, Twitter, LinkedIn, WhatsApp, Instagram and Facebook
Answer: There is a saying that is supposed to be the English translation of a Chinese curse, namely: “May you live in interesting times.” There is no proof of authorship of the saying. While on the surface the saying appears to be a blessing, it really is used to wish another to live in uninteresting times of peace and tranquility, which are usually times of trouble. That is why it is a curse than a blessing.
But we cannot deny that we are currently living in a time of trouble. The country has broken through the 100,000 mark in terms of total number of COVID-19 cases. While the disease is highly infectious, the Department of Health asserts that based on Aug. 2, figures, 90.2 percent of the cases are mild, 8.2 percent are asymptomatic, 1 percent are severe and 0.7 percent are critical.
There are simple ways to weather the lockdown. At our company, the Personal Finance Advisers, we call them SOS. Just like in the saying, “May you live in interesting times,” SOS to us bears another meaning, that of sources of savings.
Income will be limited at best during the lockdown. But we are not helpless as there are sources of savings that the lockdown brings. If you work from home, you save on things like transportation and eating out. You even save on some wear and tear on your body because you need not wake up so early to beat the rush hour going to work and you can sleep early as you avoid the rush hour in commuting back home.
You need to find these sources of savings. More than that, you need to protect these savings.
They say that wearing gloves makes people overconfident against COVID-19 and leads them to lowering their guard. The same is true when we know that we have savings to fall on in times of trouble.
The best way to protect your savings is to follow the “what you see is what you get” or WYSIWYG spending tactic. Your brain instinctively spends only what it sees. Seeing a smaller amount will make you more circumspect when it comes to spending. This is crucial because a dangerous consequence of the lockdown is what we call the “last meal” syndrome where we behave as if there is no tomorrow and spend on things that we do not normally spend.
The complement to WYSIWYG to spend is “what you get” or WYG to save and invest.
Estimate the amount of savings you can generate while under lockdown and put them away in an account with which withdrawal is not as convenient as online accounts. You can also channel your savings in a short-term placements or invest them in retail investment outlets such pooled funds. If you limit the deployment of your savings to short-term placements, you will effectively increase your emergency funds. When it comes to placements and investments, choose those that charge heavy pretermination or withdrawal fees to discourage you from dipping into them.
In the form of a blessing, may you truly live in these interesting times. Stay safe and healthy. INQ
Efren Ll. Cruz is a registered financial planner of RFP Philippines, seasoned investment adviser, bestselling author of personal finance books in the Philippines. Join our Yaman Coach Free Webinar series. For details, email yaman@personalfinance.ph. To learn more about personal financial planning, attend the 85th RFP Program this September 2020. To inquire, e-mail info@rfp.ph or text at 0917-9689774.