Before the big financial shakedown, money issues dwell on the shadows of sensitive and taboo topics. There was no urgency to put one’s financial house in order, until Filipinos realized that anyone could fall victim to bad money management and bankruptcy.

Financial advice and useful tips abound, together with a troop of dedicated experts who carries the mission of financial freedom to heart. Given our own unique situations, a financial advisor can help make sense of the jargon and lay out the best strategy to make our money work for us.

If you are looking for a financial life partner, here are five traits you should look for:

1. References
How did you know him? What are his credentials? You wouldn’t entrust your wallet to a stranger, much so your wealth portfolio. A good referral, either from friends or relatives, is helpful. However, familiarity should not be your only basis in choosing a financial advisor.

2. History
A financial advisor is affiliated with a financial service company. Looking beyond the person, know more about the background of his association: long-term growth, historical performance, even brushes with authority. His connection is his family, and you sure want to know his heritage.

3. Values
The values of a financial advisor go two ways: personal upbringing and his corporate culture. No matter how dignified and upright he is, if he chooses to be identified with a dishonest and incompetent crowd then it’s time to dump him and find a new partner.

4. Knowledge
After the background check, you should buckle down to check on how proficient and familiar he is with his stuff. Ask questions, let him explain theories in simple terms, and take in as much learning as you can. A good financial advisor is also a sage who can inspire a lifestyle change.

5. Trust
Trust is a tricky thing. It is chemistry: if you don’t have it, then you ain’t got it. And it does not stop there. Trust should be sustained, and earned at every instance. Your financial advisor should be able to trust your sincerity to take care of your money, in the same way that you are confident of his abilities and intentions.

I. Savings » A Sustainable Bank Accounts

Proper partition of income and allowances is key to a bank account that actually grows, not merely dwindle. Here’s a simple equation:

Income – Savings = Expenditure

Or if you want to be snide about it:

Reality – Delusion x Sacrifices = Money for a Rainy day

Cutting corners is a good step towards liquidity. Substitute brand name products (clothes, food, even shoes) for cheaper alternatives. Living within one’s means should not equate to a vow of poverty. It’s more like allocating your resources properly, instead of wasting too much on unnecessary stuff.

II. Investments » Make Money Work For You

A crusade to the stock market may be cheaper nowadays, but it is not for the faint of heart. To know your investment appetite, use this formula:

Disposable Cash / Risks = Investment Appetite (Low, Average, High)

Taking in your Investment Appetite, identify your kind of mutual fund:

Investment Appetite + Purpose = Your Mutual Fund

Mutual funds are perfect for financially naïve investors, which accounts for everyone but those from the financial service sector. You not only let your money work for you, but you get the wisdom of an investment manager for a fraction of the cost.

III. Insurance » Living Protection

Long has it been established that insurance is for the living, not for the dead. Before your own financial grave starts getting deeper, keep this in mind:

Beneficiaries x Dreams = Insurance Policy

Of course, if you’re feeling a wee bit selfish:

Personal Worth / Beneficiaries = Insurance Policy

Insurance policies have already adapted to the changing times, where consumers need not wait a lifetime to enjoy its benefits. Whether you want long-term or short-term, traditional or laced with investments, you can easily find the perfect fit for your dreams.

IV. Health Plan » Best Medicine

An apple a day may keep the doctor away, and a reliable medical plan can stave off monetary destitution. Prove that your health is wealth by:

Lifestyle x History (Dependents) = Health Plan

But if a scare tactic is what drives your determination:

Vices + Virtues / Responsibilities = Health Plan

Hospital bills can easily eat up your rainy day fund. Diagnostic exams can also put a big dent to your budget. And we’re still not talking about emergency procedures due to accidents. Save your loved ones from these woes by availing of a health plan that suits your lifestyle.

V. Retirement » All of the Above

Your nest egg is that comfortable place in the not-so-far future, where the knees are weak but the pockets are still deep. No matter what equation you choose to adapt, you can finally achieve:

Savings + Investment + Insurance / Health Plan = Security

Oh for goodness sake’s, here’s a more truthful formulation:

Life – Savings – Investment – Insurance – Health Plan = Insecure You

When we want to determine how physically healthy we are, we undergo blood tests, X-ray, ECG and other similar tests. Ideally, these tests are done twice a year so that any abnormal findings can be immediately treated and cured. And so isn’t it just right that we also do tests to check how financially healthy we are?

Companies use financial ratios to evaluate their financial health. We can also employ the same thing to our personal finances as well. Ratio analysis can help us analyze the success, failure and progress of our money management.

1.)    Current ratio

This ratio answers the question, “Do I have enough current (liquid) assets to meet my current debts?” The ideal ratio is 2 to 1, meaning you have P2.00 of cash for every P1.00 of debt. It can’t go lower than 1 to 1 otherwise, you have to result to borrowing to finance the debts or sell other assets to raise the cash. The higher the number, the better it is. It is calculated by dividing the liquid assets such as cash and receivables by the short-term payables such as credit card debts and personal loans.

How I fared: My current ratio is….(drum roll) 2.9! I got this by dividing my liquid assets (cash and receivables) by my unpaid credit card dues (happy days of Christmas are over). Another way to look at it, I can pay off my credit card dues without any struggle (I still do from time to time).

If you’re ratio is low, you can raise this by:

• Acquiring loans with a longer maturity or due date
• Selling some assets or possessions

2.) Liquidity ratio

This ratio measures your current assets against your monthly expenses. It answers the question, “How long can my savings sustain me in case I don’t earn a single peso for some time.” This ratio often measures our emergency fund. The ideal number for this ratio is above six. It means your savings or liquid assets can sustain you for half a year.

How I fared: 11.43. My savings can actually last me for 11 and a half months given my current expenses. Had I not purchased the Camaya Coast property, my liquidity ratio can reach as high as 17 months.

If your ratio is too low, you can raise this by:

• cutting down expenses
• increasing savings

3.) Savings ratio

This ratio measures how good you are in saving. Savings ratio is calculated by dividing your savings for the year against your income. The ideal savings ratio is 10 to 20% but this may vary depending on your circumstances. Savings means liquid assets.

How I fared: Only 18%. Although within the acceptable range, I find this quite low given that I’m single. Heck I’m not even in a relationship, which I believe is more costly than being married.

Increasing this ratio is self-explanatory.

4.) Solvency ratio

This ratio measures your total assets against your total liabilities/debts. The answer should be at least one. Otherwise, you’re considered “bankrupt”. The difference between the solvency ratio and the current ratio is that the former includes your long-term debts or loans, which include home mortgages, car loans and other loans maturing more than one year.

How I fared: 36.60. My assets are more than enough to pay for my loans! Hurray!

To increase your solvency ratio:

• Invest wisely to make your assets grow even if you cannot increase your savings ratio. I did this for some time and my assets grew passively.
• Find ways to increase your income so you can pay off more of your debts

Knowing our financial ratios can help us determine how we are doing with our personal finances. It’s not enough we know how much we are worth; we need to understand how our finances can affect us. When they’re low, we need to improve it. If they’re within the acceptable range, we need to maintain it. We are our own CFOs and we should run it like how any effective CFOs would—for profit and growth.

Is it just me or were the recent holidays too overrated?

I spent the last four weekends of December holed up in the cave that is my room. With a ration of three five meals a day, lovingly served by Manang, a bathroom I can drag myself into in five seconds, comforters, stacks of DVDs acquired from a recent Astrovision sale and wifi, I came to ignore the world, or Manila, for that matter, while the city spins itself into a web of frenzy over Christmas shopping and parties.

During these weekends, I was well aware that it couldn’t be any worse if I postpone my mandatory gift shopping, lest I endure my godkids’ disgruntled pouts and disown-ment, if that was possible.

And so, in between a (mandatory) night out and Christmas party presentation practice, I sneaked my way out into Greenbelt and willed myself to get everything I needed to give. I listed every single gift I had to buy, made a flowchart of the stores where I can buy these so I can save time and effort (I was in 4 inches platform heels, too) and set out on the great Christmas shopping journey.

Oh how I loved the fact that I got all my gifts (mostly books and stationery) in one easy trip to Powerbooks. I handed the SA my list and off he went to get it. I tinkered with the shelf that had little thingamajigs and bought XX of them for random people I was gifting them to. After 10 minutes, the cashier was punching my purchases and I was counting down to ten until I could dash of and head to my next destinations.

You could guess that my holiday shopping went well, and really, it did. I was able to buy all the things I needed to get and I did not go over budget, too.

The thing is, the one that I did not see coming was my trip back to the office parking. On my way, I passed by Converse and immediately, my thoughts of getting new classic Chucks (how oxymoronic is that?) immediately rushed in and the next thing I know was that I was at the counter, giddy over my white slim fit canvass shoes.

From Glorietta, I walked into the sea of people that was Landmark (never a fan of the crowd in there) and yet managed to fall in line and acquire a set of bathroom fixtures and a shirt with a tiger on it. How I did that in a matter of 10 minutes still amazes me to this day.

As if that wasn’t enough, I wandered back into Greenbelt and just when I thought I was done and saw all that there was to see, I saw the familiar pink #FF0066-ish lights of La Senza and a phrase single word that might as well be the death of me: SALE. Like a rat being called by the Pied Piper of Hamelin, I walked into the store and for the third time that night: I was soon at the counter being handed a huge white bag full of things in animal prints.

Rude Awakening: Never starve yourself from the inalienable right of shopping. Yes, this was supposed to be a post related to financial planning and therefore it should sound more noble but the danger in a shopping diet is quite there. I have kept myself away from the clink of the cash registers, from the madness of my kin weekend shoppers, from the thrill of touching and owning something you’ve lost sleep over (the Chucks, in my case). And I paid for it, quite unnecessarily.

One useful trick in preventing going over budget is spreading expenses over periods of time. As I have learned in the process of writing this article, in times of mandatory shopping, ergo, Christmas shopping, it’s notable to carefully plot gifts and their prices to avoid over spending. That said, conscientious budgeting is key in ensuring we do not go bonkers at the sight of a Sale! sign. Through this rather painful exercise, I realized, that even if I’ve dodged the shopping bullet for many a consecutive weekend, it’s also good to not completely deprive oneself of little things, shopping or otherwise. It may be the case of dieting for two months and going on a binge diet at the sight of a humongous cake from Conti’s. As with anything in life, moderation is key.

There wasn’t any compelling reason for me to stay away from Christmas shopping other than fear of crowds, unbearable heaviness of bad traffic and scarcity of parking space. Would you believe I have not stepped into a bazaar last Christmas season? Yet, the repercussions were massive dents on my credit card, payable but totally, utterly unnecessary had I taken my shopping pills religiously. Just like good and bad bacteria, we sometimes need a dose of bad to immune the system. I seem to have forgotten to drink my Yakult. In realistic life city living, I realized I needed to constantly reward myself howevweer small, so that I don’t end up getting ballooned up with material desires and blowing off in tremendous, expensive fits.

As a new year’s resolution, I vow not stay away from shopping. I will immune myself with the bad so that I wouldn’t be inconvenienced with such unnecessary inconveniences.

Starting right this weekend.

Early on, she determined that investment was the way to go. After doing her research, she discovered that Mutual Funds satisfied her needs while also complementing her level of financial intelligence.

“I was attracted to the fact that it was a blend of stocks and bonds and did not require much investment as regards time and effort. The low starting investment also impressed me which for me meant that Sun Life really wanted to extend mutual funds to everyone and was sincere in its effort to educate Filipinos on personal finance and investing,” Jill shared.

Now, the beauty blogger  has the finesse of personal finance down pat. In fact, she availed of the Bond Fund because of her financial adviser’s recommendation. Aside from its upward trend, she agreed to put her money in this particular pool to gain access to Sun Life’s seven family of seven mutual funds.

“At present, my priority is to get my feet wet with investing, to actually take a concrete step and make a commitment to back up my new found interest in personal finance,” she claimed.

My father is Superman to me. He is strong, generous, and witty. Then one night, he just slipped. Like gravity finally sucked him in. It was the first time I saw him in a hospital bed. The years finally caught up with Superman.

As kids, we know the flight plan of our future: get a job, move out, maybe start a family. But we turn a blind eye to the imminent stopovers. And more often than not, it includes taking care of Superman whose suit is fading.

What to do, you ask? Before reality bites you, kid, educate yourself about your family’s financial stature. Be in the know. Meddle. Better yet, turn everything into joint accounts – because it pays to be armed and prepared when super heroes hit the ground.

Pa, where is your money?

Come on, we are no longer money-starved college kids who pad our tuition fees every semester. Sit down with your parents, put on a serious face, and share with each other your money chests. Passbook accounts, ATMs, nuclear-powered piggy banks – divulge everything.

Ma, how is your insurance?

Woe is you if your parents are not even PhilHealth members. Let’s face it: treatment is so expensive it may well be a luxury. So get an insurance policy if you still don’t have one. And beef up your health coverage. The many years your parents waited for you to come home late at night led to brittle bones and tired heart. It’s payback time.

Dad, what are our properties?

Is this house we are living in already ours, or will tito and tita ask for their share? Are you in debt? Is that earring really worth something, or will the pawnshop laugh at my face? Are you starting to get annoyed? Good. Less drama when the real emergency comes screeching in.

Funeral plans, anyone?

It’s morbid, not to mention a thankless job. Still, someone’s got to do it. Blame it on the cycle of life. Delay it for a few days. But arrange these things beforehand. Because the hardest part of being an adult is to control the things you can, while letting go of the things you can’t.

By now you may have already heard of Sun Life Financial’s advocacy called It’s Time!, which aims to inform and empower Filipinos so we can achieve financial freedom. Even with the help of our celebrity advocates, Pia Magalona, Bam Aquino, James and Baby James Yap and Piolo Pascual, there are still many Filipinos who are either unaware of their financial needs, uninformed of their options or unprepared to plan for their future.



We are counting on you for help!

Being true advocates of financial preparedness, we are encouraging you to spread the word about It’s Time! by referring 5 of your friends or family members who remain uninsured or unprepared so Sun Life Financial can also be of service to them.

As a token of our gratitude, you get the chance to win in our raffle draws and even receive instant prizes of gift certificates! Get in touch with your Sun Life Financial Advisor for more details.

We truly hope you will join us in this cause. It’s Time!

Still, there is an often neglected aspect of our lives for which we also need advice and guidance—our finances. For this, a different kind of professional is needed—a financial advisor. He is a kind of specialist who is as important as other professionals whom we go to for advice. But rather than using stethoscopes, or X-rays, these financial specialists would look at a person’s financial history, financial objectives and capabilities in order to help him secure his financial future. After all, in the same way that a person’s failure to seek medical attention from a doctor may put one’s physical health at risk, a person’s failure to do a proper financial review and consultation may also put one’s financial health at risk.

Unfortunately, only a minority of Filipinos seek out financial advice. This may be the reason why many Filipinos are financially unprepared for their future. Statistics show that 90 percent of Filipinos have little or nothing to leave their families when they pass away. And, out of 100 Filipino children who enter elementary school, only 10 eventually graduate from college. Furthermore, out of 100 Filipinos aged 65, 45 are dependent on their family for support, 30 are dependent on charity, 22 cannot retire and only two are financially independent.

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These statistics may all be the result of the Filipinos’ lack of awareness for the need for proper financial counseling and lack of urgency when it comes to financial preparation.

As a response to these alarming statistics, Sun Life Financial Philippines has taken efforts to improve the financial preparedness of Filipinos through the It’s Time! campaign.

It’s Time! is Sun Life’s financial literacy advocacy that aims to inform Filipinos about their financial needs, empower them with knowledge about the proper financial solutions and encourage them to act with more urgency in securing their financial future. And to serve as ambassadors of this financial advocacy, Sun Life is armed with 2,600 financial advisors who are well trained and equipped to provide proper advice and guidance to Filipinos to help them achieve financial security.

Having been around for 115 years in the country, Sun Life Financial Philippines has earned the trust of generations of clients who have all taken steps to achieve financial freedom and security. Sun Life understands the strong need for Filipinos to have a financially secured future, which is why it has pursued its campaign in order to properly educate people about financial planning.

This campaign promotes how valuable financial advisors are helping people protect their income, manage their wealth and accumulate funds for their future needs.

“We believe that the future and life’s uncertainties need to be prepared for and managed. We all have dreams and aspirations in life and we need to protect these dreams for ourselves and our loved ones by proper financial preparation. And people need not worry because they can do this through the help of our Sun Life advisors” said Alex Narciso, chief agency distribution officer of Sun Life Financial Philippines.

Some people think that insurance is an added expense and it is an intimidating concept. “We want people to know that insurance is not complicated and must not be treated as an expense but as a guarantee for the future. We have professional and well-trained advisors, some of whom are certified by highly reputable management schools in the country who would be more than happy to provide financial counseling,” Narciso asserted.

Because most people think insurance and investments have so many unfamiliar words and figures, Sun Life has also taken steps to simplify its language. From their brochures and print ads, people can now have a clearer grasp of the company’s products and services, and more can now easily choose the type of insurance and investment products that are perfect for their needs and financial capabilities.

For generations now, Sun Life Philippines has steadfastly grown despite the economic crises that have hit many businesses through the years. It has stood by the Philippines through several world wars, people powers, economic meltdowns and political crises and has never faltered in its service to the Filipino people.

More importantly, it has helped bring a brighter future for over a million Filipinos, who have been enjoying Sun Life’s insurance services for themselves and their families. With its 2,600 advisors acting as ambassadors of financial freedom, Sun Life continues its mission of encouraging everyone to understand the value of financial planning.

This article was originally published in the Features – Supplement Section of the Philippine Star on October 17, 2010.

Born in July 2009, the advocacy was created in response to these alarming statistics:

• 90% of Filipinos have little or nothing to leave their families when they pass away.
• Out of 100 Filipinos aged 65, 45 are dependent on their relatives, 30 are dependent on charity, 22 cannot stop working and only 2 are financially independent.
• Out of 100 Filipino children who enter elementary, only 10% eventually graduate from college.

We believe we can change these odds. We can inspire the whole nation to stand up and make a difference in the way we handle our finances.

Join our advocates Piolo Pascual, Bam Aquino, Pia Magalona and James Yap, as we start planning for our financial future today.

After all, life holds no guarantees and it is always best to prepare for the possibilities that life offers along the way.

To support this advocacy, call 849-9888 and
1.    Set an appointment with a Sun Life Financial Advisor and start planning for your financial future today.

OR

2.    Refer other people you know who need to act on their financial future today.

Visit www.itstime.com.ph to know more about the inspiring journeys of Piolo, Pia, Bam and James towards financial security.

Be an advocate of financial freedom! It’s Time!

Be a fan of It’s Time on Facebook: facebook.com/itstimeph