Utang na naman

It is already part of the Filipino culture to borrow money with friends, relatives, family members, and even neighbors if somebody needs it. What’s worse sometimes these people who borrowed money forget that they owe somebody. Bakit nga ba kailangan pang mangutang?

Majority of the Filipinos are not familiar with emergency fund, most of us do not really save for emergency and grow this money for the future. Most of us trodden our saying, “Aanhin pa ang damo kung patay na ang kabayo?” (What good is the grass if the horse is already dead?) so we usually spend all that what we have.

Read also: Emergency Fund

There is nothing wrong if we really need to borrow money but only borrow what you can pay and pay in due time. Here are some tips that might help you to stop borrowing:

  1. Discipline yourself to live within your means. If you cannot live within it, increase your source of income and lessen your unnecessary expenses.
  2. Prepare your emergency fund for any urgent expenses~and that should be at least 6 times worth of your monthly expenses for singles and 12 times worth of monthly expenses for those who are married.
  3. After you have save for your emergency fund, invest in diversified asset classes such as: mutual funds, stocks, bonds, properties etc.
  4. Educate yourself continuously and learn more how you could handle your finances more responsibly.
  5. The “lack of money” is the root of all evil. (from the Mark Twain’s Notebook)

Read also: Financial Fitness Tips

Image credit: hercampus.com


Emergency Fund

Emergency Fund is an account that is used to set aside funds to be used in an emergency, such as the loss of a job, an illness or a major expense. The purpose of the fund is to improve financial security by creating a safety net of funds that can be used to meet emergency expenses as well as reduce the need to use high interest debt, such as credit cards, as a last resort. —Wikipedia

christianpf.com wrote:

  • With the unemployment rate high, job loss can happen to you! Most likely it won’t in the short term (the odds are in your favor), but if it does, you don’t want to cut back on your essential expenses.
  • Medical expenses are one of the most commonly cited reasons for bankruptcy or other financial troubles. If you break a leg, you’re going to want to have health insurance. But health insurance only goes so far! That’s why it’s so crucial to ensure that you have an emergency fund in place to soak up those costs.
  • Anything can happen. There are so many more things that can happen other than medical expenses that can drain your bank account. Don’t get caught off guard!
  • The simple idea that you have thousands of money in the bank will help you relax, have less stress, and grant you the ability to focus on what you really need to: your income.

Most financial planners suggest that an emergency fund contain enough money to cover at least three to six months of living expenses but you can also save 12 months worth of expenses or more because it is totally up to you. Note that financial institutions do not carry accounts labeled as emergency funds; it is up to the individual to set up this type of account.

Most emergency funds are highly liquid, such as checking or savings accounts. This allows quick access to funds, which is vital in emergency situations.

Read also: My Journey To Financial Freedom

How to build an Emergency Fund? Watch this:

Image credits: suzeorman.com, biblemoneymatters.com