Budget As A Priority

If you have ten thousand, would you spend twenty thousand? Of course not! But what if the monthly bills exceed that ten thousand?

According to a new research done by Friends Provident, consumers in the UK placed budgeting as their topmost financial priority. But I don’t think that is something new. In heydays, budgeting is often left to the accountants and number-crunchers. If the inflows exceed the outflows, there is little difficulty in budgeting. But in times when there is a global credit crunch, like what is happening in the world economy today, tightening of the financial belt is expected.

I’m not going to be harsh in my example. Let’s say that after deducting all of the recurring monthly expenses and the mortgages installments, you are still short by five hundred bucks. What would you do?

First, you need to find ways to increase your income legally, like working in two jobs or some business endeavors. If one is employed, there is a certain ceiling to the earnings, unlike when one is into business whose earning potential is limitless.

Second, is to streamline your expenses. If the mortgages consume half of your income, you need to seek advice on restructuring some of them. Cut on those unnecessary expenses that satisfy only your vices. In other words, save up to the last cent.

But if you have excess funds, don’t throw them away. Cancel out high interest debts. Invest your money wisely and make it work for you. Budgeting is an excellent tool to manage your finances better.

Stronger Peso and the Need for More Dollars

From P56 three years ago, it’s now down to P42.85 a dollar. Good news or bad news?

Is there really a strengthening of the peso? Economists say that the $14.6B OFW remittances in 2006 (and growing more in 2007) buoyed the value of the peso. And they say it’s good for the economy. Thanks to our New Heroes! Along with their families’ improved conditions, needs also increase. With this, they are more likely to pour in more dollars.

But what about inflation and the rising prices of fuel? What about our own export industry?

Imagine if it were at P56 to a dollar rate. Juan’s $500 remittance is equivalent to P28,000. His wife in the Philippines spends it for Junior’s and his siblings’ tuition, food, house maintenance, etc… Then the peso rose to P42.85. To be able to cover the same expenses, Juan needs to remit $653.54 or an increase of 31%. But it’s actually not enough. We all know of the rising prices, inflation, and all the other problems the government tried to downplay.

Now for the exporter, he earns lesser compared to what he earns before. The prices of these export goods are controlled by the market, hence, the exporter doesn’t really have a say on the price. With the increasing costs, margins become thinner and may even be totally eliminated forcing some to close shop.

But what did the government do? Are there any safety nets for who are badly affected by this rise of our currency? Perhaps now, our best exports are our people. Call it brain-drain or whatever. It seems that nobody cares anymore. We have plenty of RNs yet hospitals lack nurses. We have plenty of CPAs yet there seems to be a shortage.

Who among my PwC buddies remained here? Sadly, only a few of us are left here. Almost all of my wife’s classmates in nursing already left the country and found greener pasture abroad. Who’s gonna prevent us from seeking employment outside the country? The government even encourages it. And, yeah, we need more dollars to survive in this country.