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A simple system to achieve Financial SecurityA Philippines example
by Sky SalanioFinancial Coach
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How many people retire with enough money to enjoy life and be financial secure?
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3% will retire rich
22% will continue to work
75% will retire poor and will depend on family members for support
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How much is the average monthly pension?
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Php 8,000 per month
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What can we do?
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We need to radically
change our beliefs
which will change our habits which will
change our destiny
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We need a system to help us
change, not willpower
The SYSTEM:
1. Increase our
income
&
2. Decrease our
expenses
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Increase in Value = Increase in Income
Increase in Income
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Skills = Education +Coaching + Time
Increase in Income
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Delete Debt (budgeting activity)
Decrease in Expenses
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Do these now:1. Sell TV (cut cable)2. Find new friends3. Cut non-essential expenses
Decrease in Expenses
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Meet Jose.
He is a 35 year old salesman earning Php 60,000 per month
He has a non-working spouse and 2 young children.
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Jose’s household Budget:Balance Sheet:
Assets: Php 0
Debt: Php 45k
Net worth: Php - 45k
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Meet Boss Peter.
He is Jose’s boss and company owner
He is always looking for ways to earn more via more sales, increased efficiency or decreasing unit costs.
Story for illustration purposes only
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However, he can’t find good employees
1. Increase Sales2. Efficiencies 3. Decrease unit costs
And hindi maarte =)
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Proactive employee meets helpful boss
The only way salary and bonus will increase is if company net revenues will increase
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From low value to growing value After a 3 month management course offered by TESDA which increased Jose’s skill, Jose is able to close more sales within 6 months. After which he was promoted to supervisor with a salary of Php 80,000
Jose is able to deliver more sales due to his greater skill
See a short video on Alberto’s story
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With an extra Php 15k Jose is able to pay down debt in 6 months and is debt free.
Only 1 out of 10 Filipinos are consumer debt free
Source:
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Jose’s household Budget after 6 months:Balance Sheet:
Assets: Php 45
Debt: Php 0k
Net worth: Php 45k
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With an extra Php 15k per month Jose is able to save 90k in 6 months which is 3 months worth of living expenses
This is called emergency fund
8 out 10 Filipinos do not have 3 months worth of living expenses saved
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After 6 more months Jose has Php 90k saved for investmentsJose’s Balance Sheet
Assets:
Emergency Fund: PHp 90k
Cash in bank: Php 90k
Total Assets Php 180k
Liabilities: Php 0
Net Worth: Php 180k
DO NOT SPEND MORE as your Salary Increases
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Milestones
1st half 2017 2nd half 2017
January 2017Joses starts Skills training
Net worth: - Php 45k
June 2017Jose increased salary
Net worth: - Php 45k
Oct 2017Jose does not increase spend for 3 months
and uses funds to pay debt
Net worth: Php 0
Dec 2017Jose continues to not spend
Net worth: Php 45k (half
of emergency fund)
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If Jose invests 90k and invests 15k per month 10 years at 8% compound interest;
At age 46 He will have Php 2.8M!
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Php 2.8M to “retire” with at 46
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Remember the system:1. Increase skills = increase salary2. Weekly budgeting and goal setting3. Drop TV, facebook, friends etc.4. Do not increase spending 5. Remind yourself : visit my website skysalanio.com
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Did you learn something today?
More resources at:skysalanio.com