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A Guide To Making Smart Life Choices For Your FamilyThese are the things you need to do to make a difference in your family's life.by Rose Fres Fausto .CREATED WITH PHILAM LIFE
The Filipino mother is the Ilaw ng Tahanan and our being a matriarchal society adds to the power that the nanay actually wields in the Pinoy family. There's a joke that goes, "The father is the head of the family, but the mother is the neck. When the neck turns, the head can't help but follow."
Kidding aside, the Filipino mother really bears a big part of the responsibility of making the right life choices for the family.
In a typical Pinoy set-up the mother takes care of budgeting household expenses. These days we see more and more mothers bring in half (sometimes more) of the family income. So the power to decide even on financial matters is equally distributed.
It's important that a mother knows how to make important life choices. Being able to make sound decisions can help lead the family to a more secure future. As a mom, here are some simple ways to make smart life choices.
1. Know your values and set your goals first
Before any important life choices are made, it is best to be clear about your family's values and goals. Do you value education? What kind of lifestyle do you want to live with your family now? Do you have other obligations outside of your nuclear family? What kind of lifestyle do you want to have when you retire?
Once the above are clear, then the spouses can forge ahead with their goal setting with timetable. Involve the children on an age-appropriate basis. The lack of clear objectives and understanding of each other's values are usually the culprit why families don’t thrive, why the necessary choices on how they spend their resources such as money, time and talent are not made. They are not necessarily taken for granted, families just don’t know where to start.
2. Assess your current situation
In order for your family to reach your goals and dreams, you should know where your starting point is. Do you have debts? How much is your cash flow? Are you supporting other people outside of your nuclear family? Is this acceptable to both spouses? Is there an expiry to this support? What are your current spending (and earning) habits? Are they compatible with those of your spouse? If you already have children, how are their habits? Do they match yours?
Only after assessing your current condition can you plot how to move from point A to B.
3. Consider it a family journey
It's best to involve the entire family in your financial journey. Talk about money in a healthy way. Involve all the members in your saving and investing. Be comfortable with money and the way to do so is to know how money works.
4. Know the Basic Laws of Money
Let's face it, a lot of people are intimidated with finance jargon, making it challenging for parents to teach their children about money. This inspired me to rewrite a classic by George Clason. In my book The Retelling of The Richest Man in Babylon, children are given a head start on the laws of money, while adults are reminded how simple the laws are. Here they are:
- Pay yourself first.
- Get only into a business that you understand. Seek advice only from competent people.
- Make your gold work for you. Buy luxury only if you can afford 10 pieces of it.
5. Understand the Basic Funds Needed
In order to help make your family's financial journey safe and enjoyable, here are some funds that you should have.
Working Capital or your Monthly Budget – This amount should be free and readily available for your family's regular needs. This is usually in savings or current accounts and petty cash.
Emergency Fund – At least 6 months worth of expenses should be tucked away in fixed income earning instruments that can be terminated on short notice, in case of emergency. Note that this need not be in your ATM account. In fact, it shouldn’t be in order to avoid "declaring unnecessary emergencies!" (Remember: A sale is not an emergency!) For business owners, 12 months EF is more conservative.
Protection Funds – This is important, especially if you have dependents. Protect the income earning capacity of the breadwinner and get the least cost insurance to protect you from untoward incident. Ask your insurance company to help you compute how much you need to cover the needs of your dependents until such time that they can be on their own. Other protection funds such as home, car, health, etc. should be assessed on a case-to-case basis.
Dream Funds – Given the dreams you have established above, what instruments best suit them in terms of timetable, target amounts of dreams, and your risk appetite. There are many funds to choose from which are invested in equities and bonds.
Retirement Funds – Every parent should plan for a happy retirement and not pass on the burden to their children. Start as early as you can and hold long-term. In choosing your funds, bear in mind that stocks or equities offer the highest returns among all asset classes in the long run.
For most Filipino parents, the last one is what they overlook because they fail to see the urgency of something that seems to be far into the future. Because of their over-giving nature, they fail to leave some for themselves, always giving priority to their children. To this I say, "Cut the financial umbilical cord of your children once they graduate from college!" This will do good for both parents and children.
Learn more about smart life choices at Philam Life. Philam Life offers Life Smart, which gives you guaranteed life insurance coverage with accident and terminal illness benefits. At the end of your plan, you can get all your payments back, with a possible cash bonus. Learn more about Life Smart here.
Indeed, the quality of our family life is a product of the life choices that we made and continue to make. Cheers for making smart choices!