One of the many challenges of having a family is managing the finances properly while still being able to save for the future. To help you out, MoneyDoctors Inc. president Joe Ferreria discussed how you can save money, compromise on expenses with your partner, and what the grounds for retirement benefits are.
Q: Should I have my own money without my husband knowing about it?
Rather than hiding money from each other, both of you should agree on whether you will contribute to a common fund that will pay for all the expenses, or resort to an expense assignment.
If it’s a common fund, then the expense list should include personal allowance for each of you. You don’t have to discuss how you will spend or save your personal allowance. On the other hand, if it’s an expense assignment, whatever is left after paying your bills is really up to you to save or spend.
Hiding money is a bad idea because it is a breach of trust between partners and could damage the relationship. While these are general principles in family finance, there are exceptions. For instance, if your husband has a gambling problem or some other vice, you have a perfectly valid reason to hide money from him.
Q: I have virtually no savings because I live from paycheck to paycheck. How do I even start saving? Is there a certain percentage of my salary that I should set aside?
Saving money is not about the amount you set aside. It’s about establishing a habit. People come to me and tell me that it’s impossible to save. I ask them to save a measly 20 pesos a day. If that’s still not doable, I drop it down to 5 pesos a day. They soon realize that it’s not true that they cannot save money. There really is an amount you can set aside regularly if you put your mind to it.
You can start with this activity: Get a glass jar with a lid. Put the jar near the door, so every day, when you come home, the first thing you is put 20 pesos in the jar. Do this for a month and it becomes a habit. On the second month, increase your day-to-day activity of saving money. People convince themselves that they cannot save. You can break this negative mindset by trying this simple activity. Through this exercise you can convince yourself that it can be done. Pretty soon, the small 20 pesos daily saving will increase.
Just tell yourself, it’s all about the habit, not the amount. Fix the habit, and the rest will be easy.
Q: It’s my 10th year in the company, and I’m entitled to early retirement benefits. How is this computed? Is there a minimum amount when it comes to this?
The legal standard is one month for every year of service, payable at 60 or 65. I am not providing a precise amount because there is a set of formula for this. For simplicity’s sake, I put it down as a month per year.
However, companies do have a variety of benefit programs that give separation or early retirement benefits. You will have to ask your Human Resources Department about this.
There are vesting schedules to these separation benefits as well. The most common is 25% of your total benefits will be paid, if you complete 5 years of service; 50% if you stay 10 years; and you are fully vested for 100% benefits after 20 years of work.
As to minimums, it will really depend on the company you work for. Most will use a formula in computing what really is due.
This article was originally published in the May 2015 issue of Good Housekeeping Philippines magazine.