The family budget has changed significantly in the last decade or so. Besides the fact that the prices of commodities have increased exponentially, our priorities have also affected the way we spend money. For example, the introduction of K to 12 in the Philippines two years ago has made a great impact on how we save up for education. Housing has also taken up a big chunk of the budget: more people are looking into getting homes that are situated near their workplace, or else their transportation spending may rise — an effect of our traffic condition.
If we are to spend our hard-earned money, these are the five things they should go to:
1. Adequate savings
It is intrinsic among Pinoys to be frugal about money, and saving it in the bank remains to be the top choice, even if bank interest rates only range from .10% and 1.25% per annum. The old Filipino saying "pag may isinuksok, may madudukot" holds true, and the money you save will be the money you'll use, hopefully not for emergencies, but to build a home, start a business, or travel in the future.
2. Income protection
No one knows for sure what the future holds, and should anything unfortunate happen to the family breadwinner, it could be devastating for the people he supports. If there is only one type of insurance you can afford, it should be life insurance. Christine Tan, a financial adviser at Insular Life, spoke at the recently-held Smart Parenting Convention to stress how important this is. "Far more important [than education] is the food on the table. Wala tayong pag-uusapang educational plan pag alam kong wala namang insurance yung breadwinner."
According to Tan, education takes up a big chunk of a family's budget—about 30%—especially now with two more years added to basic education with the K-12. And with the continued rise of tuition fees at about 10% per year, it's good to start an educational fund as early as possible, ideally while the child is young. Note that these days, it takes approximately the same amount of money to send kids to preschool as to college.
4. Health care coverage
Anyone who has gone for a medical checkup knows that it is not cheap to have tests done, and without medical insurance, money can quickly go down the drain. Setting aside money for medical emergencies is always a wise move.
5. Secured retirement
We almost never think of a retirement fund until we're near that age. But, as with anything, starting a fund that will become our primary source of income in our twilight years must be done while we're young and while we have the capacity to save.
Tan ended her talk by giving an important reminder: "If you save money today, it will save you in the future."