Personal Finance 101 for Pinoy Freelancers

Feb 12, 13 • In Getting Paid

This is a guest post by Benedict Baluyut, a PRC-licensed real estate broker, registered medical technologist, and a personal finance blogger. Check out this website at http://www.pinoymoneyvantage.net

“Cast all your anxiety on Him, because He cares for you” – 1 Peter 5:7

In recent years, freelancing has become a trend for many Filipinos who are seeking extra work to augment their income.

But though freelancers or independent contractors have flexible time and can enjoy their assignments or work than in regular employment, they have disadvantages too, from uncertainty of work to income, company benefits, paid holidays and even bonuses.

Are you prepared? Are your experiencing mishaps arising from unforeseen circumstances and that require utmost urgency?

Here are ten ideas that you can use in preparing yourself for the best or worst in life.

Make goals and set time frames – There is nothing wrong in dreaming, but planning your goals requires a realistic approach, such as what you will do in the next 365 days and beyond. Short, midterm and long-term goals should have deadlines too. After jotting it down, your goals must have deadlines and are posted in a conspicuous place where you can see it daily.
Apply the 10-20-70 budgeting – This is a budgeting system to help you allocate your income. 10% goes to savings, 20% goes to your personal spending, and the 70% is used for daily living expenses (e.g. payment of credit card, utility bills etc). You can modify this if you want to exercise total financial control of cash flow.
Learn to invest – you can convert your savings into a stream of income by investing your hard-earned cash. There are mutual funds, unit investment trust funds, and bonds. These streams of income are used for buying your home, car, initial startup capital for business, vacations abroad, your child’s college trust fund, and even for retirement. There are free seminars and other information regarding these financial products on the internet. However, just take precaution when venturing into it by doing research.
Change your views and perception of money – There is nothing wrong in becoming rich; it is the notion or idea that money is evil. The truth about wealth transfer, managing finances, investment, debt, gift giving, and others financial aspects are always spoken of in the Bible 250 times. One such example is taken from 1 Timothy 6:10: “Money is NOT the root of all evil but THE LOVE OF MONEY IS THE ROOT OF ALL EVIL.” In short, change your mindset on money.
Know your S.A.L.N. – What is S.A.L.N.? The acronym stands for S – Statement, A – Assets, L – Liabilities and N – Net Worth. You may not be a politician or public figure, but you can list down your S.A.L.N. to determine your financial fitness. Start by writing down your Assets and Liabilities on a piece of paper. Write the corresponding values of the assets and liabilities you have. See an example of SALN below.

SALN of Benedict Baluyut

Build a contingency fund – in times of real emergencies where you’re in need of cash, you need funds that can be used immediately. This fund is not to be used for personal gratification. To abstain from using this, it should not be tied to an ATM card to deter you from accessing it.
Protect yourself and your family – health insurance and HMOs are very useful for emergencies wherein you and your family’s health are at stake. Let’s break it down:
- Getting covered with a social health insurance policy provided by our very own Philippine Health Insurance Corp. (PHILHEALTH) could be useful as it extends the illness coverage to other dreaded diseases. Philhealth contributions for self-employed or voluntary members are at P1,800 annually (as of 1st Jan 2013).
- Health Maintenance Organizations (HMOs) are a managed health care system in which subscribers pay a fixed monthly fee + co-payment when you see a doctor. HMOs can refer to one physician acting as a gatekeeper and can only refer to other specialist-physician within the HMO network.
- Preferred Provider Organizations (PPOs) are enrollment-based managed health care services that have agreements with an insurer or a third-party to provide medical care services at reduced rates.
Pay your debts – Lessening your debt requires commitment and discipline. Make it a point to pay above your minimum required payments, hide your credit cards to avoid impulse buying, and pay the amount on time to avoid penalties. A quote from the bible from Exodus 22:14 says that: “If a man borrows anything from his neighbor, and it is injured or dies while its owner is not with it, he shall make full restitution.”
Teach your kids money management – if you were never taught about personal finance as a child, it’s never too late to do so for your own. Let your kids adopt positive monetary habits. The basics of saving their allowances, water, and electricity are useful ideas you can teach your children. Other than that, you can also show basic entrepreneurship in order to get the entrepreneurial spirit running in them.
Consult a financial advisor or financial planner – Still troubled or puzzled with organizing with your personal finance strategy? You can ask a financial planner for help. A financial planner or advisor can give you expert advice on different aspects of financial planning and goal setting, recommendation of investment, and debt restructuring of your finances. They can help you build comprehensive and written financial plans with realistic approaches.

Remember that dreams have deadlines too. The desire to fulfill these dreams requires discipline, hard work, and commitment to achieving your financial goals.

Benedict Baluyut, is a personal finance advocate and blogger. He is involved in diverse industries as a PRC licensed real estate broker, Clinical Laboratory Scientist / Registered Medical Technologist, Registered Financial Planner and a recreational soccer / football enthusiast. Catch him at his blog: http://www.pinoymoneyvantage.net/

finance freelancers freelancing freelancing tips personal finance

About the Author: Guest Blogger

Guest bloggers are welcome to submit interesting and insightful posts in relation to freelancing and the Pinoy freelancing community. Visit http://thefreelancepinoy.com/write/ for the guidelines and steps on how to become a guest blogger on TFP.

8 Responses to Personal Finance 101 for Pinoy Freelancers

Zion says:

February 12, 2013 at 1:54 pm

I have personally started to find ways to manage my finances. I always hated myself for being such dufus when it comes to money management. The first thin in my list will always be to pay my debt offs.

Reply
Benedict says:

February 12, 2013 at 2:21 pm

Hello Zion,

You are correct and you are in the right track of paying your debts and utilities first. Then make do what you got with the rest. Just remember to budget and economize. Just keep on pushing on it. If you get lost on track, try to get back with it A.S.A.P. Managing personal finance truly requires Join us on our discipline, hard work, and commitment to achieving your financial goals.

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Claudine says:

February 12, 2013 at 8:45 pm

Great list! Though you could probably do a follow up for those not earning a regular income or just starting. Sometimes when you do freelancing, you don’t always get constant income especially when you’re starting.

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- Benedict says:
  
  February 12, 2013 at 10:40 pm
  
  Hi Claudine,
  I am intending to make a series of these topics relevant to personal finance from saving to investing. I’ll try to put updates on the mutual funds and Unit investment trust funds (UITF) segments. I have already written about mutual funds in 2010 in my blog. You can check it out anyway.
  
  Reply
- Matt says:
  
  February 12, 2013 at 10:51 pm
  
  Yeah, such as brainstorming lists of ideas for how to find new clients or customers without spending too much $ in the process, ie alternatives to advertising and putting more focus on referrals, local events or what you could call grass roots efforts. Call it personal finance 101 for freelancers, applied to sales and marketing activities.
  
  Reply
Benedict says:

February 14, 2013 at 6:47 am

Hi Matt,

That’s a nice idea. I am thinking about it right now. This is just the general list of having a personal finance ideas because a lot of our fellow Filipinos are not that financial savvy and have debts all around or still working beyond their retirement ages wherein they should be enjoying it.

Reply
JW says:

April 19, 2013 at 11:13 am

Hey ya’ll:

Freelancing is a new area / career / job for me and I am hooking up with specific sites such as with The Freelance Pinoy so to boost my Freelancing intel (knowledge). Hopefully, such as with this post, I can return some of what I have into the kitty.

Mr. Benedict Baluyut, you put forth some great ideas so to get one’s “finances” in order, yet I’d like to add a few ideas. Not to be-little what youv’e submitted, just to add to.

First to determine why is one getting into this arena?
For extra money? For a career / job? Because you love it and don’t care about the money?
Whatever / Why ever it is, the reason should be solidly determined and THEN the proper budget set-up concerning this freelancing decision.

Aside from being a hobby, this should be looked on as a business. And a business is NOT run as if it is a job / career. Initially, the business is a money eating creature that requires CASH, along with a major time management discipline that does not tolerate the ‘I’ll do it later’; especially in this rocket-fast economy of on-line commerce.

Any how, so-forth & so-on . . .

Here is how I think a budget pertaining with this freelancing could best (in my case is) be set-up.
1. 10% of the gross belongs to God -if you be in the reality of Jesus. If not, then eat, drink & be marry.
2. 5% of the gross goes into untouchable cash savings, period.
3. 35% of the net goes back into the business. This is key. Once you’ve got all the business tools (including books & audio material so to further your mental intel pertaining to your growth / worth), then begin that other business you’ve already looked into and written out a business plan for.
4. 50% of the net goes into “life-style”. NOT to vacation & NOT to increase your already set life-style. This should be so to free you from your present “job” &/or to pay off ALL debts, period. Once you are debt-free and then you are able to financially leave your “job” (able to leave with @ least 6-8 months of monthly cost-of-living cash on hand), go at it full time.
For me, mutual funds are a joke. To pay somebody else & to entrust them with my money (my life hours) just is not wise. And what is the rate of return? -less than 10%? Honestly, such an “investment” could be lost overnight without your knowing about it until days or weeks later. (I have seen people’s mutual fund portfolios loose 50% and said people panic with what to do!) Just take that “investment” money (the 35%) & build business with it. Your in control and you get to make the decissions. People will always need stuff and you just might hit the gold mine product or idea! Besides, do you really believe that all is gonna remain the same? This new world economy is about to get slammed into the negative (again) very soon. And needless to say that governments are growing more & more controlling and socially cannibalistic, demanding more of whatever it is that you own -Money being their first priority.
This internet is here to stay. This e-commerce is happening today and is the wave for the near future. Business foundations and some of the new business ideas have been &/or are being shaken Those who refuse to adapt will fall by the wayside & so will their stocks and therefore mutual funds.

So run for the cash money now, get 100% out of debt, then get all the hard assets for a comfertable life-style (i.e. land, house, food, clothing, car, etc.), and THEN splurge with the way (very very very) nice things on this planet, all the long keeping that laptop rocking with business & new business & new ideas.
Presently, I’m prioritizing my life-style so to swing a bigger bat along with the heavy hitters on-line. So till next time, be good.

JW

Reply
- JW says:
  
  April 26, 2013 at 8:13 am
  
  Hi Stef:
  
  Perhaps this book &/or website can help those out there educate themselves about money (& what to do with it !). This man, Mark Matson, has a strong history in the financial arena and is talked about negative-ly by a lot of “status quo” money people. And he is way successful, financially. Therefore, he must know something and I’d be wanting to look into & know it also. Basically, look for someone who is at where you want to be, learn their cookies / techniques and then do it as they did it &/or are doing it -study them.
  I mean, why are you WORKING for the money anywhay???
  
  So if you are looking for someone else to invest your money for you, check him out.
  https://www.matsonmoney.com/
  Mr. Matson is not a money manager, he is a money coach -a new arena. Cool.
  
  Bee good
  JW
  
  Book Description
  Publication Date: October 30, 2012
  Why don’t folks see that stockbrokers can’t predict the future? After all, people scoff at astrologers and tarot card readers, but if some guy in a suit says he is a market analyst, people can’t wait to hear his insider advice for what to do during a stock run or slump. Investment adviser Mark Matson calls these so-called experts what they are: bullies. They are bullies because they line their own pockets by pushing mom-and-pop investors into taking risks they don’t fully understand. His plainspoken new financial guide will show you how to outwit, outsmart, and out-invest Wall Street bullies. The wisdom contained in these pages will give you peace of mind about investing your hard-earned dollars. Instead of special tricks or hot tips, Matson teaches how to seek wealth responsibly by utilizing the free market and ignoring the three big investment lies propagated by Wall Street. Main Street Money: How to Outwit, Outsmart, and Out-invest Wall Street’s Biggest Bullies is a book that believes every individual can become a portfolio master who can rise up and take control over his or her own financial future. To do so, novice investors will need to learn every trick and trap in their path. Matson knows these follies all too well. For the first years of his career, he worked in the belly of the beast on Wall Street, recruiting clients to invest in mutual funds whose managers falsely promised they could outperform the market. “Doing client reviews with investors and trying to explain why all of the gurus from the biggest mutual fund companies like Vanguard, Fidelity, American Funds, and Templeton were losing to the market was gut-wrenching,” Matson writes. “I was failing my clients. I couldn’t eat or sleep, the stress was mounting. If I couldn’t pick the best managers in advance, what good was I?” After reading this book, even novice investors can master the critical ability to allocate their financial resources. You will understand how capitalism powers global markets and how this knowledge can fuel investment decisions. You will learn how to maintain the discipline necessary for seeking long-term investment success. Mark’s investment philosophy is broken down into easy-to-follow steps that introduce the language of the investment industry. The book spells out why gambling with your financial future, though promoted by many financial industry insiders, is a fool’s errand. You will learn how to identify personal risk tolerance limits and build a financial investment framework. You will come away with an understanding of how to design a portfolio that maximizes potential returns at any level of investment risk. Unlike many other investment guides, this is not a book for speculators who see money as a drug to be gambled with in order to create surges of adrenaline or ego. It’s a fundamental course in learning how to become the owner of your own financial future.
  http://www.amazon.com/Main-Street-Money-Out-invest-Wallstreets/dp/0985362006/ref=sr_1_7?s=books&ie=UTF8&qid=1352734384&sr=1-7
  
  Reply