Frugal Pinoy

This is the third and final part of the Frugal Pinoy series on “Stretching the Peso Against the High Cost of Living“. In this post, we’ll discuss how to augment income, as well as how to maximize savings.

If you want to review the first two parts of the series, here they are:

• Stretching the peso against the high cost of living (Part 1) - Food, household needs, and utilities.
• Stretching the peso against the high cost of living (Part 2) - Entertainment and transportation.

Income and Investments

Think outside your job. Your job doesn’t have to be your only source of income. Although my “job” is mostly being a freelance blogger, I’ve earned money performing other services such as graphic design, research, and being an art teacher’s assistant. Also, I sometimes sell some of my things that I no longer need - including junk. I’m also a member of several advertising and affiliate programs which allow me to earn some side income that requires very little maintenance. I’ve even earned money and equipment from joining online contests (examples of things I’ve won: an ergonomic keyboard and mouse set, money, a jacket, and Amazon gift certificates).

The key is to be creative and to think of your skills as business opportunities.

Consider earning in a better-performing currency. Our OFWs have discovered this ages ago - a dollar can go a little further in the Philippines than it does in the US. That’s why they work abroad and just send money to their families here. While the US dollar isn’t the most stellar currency, I find that it’s better for me to earn in dollars rather than pesos. Here’s why:

• I’m paid in the same amount an American of my experience and job description is paid. This is a big deal, because the payments tend to be more than what I would get if I accepted freelance work locally.
• When the peso weakens, such as P40 = $1 going down to P44 = $1, I’m getting more pesos with each dollar I earn. It doesn’t completely offset inflation, but it makes my economic woes hurt a little less.

If you can find a way to earn in Euros, good for you!

Savings

Start or bulk up emergency fund. I probably sound like a broken record, since I always bring up emergency funds. The thing is, if you don’t have one yet, you should start one now. It’s the financial cushion that will catch you in case of emergencies such as getting laid off at work, unexpected medical expenses, and when your car or house suddenly needs repair. Because of inflation, you’ll need this now more than ever. My personal goal is to have a year’s worth of living expenses, and I’m almost halfway there.

Automate savings. If you can automatically send money on a monthly basis to your savings account from your payroll account (ex. the account your employer sends your salary to), this will make saving money much easier.

Most banks now have online banking facilities, and what you can do is to set up an account separate from your payroll account (or main income account), then set up automatic transfers from your main account to your alternate account using online banking functions. You can also select the amount and intervals (say, P2500 every 15th).

BPI Direct has even come out with a new product called Save Up that offers not only automatic transfers from your existing account, but also entitles the depositor to life and accident insurance, the amount of which will depend on your Average Daily Balance (ADB). HSBC also has a similar product called AutoSaver, though without the insurance. Check with your bank first, as they may be providing similar products.

By automating your savings this way, you’re less tempted to spend the money elsewhere and you won’t use “I forgot to save this month” as an excuse. It also helps if the alternate account where you’ll send your savings to has higher interest.

Look for high interest savings accounts. Information about these deposit products usually circulate through word of mouth in the blogosphere or online forums. It’s best to ask your bank if they carry these special deposit accounts. The bank would probably call their product “participation in the BSP’s Special Deposit Account” because technically, only banks would have the capability to take out an SDA with the BSP. Click here to read an article from Inquirer.net about these accounts. It’s likely that I’ll be moving my emergency fund and savings to these types of accounts when my TD matures.

In the end, it takes both a frugal lifestyle and increased income to battle the effects of inflation. Throughout the month, we’ll be discussing the above points in detail.

If you’ve anything to add/recommend, feel free to share your ideas with us in the comments.

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This entry was posted on Thursday, June 12th, 2008 at 11:06 am and is filed under Miscellaneous. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.