Many of us may be finding it difficult to manage and control our personal finances. How should we make ends meet? How can we save money and make investments that will truly benefit our future? If you have been trying to manage your finances but often fail to do well at it, you should seek advice from a financial planner.
The first leg of Entrepreneur magazine’s Entrepreneur Talks for 2015 was aimed at doing that: providing advice and insights that will help attendees manage their personal finances better. ‘Entrepreneur Talks: Because Money Matters’ was held last April 28 at the Mayuree Ballroom of Dusit Thani Manila in Makati City. Guest speaker Armand Q. Bengco, executive director of the Colayco Foundation for Education, Inc., discussed the basics of investment and financial management and at the same time shared some ways on how we can prepare for our future finances.
We’re sharing five of the handful of personal finance lessons we learned from that insightful session:
1. Nobody but you will manage your finances.
Like it or not, we’re not high school kids anymore. We can’t and shouldn’t depend on our parents to pay for our bills. Our financial independence should have started when we started earning from our first job and should continue on until the day we die. In his talk, Bengco related five aspects of personal financial management: earning, planning, saving, spending, and investing. These five aspects, managed and prepared for by you, all come together in determining how financially secure you can be in the future.
2. Be financially literate.
Financial literacy doesn’t necessarily entail being an expert on the field. Just some basic knowledge about stocks, choosing the different kinds of other available investments, and deciding where to put your money to make it grow is enough. If you already have an existing stock investment, for instance, keeping regular tabs on that particular company’s performance is one way to keep yourself in the know.
3. There is no such thing as a ‘sure’ investment.
If someone comes up your door one day offering an investment that he claims is sure to earn you a certain amount in a few years, run away and shut the door at once—it’s probably a scam. In any investment, the only thing that is certain is its uncertainty. An investment company may and probably will present you their projections on how much investing on Company X will earn you in the next few years, but it’s just that—projections.
Four things may come out of your investment: you gain, you lose, you neither gain or lose, or—worst of all—the company you invested in goes bankrupt. Whenever you make an investment, embrace the fact that there are always risks involved. Get to know and understand those risks before making investment decisions.
4. Invest with a purpose.
Probably the most important question to ask yourself when you start investing is, “What is this for?” There are three things, according to Bengco, to keep in mind when choosing an investment: purpose, target, and timeline.
First, know what your investment is for. Is it for a retirement fund, an investment for your 10-year-old daughter’s college education, or a business you plan to pursue in the future? Once a goal has been set, it’s time to put a target date and timeline to that goal. When do you plan to retire? When do you plan to start your business? These questions will help you predict realistic expectations from your investment which would, in turn, allow you to make the necessary adjustments in life as you move towards your financial goal.
5. Be patient.
People sometimes forget that investments are long-term commitments. Fully expect to see your investments rise and fall through the years and don’t let yourself be easily swayed by fluctuations in the economy. Keep on investing in sound (and legal) investment opportunities.