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Monday, January 10, 2011

The Cash Culprit #2: The 500-peso Plan versus the P* Investment

There are approximately 24 pay days in a year.  If you save P500 every pay day, that will be P12,000 in one year.  If you regularly save 12,000 every year for the next 10 years, you will get P120,000.  For example, you’re 21 this 2011.  You start saving P500 on January 15, the first pay day of the year. In 2021, you’ll be a 31-year old person with P120,000 in the bank.  Now, that may not be substantial in 2021 if we factor in inflation, but still, saving P500 per pay day is nothing as well. That’s just 2 Starbucks coffee, a price of 2 movie tickets, several rounds of beer with side dishes or 3 Big Macs and a couple of large fries, or a Topman mass-produced T-shirt (not even the good kind). We’re not talking about big investment here. Think of that P500 as money you’ll waste anyway.  How many items have we purchased that we regretted buying? How many bad movies have we watched? How many Big Macs have we devoured that only inflated our waistline and not our bank books?  Might as well take that P500 from your pay check and hide it somewhere, save it in the bank and forget about it. Believe me when I say to you, 10 years will go by so fast.  One day in college, I just bought Alanis Morissette’s Jagged Little Pill, and then one day I woke up, she released her 10th anniversary acoustic version of Jagged Little Pill. What!?  I digress.
Anyway, even if you get promoted after your 25th birthday and earn gazillions of money, those accumulating harmless inconsequential P500s will still pile up.  Again, believe me when I say to you that the more money you earn, the higher your lifestyle will become.  “No, that will never happen to me.” You may say this now, but I guarantee you, your money will change you and not the other way around.  You cannot change money.  Money will change you (good and bad).
 When I was earning P8,000 a month, I was perfectly happy eating Lala Fish Crackers with my good friend Melds.  We had a blast! I did not see any problem wearing Bench.  But once I started earning more, and was kicked up management heaven, things changed.  Not only will money change you, stress will also make you impatient.  You will no longer have the patience to fall in line, to shop in crowded stores and wait for a slow waiter.  You will choose the priciest store with only you in it.  You’ll start to feel like Oprah. You’ll be intoxicated once the entire salon wait hand and foot for you and you tell them, “I don’t have much time, make it quick and fabulous, or it’s your head on the chopping board.” Of course, that was not me.  But, I know that vixen; I was there in the salon when she said that.  Anyway, I digress.
The thing is, unless you keep yourself grounded, you’ll end up losing yourself in all that hoopla.  You start believing your own sh*t.  Money always disappears. The only thing predictable about money is that it always runs out. 
My advice is to keep saving P500, no matter how high your salary gets.  If you want, before you deposit it to the bank, scribble something personal on the 500-peso bill, something that will remind you of your younger and humble days.  When I was 25 years old, I was forced to resign from my second job because I was way too opinionated, and my boss was one of those high-level idiots.  I was happy that I would never have to work in that dreadful place again.  However, I was also unemployed, and for months, I could not get a job.  It was back when I did not know my capabilities as a person so I was suffering from low self-esteem.  It was humiliating not to have a penny (or a centavo) of my own.  In one of my saddest days, I wrote on a piece of paper “Remember the days of hunger.”  A few months later, I got a new job; it did not pay much but it was a start.  I wrote “Remember the days of hunger” on my office wall.  The phrase was also the welcome note in my cell phone and the screensaver in my computer so every time I turned my phone and computer on, I was reminded of my “days of hunger.” I swore I would never do that to myself again, be that poor. (I know it’s very Scarlet O’Hara; it’s coincidental not intentional).   Anyway, I suggest you write something like that on the P500 bill that you plan to save from now on. 
Unfortunately, I was not financially smart enough to follow the advice I am giving you now.  Most of my twenty-something buddies were party animals, and so no one was thinking about financial security in the future.  We were way too handsome and beautiful too be bothered with money. That stuff is for old ugly fogies. One of my friends, who earned the most money, almost became bankrupt because of his many credit card debts, and he was earning P75,000 a month.  I wondered, if we all had saved P500 pesos when we were 21, we would have had P120,000 now, or even more.  But, try telling me to save P500 when I was 21.  I would have just probably handed you a martini and kissed you, before I’d fallen on the floor or puked on myself, whichever would have come first. 
Luckily, someone knocked some sense in me, and I did manage to catch up before I turned into a total financial loser.  I have some money saved, but I am not liquid enough.  So, here’s hoping you twenty-something guys and gals would wise up and start thinking about your future.  As a wise woman once told me, “The p**** cannot stay hard forever. Don’t invest on it.” That is a hard lesson to learn. No pun intended.


CASH CULPRIT #1: The Credit Card and Mister Trilby
CASH CULPRIT #3: Your Brain is On Sale

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