All of us who are stuck in the rat race know the daily stress of work and the anxieties we have for our future even as we worry about the present issues that our families are struggling with. The chart of expenses below compares the expenses of the regular employee to their house helpers. The comparison may seem funny but the situation also tugs at reality in a major way.
“Ms. Employee” represents all of us who struggle to make ends meet with our monthly salaries and “Inday” represents the household helper that we employ to help us manage our households. Not many of our household helpers may be able to save this much of their actual salaries but in his book My Maid Invests in the Stock Market and Why You Should, Too!, Bo Sanchez shows us that his household helpers do invest in the stock market and they can look forward to a brighter financial future because of doing so. If we want to have a brighter financial future as well, then we should learn the lessons he taught his maids.
Take Charge of Your Finances
In the first part of his book, he encourages us to take charge of our financial future. Most regular employees including household helpers and OFWs do not have this initiative. We are all preoccupied with addressing our family’s present financial needs that we often forget that we should also prepare for our own future.
This is an all too common scenario outlined in his book that often happens to employees.
“They send most of their salaries back home. They send it to their parents, siblings, nephews, nieces, aunties, uncles, cousins, including their pet carabao. Sometimes, I feel my helpers are supporting entire civilizations. Without their monthly stipend back home, the economy of an entire barrio will cease to exist. People will loiter on the road aimlessly. Children will die of starvation. And the world will come to an end.”
This is how much we are burdened by the financial needs of our families back home and this pressures us to send them all that we can, even all that we have while we shelve the thought of our own futures for pondering on another day.
Bo says that everyone ought to be rich but not everyone knows how to do it. In his book, he shows us the basic strategies he teaches his maids for planning their budget and what each fund is for.
Budget Your Income
If you have an income, you need to make a budget. Be sure to include investments in your budget. For his helpers, Bo suggests this simple budgeting system.
- Tithe Fund – Having this fund helps you grow in abundance thinking. “You’ll grow in abundance thinking, when you give beyond your family’s needs. This will make you think rich and feel rich. And when you change your thinking, you change your living. Soon, you’ll become very rich and you’ll have more to share.” He recommends allocating 10% of your budget for this fund.
- Expenses Fund – This fund is where you will get all your spending for your daily needs.
- Support Fund – What you regularly send for your family’s needs.
- Emergency Fund – A savings fund that you use for when emergencies come up.
- Retirement Fund – Your real savings. “Because you don’t have a business, the best way for you to grow your money is to invest in the stock market.”
This is a good budget plan to start you off on allocating your money. If you want a more sophisticated budget plan, you can also try out the money jars budgeting system.
Have a Powerful Vision
Bo encouraged his helpers to follow the budget plan monthly by showing them the best and worst case scenarios that they could find themselves in if they don’t take care of their financial futures.
We should all have a clear vision of what we want to achieve when we have improved our financial situations. This will keep us motivated to stick to our monthly budget goals and help keep us disciplined to spend our money wisely.
Create a powerful vision of yourself in the future. This is where the discipline of delayed gratification can be used to your advantage. Disciplining yourself to live within the limits of your current budget will enable you to enjoy the comforts you want in life in the future, when you are not working anymore and you have all the time and the money to do what you want.
To help you stay motivated, you can read up more on how the rich think about and manage their money.
Invest in the Stock Market
If you don’t own a business, then concentrate on doing great at your job and use the money you earn to invest in the stock market.
Many people fear the stock market but Bo states that “trading” is the riskier side of the stock market and there is a difference between trading and investing.
- Trading is speculating. “In trading or speculating, you don’t look at how strong the company is. Any company is game–even what they call “penny” stocks. These are companies whose stocks are worth centavos. Because they’re considered very risky. So leave the trading to full-time traders–the people who do this full-time, studying about it 8 hours a day.”
- Investing is where the investor “invests only on the great companies. Because we’re in for the long haul. Through your business or job, you create the money necessary to invest in the stock market.”
Money Cost Averaging
The best strategy to invest in the stock market is money cost averaging where you buy stocks of great companies, little by little each month. The important thing is to do it regularly. When you adapt this strategy, “you’ll be buying stocks without much thought to the bouncing of the market prices.”
He follows Warren Buffet’s strategy: “Be fearful when others are greedy, be greedy when others are fearful.”
You Can Start Investing Online
Bo recommends that you invest online thru Citiseconline, now COLFinancial using their Easy Investment Program (EIP). He states that he is not sponsored by the company but he recommends it because it allows people with smaller budgets to invest since only Php5,000 is required as the initial investment amount.
Each month, or every 3 months thereafter, you can deposit your investment fund to the different branches of these banks: BDO, BPI, Security Bank and HSBC.
Bo Sanchez’s book definitely gave me a new perspective on how to manage my finances. The budget plan he recommends is a good plan to follow if you are just starting out earning your own money especially if you have no current loans to keep your budget tied up.
There are many resources that you can get your hands on online to help you get started on investing. In the meantime, start growing your investment fund so you can make your initial investment as soon as possible.
Here’s to a brighter financial future for all of us!