Why buying 'pasalubong' too often isn't a good idea


Posted at Aug 10 2014 09:11 AM | Updated as of Aug 11 2014 10:17 PM

MANILA, Philippines - Every parent knows how tempting it is to buy small treats to give their children when they get home.

However, ANC On the Money's resident financial adviser Salve Duplito warned those candies, cupcakes and toys can add up to thousands of pesos a year.

She called this the "pasalubong virus."

"Most parents are infected with a financial virus they don't even know. The pasalubong virus. Do you know how much money you spend on those little candies and toys that you pick up for your kids just before you get home," she said.

Parents who have a hard time sticking to their budget should try to keep track of their expenses. One way is to download an app, like the Toshl Finance app where they can record their expenses after they buy something.

"The key is to change behavior effectively so you input the expense after you spend," she said.

Duplito cited the example of one couple who was shocked to find out that as much as 15 percent of their budget went to donuts, fastfood meals with toys, candies and cupcakes for their kids.

The mom spent an average of P1,500 a week on pasalubong, while the husband would spend as much as P2,000 a month on expensive toys for the kids.

The amounts may not seem a lot at first, but Duplito noted when you compute how much they could have saved in a year, the figures can be quite big.

The couple could have saved P5,200 a month, or P62,400 a year. If compounded at 8 percent a year, they would have P112,230 on the first year and as much as P1.18 million on the fifth year.

"And that's just easing up on pasalubong... The high finance of parenting requires a lot of honesty in the numbers and standing in your truth. But more than the numbers, it's the principle that matters," Duplito said.

She suggested three ways to counter the perils of "pasalubong".

1. Agree to a spending limit for treats and set rules on what pasalubong to buy.

"Children don't care if a donut is bought from a neighborhood store or Krispy Kreme until we teach them... Too often it's our personal frustrations and needs that warp our kids' innate sense of financial wisdom," Duplito said.

Parents don't have to completely stop buying pasalubong for their kids. They can reduce the amount of treats and set rules on what to buy.

2. Create a savings plan for a college fund and use that to temper your need to buy treats.

"Every time you feel the pain of not having money for 'pasalubong', tell yourself you are buying the children something even more awesome: the gift of college," she said.

Duplito said the savings plan will be easier to pursue if you think of expenses not in days or weeks.

"Annualize them and compound them to see their real value. You will realize small things add up to big amounts and that's when you get the vision of the real value of cash," she said.

For instance, people who spend P20 a day on Lotto may think it's a small amount, but this can reach P4,800 a year, and more than P1.7 million in 10 years if compounded at 8 percent a year.

3. Make your spouse your accountability partner.

Duplito said husband and wife should be each other's check and balance. She said knowing someone will be looking at your performance pushes people to work faster and better.

"Couples end up being so relaxed with finances when husband and wife have no reporting system. Solution: Make your spouse your accountability partner. Balance between encouraging and pushing each other to do more," she said.