How to be your family’s financial hero

ABS-CBN News

Posted at Aug 29 2016 04:31 PM

MANILA - As we celebrate National Heroes' Day, we thought of showcasing another way where Filipinos play as everyday heroes--that is helping others out of dire financial straits.

Although many live from paycheck to paycheck, we still aspire to be of help to someone--our parents, siblings, nephews and nieces, even neighbors and friends--when they are in financial limbo.

Before we can help, though, it is important to be in a good position to do so. How then can you have enough income so that you can help out your family when they come knocking on your door for financial help?

Going from zero to financial hero is a laudable act but it is also challenging to do. However, with enough resolve and discipline, you can become an occasional financial hero. Helping others, though, is not as simple as it may sound, especially when you also have your financial needs to think of.

Here are some points to think about if you aspire to be your family’s financial hero:

1. Set aside funds for helping others. 

If you know that you are always called upon to help out financially, you may wish to regularly set aside funds for this. When coming up with your budget, plug in this item. Make sure that this is a separate fund from your emergency savings and long-term savings funds. By setting aside funds primarily for helping your family, you will be able to have a constant source of funds to tap should this need arise, without having to dip into your personal savings. This proactive approach benefits both your family and yourself.

2. Make sure to invest your money. 

Even while helping other people, make sure that you take a long-term approach to your finances and invest your money, so that you can continue to build your nest egg or your retirement fund. Make it a point to invest regularly, so that your money will work for you. Thankfully, there are many investment options now available for small investors who may not have much to spare per payday. These include UITFs and mutual funds, which you can invest in for an opening amount of as low as P5,000, and which you can top up for as little as P1,000.

3. Protect yourself. 

Before you help others, make sure to cover all bases and protect yourself against life’s uncertainties. If you have dependents, get life insurance. Also consider accident and disability insurance. These will ensure that should anything befall you, your family will not be burdened and there will be funds left over for their basic needs. Equally important is medical insurance, which will help you cover hospitalization and treatment costs in the event that you get sick.

4. Know where and when to make cuts. 

When you are called upon to help, it is easy to get emotional and make cuts just so you can be of help to a family member in need. Before making arbitrary cuts, learn to prioritize so that you don’t end up missing out on essentials. Just knowing which of your expenses are essentials (needs) versus non-essentials (wants) is a good start. For instance, you shouldn’t miss utility or credit card payments so that you can play hero to a family member. You really don’t want to end up damaging your credit standing or worse, getting into a debt trap.
 
5. Don’t encourage overdependence. 

Know how much you can give. Do not sacrifice your financial security so that you can be a family member’s knight in shining armor. Also look at what your family members are coming to you for--some of them may have developed a habit of dependency and may have stopped looking for other means to meet their financial needs. Instead, help them find ways to become financially independent and be in a better position to address their financial needs, such as by helping them find part-time jobs or entrepreneurship opportunities.

Being a hero does not mean you should always be accommodating of others’ needs. Part of being a hero is always knowing when it is best to say no. Some calls for help may border on the frivolous — e.g., financial help for a birthday party or fiesta, or a downpayment for a vehicle. Do not be afraid to say no, especially if you cannot afford to help out, or if you feel that the call for help is not urgent.
 
Remember, you cannot help others if you are financially incapacitated. Know when your needs have to be prioritized over the family member’s request for assistance. Certainly, your retirement fund deserves to come ahead over the request for money to buy new shoes or a gadget.

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Grow Your Money is an editorial partnership between ABS-CBNnews.com and Citi Philippines to promote financial education and provide helpful information to Filipinos on how to better manage their personal finances.

Visit www.citibank.com.ph for more information.