Take it from the Money Experts: Wealth Advice for the New Year

Aneth Ng-Lim

Posted at Jan 07 2019 08:16 AM

Bangko Sentral ng Pilipinas Deputy Governor for Resource Management Sector Ma. Cyd Tuaño-Amador, Sun Life Philippines’ chairperson Riza Mantaring and HSBC Head of Retail Banking and Wealth Management for Philippines Kris Werner. Handout photos

MANILA -- It’s the New Year and we recommend embracing this fresh beginning with a three-fold money commitment: one, manage your spending better; two, grow your wealth with disciplined saving; and three, intentionally share with the less fortunate.

These seem simple enough but admittedly, many find them hard to execute, which we sadly discover as the year unfolds, and then come December we find that we made little or no progress.

So how do the successful ones do it? We reached out to some money experts who are not only on top of their own finances, but also head institutions and companies that help millions of Filipino consumers do the same. Read on for their advice, and may their words of wisdom take root in your financial lives and bring you and your family prosperity in 2019.

LIVE BELOW YOUR MEANS

If you want to become poor (or stay one), live beyond your means or spend more than what you make. If you want to stay out of debt, live within your means or spend only as much as your income. But if you want to become rich, the secret is simple: live below your means.

Bangko Sentral ng Pilipinas Deputy Governor for Resource Management Sector Ma. Cyd Tuaño-Amador learned this wisdom early and understands it all too well. “Since I’ve reached the age of responsibility, I’ve lived by the dictum: Real riches do not consist in the abundance of goods but in the paucity of wants.”

No wonder Deputy Governor Amador was able to opt for early retirement back in 2015 when she joined her family in Australia. However, she was recalled back to work just two years later and made history as the first female to be named Deputy Governor after 30 years.

“I’ve always lived a very simple life and have been quite content in just having a good book and a quiet place to read for when I have the luxury of quiet moments. Those are the times when I feel very rich and very blessed (even in financial terms).”

SAVE WITH A PURPOSE

Eduardo Jimenez stands tall in the world of microfinance where he has worn many hats. For nearly two decades, he has been serving as the Microfinance and Financial Inclusion adviser of the Bangko Sentral ng Pilipinas. He is also president and trustee of Kabalikat para sa Maunlad na Buhay, one of the pioneer microfinance NGOs in the country with over 185,000 members availing financial and non-financial services. His day-to-day work gives him a very intimate understanding of the importance of saving, and saving with a goal in mind.

“Early in 2018, my wife and I decided to save funds so we can travel to the US together with our two sons for a family reunion. We planned to spend at least two weeks there and visit friends and relatives in several states,” relates Jimenez. Now, we all know a trip abroad can be expensive, especially if you are doing it as a family of four so Jimenez was wise to plan for it as early as possible.

“As my family decided to save for this vacation, we were reminded that in 2017, we successfully worked on a budget and saved so that we can enjoy a 21-day tour of London and Continental Europe,” recalls Jimenez. “Since we were able to save enough funds for all of us for that European trip, we were pretty sure that we would be able to save for our US trip as well, but of course we have to forego non-essentials and put savings into our family kitty.”

YOU CAN'T SPEND WHAT YOU DON'T SEE

Financial experts all agree on this: one of the most successful wealth-building strategies is to automate your savings. After all you cannot spend funds that are not conveniently sitting in your ATM account.

Kris Werner, Head of Retail Banking and Wealth Management for Philippines, HSBC, adopted this strategy and saw great results in 2018.

“I committed with my wife to be more organized about how we save and in 2018, we focused on saving a fixed proportion of our salaries, locking it away each month as soon as it is received into an interest-bearing account. To ensure we still have some benefit from our money, we spend 20 percent of the interest we earn on a treat each month and this amount has grown consistently through 2018, particularly as interest rates improve.”

With their gains from last year, Werner will understandably continue the same saving plan into the new year. “In 2019, I hope to continue the family saving plan from 2018 but also purchase managed funds (UITF) using a regular monthly investment plan, contributing around 10% of our combined monthly income. I have found that investing smaller amounts on a monthly basis is important as it allows you to benefit from market movements, helping to buy more units when prices are low and then hopefully watching these units appreciate in value as market cycles change. In periods of volatility, like what we are seeing now, it has been a strategy that served me well over the years.”

DO NOT PUT ALL YOUR EGGS IN ONE BASKET

Speaking of volatility, it seems we have to brace ourselves for more this year. Sun Life Philippines’ chairperson Riza Mantaring prepared for a volatile market in 2018 by slowly rebalancing her portfolio. After 26 years with Sun Life Philippines, she stepped down as CEO in June to assume her new leadership role, and considers herself retired from active corporate life.

“My husband and I have both retired. When we were both working, we were fairly aggressive investors, since we saw the money we set aside as long-term money. But now, we realize we have to be more prudent and allocate more to fixed income investments, as our income needs to be more predictable,” explains Mantaring.

The couple started their new investment strategy this year, and are glad they did when the market turned very volatile. "For 2019, we will continue rebalancing our portfolio."

WHETHER HANDOUT OR HAND UP, DO WHAT YOU CAN TO LEND A HAND

This last piece of advice comes from yours truly. As a disclaimer, I am nowhere in the same league as the first four. However, I did manage to retire from corporate work at least 20 years earlier than most people do by watching what I spend and saving as much as I can for nearly two decades. Just as importantly, I did my little best to give back by volunteering my time, sharing my skills or donating to different charities that badly need support. In all these, I can confidently say that I gained so much more each time I would make myself available or open my wallet.

When you see poverty in living color, it’s much harder to justify the expense of a five-figure smart phone, or splurging on designer clothing and accessories. The more you see their wants, the less you want.

This year, I challenge you to find a cause you feel passionate about and explore how you can help. Do you like children? Maybe you can offer tutorial services on weekends, or sponsor a child so she can go to school. If you like to cook, check out feeding programs nearby that are always short of volunteers.

When you lend a hand, you will realize any person can be one step away from poverty, and this will make you fight so much harder for financial independence. May 2019 be a kinder financial year to all of us.