It’s a sad fact that for most Filipinos, the golden years are a bleak prospect. 

Despite spending decades of doing labor, not everyone can retire comfortably without having to rely on friends and family members. When the only retirement ‘plan’ for most is to rely on their children and their children’s children to survive, it isn’t really surprising to hear stories about high earners who have amassed various assets for themselves only to be wiped out because of unexpected illnesses. In fact, it has been previously reported by Standard & Poor that only 25% of Filipinos are financially literate. 

While the government has taken some measures to improve the state of financial education in our country, it still doesn’t address the fact that a huge chunk of our workforce are still vulnerable to various avoidable risks in their lives. Money matters are already complicated in itself and we wouldn’t want it to complicate our personal lives. The good news is that there are still ways we can protect ourselves when the cards aren’t in our favor.

1. Set your goals

Different people have different needs and knowing what we want in the future helps us manage our expectations. Do you wish to travel around and out of the country or do you want to pursue your other passions? List them down and make sure that they’re clear. Vague goals and blind planning is as useless as no planning at all.

2. Set your number

Once you know what you want in the future, it’s time to give a peg for the numbers. How much money do you need until your last day? This might seem as a grim thought but these are questions that need to be answered because our world still runs on money in order to make our transactions easier. If you don’t know how to breakdown the numbers, it helps to consult a professional. They’d be happy to help you reach your financial dreams

3. Young? Get insurance

One mistake that most Filipinos commit is that they don’t get Insurance. In reaching your financial goals, insurance becomes an indispensable tool because it covers many risks that you’ll have to consider at some point. One of those things is during death. Mourning the eventual loss of a loved one is already difficult --- we don’t want to have to deal with money issues at times when we feel that we need to be alone. Other risks such as those related to healthcare allows to dampen our expenses during the most unexpected of times. Head out to you local insurance agent. We want to make sure that the fruits of our labor won’t be wiped out by one accident.

4. Build a retirement fund

A lot of companies offer retirement benefits to their employees who have served them for a set number of years and other conditions. Such plans are really great, they may not be enough to cover your lifestyle when you retire.

While some people do get by with just a pension, there are still others who might need to pool their excess earnings in a nest egg to create another source of income for their twilight years. While setting up your own portfolio of investments is always an option, not everyone can do it efficiently on their own. One of the places where you can house your nest egg is through PERA fund (Personal Equity and Retirement Account). Similar to the IRA of US, it’s a voluntary savings accounts that enjoys tax incentives from contributions and income on investments. You want to maximize your tax savings to keep as much value as possible. PERA Administrators include well known banking entities BPI and BDO.

5. Save

In building your nest egg, saving is something that you can’t avoid. While chipping away some of your earnings for future use might take a little getting used to, there are some ways that could help you stick to a routine. For starters, you might want to take advantage of automatic deposits. Like what the name suggests, It automatically sets aside a set portion of your income when it reaches the coffers of your bank account to avoid the temptation of overspending.

Knowing how much to save is a different thing to. Some people have different ideas on how much you save. A classic rule a lot of people follow is the 80:20 rule, which suggests to save every 20% of your earnings for reinvestment and to spend only what’s left behind (or the 80%). Recent trends however take advantage of the ‘minus 10’ approach. To come up with the ‘appropriate’ savings rate, deduct your current age with 10. For a 20 year old, this would mean that he has to save 10% of his income and increase it as he ages. Saving might really seem like a chore but if we look into saving as a way of ‘paying’ our future selves, it helps make things feel better.

6. Save some more

It’s innately human to want the best out of things. The same goes for saving for retirement. Obviously, the value of your nest egg increases as you save more. There are two major ways to ‘save more’: 1.) Increase your earnings potential and 2.) Create multiple income streams.

To increase your earnings potential, you’d want a raise in your salary. However, that’s easier said than done. A more realistic alternative might be to get the necessary credentials to help you get that promotion such as getting an MBA from a reputable school or learning marketable hard skills such as coding. If it’s relevant to your field, it might actually help you up your income.

The other way to earn more money is by having multiple income streams. If you’re young and you have the time, you might want to consider doing a side hustle. If you’re great at Photography, why not earn a few bucks more by working as a part time photographer? There are so many things that you can do as a freelancer including as an English teacher, a virtual assistant and a bookkeeper. Not a fan of being an employee for the bulk of your day? Why not run an online business along with your day job? Look for a method that works for you. If you can spare more stress in your life, go for it as long as it’s stress that pays back.