Money Habits and Personal Finance

Money Habits and Personal Finance

Sean: All right. Hey good evening, everyone, and I’m glad to see you all here. We’ll be answering your questions and you know where to ask them with the link from.sean.si/discord, that is where we get the questions and we answer them.

Sean: My guest for tonight is Karlo Biglang-awa, and he does have a podcast himself as well, which is “The Now Finance.” And you might want to follow his podcast as well if you want to learn more about personal finance management. He is a registered financial planner and also does real estate on the sides, and we are fortunate to have him on as our guest tonight. Hey Karlo, welcome to the show.!

Karlo: Hey Sean, good evening. Thank you for having me here and of course, we want to greet all our listeners on the Leadership Stack podcast. I’m also a big fan of Sean Si, and I’m always learning a lot from your show. And it’s really value-adding for us, especially this pandemic. Thank you so much for your content, Sean.

Sean: It’s a pleasure and privilege. And it’s not just me, it’s the Leadership Stack team who does the magic. So it’s not a one-man show. I have a lot of people who are doing a lot more work behind the scenes, and I’m fortunate to be working with them. So, Carlo, are you ready to answer some questions?

Karlo: Yeah, sure. I’m so excited to answer the questions of our listeners tonight.

Sean: We have a question from YouTube. It’s Pam, how do I start managing my money better? I think this is going to be well answered by you, so I let you go first.

Karlo: Well, that’s a very timely question Sean, especially this pandemic. A lot of our countrymen are having a hard time handling their finances. To start off they need to know where they are right now because for me financial planning is like a journey. We have a certain roadmap, and of course, once you identify where you are – first, if you are having a hard time coping with your expenses, maybe you need to increase your cash flow. But on the other hand, once you also identified that you are having excess funds, for the others right Sean?

Karlo: Some of them were able to save up money because of the work from home set up, maybe once they identify their situation, maybe they can now go to the next step, which is maybe they can save more, or maybe they can invest more. So the first thing is to know where you are. Are you struggling with your day-to-day expenses or do you have excess? And after that, you need to know your goals as well. Once you identified your goals, it will be easier for you to know what to do next. For example, once you list down your short-term and long-term goals, you will be motivated to take small steps. We encourage our listeners Sean, to really take small steps because sometimes planning is too overwhelming for others, but once you do it one step at a time – just like saving one thousand pesos per cut-off. Eventually, it will increase and you will achieve your goals. But first, you really need to know where you are right now. Are you struggling or do you have excess funds, so you can identify the next step.

Sean: Very good, so management will always say “what you can’t measure, you can’t improve.” So the first step is answered very well by Karlo there. You have to first, know where you are, measure where you are, and after you see that, then we can start improving, where you want to go.

Sean: A lot of people use expense trackers, so there are apps on the phone. You just have to put in every expense that you make, every money that goes out, put it in the expense tracker, so you know how much you’re spending per month and on what? Like food, eating out, movies, entertainment, you’re spending for – I don’t know – hobbies, like I have a lot of toys at the back, right? So I track those expenses, you track those expenses, then you’re measuring, “Oh okay, I spent so much money on gas. I spend so much money on eating out. Maybe I should budget, put a budget there, put a cap there. So I know how not to overspend.” So that’s only one of the best ways to start, especially if you’re frazzled right now. If you are getting stressed about managing your money, that you just got your salary yesterday, and now it’s all gone – those are some of the things that you have to do.

Sean: And the next question is very similar, how to budget, monthly income, and expenses? And that’s going to be the same answer for me. How about you, Karlo?

Karlo: Yeah, actually, just to add with what we mentioned, maybe you just need to use a certain tool that will be effective for you, it could be an app, just like what Sean mentioned. Or maybe for some of us, we are using Excel. So you can also project, for example, after listing down your essential needs, your priorities, and then the non-essentials. Maybe those two things are really important because, once you list them down, you can now project how much can you save for this month, or are you going to lack a particular amount or your expenses?

Karlo: So, yeah, just use a tool and list down your essential needs and non-essential expenses. So you can also project for the whole year. And what’s good when we project for the whole year, we can have a bigger picture. So we go for the monthly and then we go for the whole year tracker, so we can have a more prepared action plan in the coming months because we only often look on the smaller scale. But when we look at it from a bird’s eye view, we can plan better.

Sean: For sure, for sure. Yeah, actually there are a lot of people that are asking, “what is your advice for me to be able to save up like a million pesos by the end of the year?” and I tell them, “okay, then if you’re going to have a million tests by the end of the year, how much should you be saving per month? What are you spending on?” So look at the big picture, you said it well Karlo, and then reverse engineer from there. Good stuff.

Sean: What are some spending habits we should avoid to help us grow our income? I will let you go first, brother.

Karlo: Well, that’s a very good question, yeah? It’s really about our habits, well, maybe being unaware of where your money is going, because right now because of the online platforms, it’s much easier to just buy and spend right? Then out of nowhere, someone will be knocking at your door saying that they have a package for you. So I think we need to set some limits. We need to be aware. For example, we want to buy things online. You should set around three to five thousand and limit, depending on your capacity of course.

Karlo: Because the moment that we become unaware of our spending, we often get carried away, right? Or maybe for some, by using their credit cards because they can just swipe their cards easily, especially if they really want that certain thing. So, we are becoming unaware of where our money is going.

Karlo: So I believe we need to be aware and we need to set some limits. If we don’t set or have ourselves these ‘limits’, we’ll easily be carried away. And of course, ‘accountability’ or the lack of ‘accountability. Maybe if you’re still single, you need to have someone who can check your finances, or who can just ask you about your financial management. And the moment that we lose our accountability, is also the time that we will become unaware of our spending.

Sean: That’s good. And I’m going to just add on that – the mindset of our money not being ours, you know. I’m a man of faith and what I share is only stuffs I really believe in, and what I believe in about money, and about business is we’re just stewards. We’re not really the owners of our money and our businesses. It’s God who owns it, and we’re just managing it for Him. So if you see it that way, you will really not spend needlessly. You will not spend out of wants, don’t spend ‘wantonly’ like, “if I like something, I’ll just buy it, that’s the ultimate decision.”

Sean: And that’s not how we should do it. If it’s a major purchase, meaning it’s 10, 20, 30 percent of your income, or of your capital, your savings, you have to pray about it. Don’t spend wantonly. But if it is, you know, if you’re buying chewing gum, just buy the chewing gum, right? So it depends on how big the purchase is going to be but always be disciplined in how you’re spending and always realize that it is a matter of faith. It is a faith-based decision, especially if it’s a big amount.

Sean: How can people who are new to personal finance manage their income better?

Karlo: So I believe we are always saying this what that personal finance is about our behavior more than our knowledge, as Dave Ramsey also mentioned. So we need to check also our behaviors. If you’re new in financial planning, you need to check what are the majority of your expenses right now, because that is where you will know what and where to improve on.

Karlo: For example, when I started in financial planning, the majority of my expenses went into clothing and shoes, because I was still single at that time, maybe you can also relate, Sean? And then eventually I realized the majority of my income is being placed in those items, and that’s when I began planning. I said to myself that “I need to make sure that my income will be put to good use.”

Karlo: So I shifted my focus from buying to saving. And the idea of “saving” will start from budgeting, once we start the habit of budgeting, let’s say every month, you will list down again – like we mentioned a while ago, your income, your expenses, what are your priorities, then the non-essentials, that’s when you will learn to save up intentionally. Because the most difficult thing to start or to develop in ourselves is the habit of budgeting and saving. But once you get the flow of budgeting and saving your money, it will become natural for you; it’ll be just like taking a bath. So it’s the same thing when it comes to personal finance, we just need to set the habits and our priorities, so that it can have a bigger impact in our future moving forward.

Sean: For sure.