5 Lessons I’ve Learned About Saving And Investing6 min read
A Philippine and New York bar passer who chose business and motherhood over law practice shares her views on financial independence.
I had always been financially dependent on my parents well into my mid-20s. After four years in college, I worked for two years in media. That’sÂ when I asked myself,Â â€œWhat am I doing with my life?â€ And then I decidedÂ I was going to law school.
Getting that A-T-T-Y attached to my name meant another four years in school, and an additional six months to prepare for the Philippine bar exams. In my case, I even flew to the US for another six months to take the New York bar exams. That was a total of five extra years of studying.
During that time, I was a full-time student, relying on my parentsâ€™ kindness and generosity. Although I was given more than enough to survive, it was still just an allowance. The best I could do in terms of financial stability and investment was to save a few hundred pesos a week (if I was lucky) and put it in a wallet I left under my bed. I did have savings account for a couple of years that I’d worked, but it would be great if I deposited even P500 once a month. For the five extra years I spent in school, that money never grew.
When I started working, I went crazy with my newfound financial freedom. My starting salary wasnâ€™t the least bit high, but compared to my student allowance, it suddenly felt like I was a millionaire with an unlimited capacity to spend. I could finally buy that branded top and get out of my seven-year-old jeans! At that point, I was already in my mid-20s, but while my friends were talking about buying real estate or starting a small business, I was still hung up on not being able to afford the bag I wanted.
A few months after I started working as a lawyer, a wonderful business opportunity fell on my lap. I couldnâ€™t pass it up. So I went back to my parents to borrow some capital.
When the business was just starting, I went back to being frugal. I was paying off my parents for my loan, so I was working on a strict budget. But earning my own money meant I could now eat out every so often, and at least buy myself nice clothes every now and then.
When I finally paid off my parents, thatâ€™s when the overspending began. In hindsight, I should have started my financial management at that point, but I was having too much fun spending. I was earning too much for my own good. I got hooked on shopping, bought myself one luxury item after another, and lived the good life (at least according to my standards of a good life.)
I only started thinking about my finances seriously when I got married. At that point, I felt secure and stable in my business, but beyond what I was earning, I really did not have much knowledge about saving and investing money. The sudden increase in expenses caught me off guard. There were utility bills to pay, household staff to feed, a baby to care for and support, the list just went on and on and on.
A few years down the line, here are a few things I learned about investing and saving wisely.
1. Start saving early.
Had I started saving even as a student, I would have doubled my current savings. Those savings could now be used to start another business, an additional downpayment for the house, or other more purposeful things in life. I look back at the five yearsâ€™ worth of stuff I accumulated versus the amount in my savings account and really regret spending on so many unnecessary things. They say you should set aside at least 20 percent of what youâ€™re getting. In hindsight, I should have done that even as a student, and not just now when the necessary expenses are ever-growing.
2. Invest in real estate as soon as you can.
My husband and I only started seriously looking for a property when our daughter turned two. The prices now are just outrageously highâ€”houses that were in the P5-million to P6-million price range five years ago are now priced at P25 million. Thatâ€™s a 500% increase in just five years! Assuming we took out a 10-yearÂ housing loan, we couldâ€™ve been halfway by now. Or we couldâ€™ve sold the property and now have enough money to buy a more affordable house and make other investments.
3. Buy insurance when youâ€™re young.
InsuranceÂ isnâ€™t for everyone. The financially savvy would tell you to buy one only if you have dependents solely relying on you. But assuming that you know for a fact you will get married and/or have a child in the future, buy life insurance while you are young. My husband bought life insurance when he was still single and in his early 20s. By the time we got married, he was almost done paying for his policy, while I was just starting to scout around for one. Not only thatâ€”his premiums were half the cost of my current insurance premiums. You would think that a few years of holding off on insurance wouldnâ€™t matter, but I learned the hard way that insurance policies increase exponentially each year you turn older.
4. Have a goal and work toward it.
Whether the goal is to finish medical school, or to become a bank manager in 15 years, or to start your own business at 25, always have a goal that will lead to your financial success. All your actions and decisions should lead toward that goal. Although exploring your optionsâ€”as well as traveling and finding yourselfâ€”are nice things to do while youâ€™re young, you will eventually have to grow up and deal with adult responsibilities. Your goal should be a life of comfort where you could sleep soundly at night knowing you have money saved somewhere in case a loved one gets sick. You can’t be a tambay and think that you can put off making your own money until you have kids.
5. Take risks while youâ€™re still young.
The young ones always have the best ideas. Do not be afraid to explore them. In whatever field, they always have the advantage of optimism and enthusiasm, use that to your advantage. Discover what you are good at, find out where your passion lies, and build a career around that. When you are young with less responsibilities, you have the luxury of making mistakes and learning from them. The earlier you start making these mistakes, the sooner you will get to eventually finding your success. Worst case is you donâ€™t earn, but at least you find your passion. And a life filled with passion is always the best kind of life.
Caleen Obias is a member of the Philippine Bar and the New York Bar. She now runs a supplementary education program and has put her law practice on hold so she can focus on her daughter.