Little things matter

[Efren7962]

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Little things matter
Posted: 2:38 PM | May 11, 2006

Efren Ll. Cruz, RFP
INQ7.net


From the tender age of one up to the time we graduate from school, we are taught that 1 + 1 = 2. In other words, things add up. Unfortunately, all throughout life, we take the "1s" or the little things for granted. Truth is, the "1s" can amount to a lot--when you add them up.
For example, the cost of going to work including parking fees and lunch amounts to 470 pesos a weekday for me or a whopping 10,300 pesos a month -- that's more than the minimum monthly wage in the National Capital Region. My mom's weekly grocery bill, including the budget for the wet market, amounts to 9,500 pesos or a grand total of 38,000 pesos a month.
Clearly, something must be done to manage the seemingly harmless "1s" that can wreak havoc in our budget. We don't have to limit ourselves to cutting costs. Many times, the better solution is to increase income.
Increasing income can be as simple as saving and can be as complicated as investing. Both can be potent.
For instance, I just opened my giant feeding bottle of a "piggy bank" after saving in it my lose change for about three months. I saved over 3,000 pesos. At this rate, I can save 12,000 pesos a year just with a piggy bank -- roughly the same as the net interest income of 250,000 pesos placed in a time deposit for one year.
The principle that things add up is also true in investing. Interest or income left in your investment account earns more interest or income. Financial planning practitioners call this the magic of compounding. Sometimes money can even double through investing. Now how do you know when or at what interest rate your money will double? Just apply the rule of 72.
The rule of 72 states that if someone says he will double your money in 5 years, that means your money will double with a net interest rate of 72 ÷ 5 or 14.4 percent per year. If someone says he will give you a net interest rate of 10 percent per year, then he will double your money in 72 ÷ 10 or 7.2 years. This rule applies only to single-pay investments. Also, many times, the interest or returns are not guaranteed, especially if the returns quoted are high.
So make it a habit of reviewing the "1s" in your life. It can spell the difference between healthy and sickly personal finances.
Have you added up your "1s" lately?

Efren Ll. Cruz is a registered financial planner with the RFPI USA. He is author of the bestselling books, “Pwede Na! The Complete Pinoy Guide to Personal Finance” and “Pwede Na! The Complete Pinoy Guide to Retirement & Estate Planning.” He is Chairman and CEO of Personal Finance Advisers Philippines Corporation. This article does not constitute nor forms part of any offer or solicitation of an offer to buy or sell any securities. The opinion and views expressed herein are solely those of the author’s and do not necessarily reflect those of the Personal Finance Advisers Philippines Corporation.

[balot_sweet]

Little Things MAtter --> really true...nice 1 ts

[jfox]

nice.........

[BaDz Abadia]

nice one... saktoh gyud na...
wala may 5 kung walay 1

[Qyztina]

very very true bro... thanks for sharing this to all of us... makalimtan man gud usahay...

[peewee_toot]

wow! sakto kaayu ts. nice!