The 3 Wallets we must Have (to be financially stable)

We always hear this aspiration in life: “I want to be financially stable” and oftentimes when we probe what this exactly means, we hear answers like: I want to give my family more than what they need, my children will be able to finish the degree they want and live a comfortable life now and in the future.

In a study conducted by the National Economic Development Authority (NEDA) to define the “Life Filipinos Want”, an overwhelming 79.8% said they want a simple and comfortable life and by that, the study revealed, we want to live in a house we own, have a car, being able to have our children finish school, have money for our daily needs and being able to travel occasionally. Filipinos’ aspirations are very family-centered which even includes the ability to take care of our ageing parents reflective of our close family ties (

“A simple and comfortable life is the kind of life Filipinos generally want.”

NEDA Study, Ambisyon 2040

Sad to say though, a lot of us, never get to do all that we aspire for. In the process, we either delay or downgrade our plans and most often than not, it is because we failed to prepare. The good news is the fact that more and more Filipinos are improving the amount of disposable income they have as we progress towards an upper middle-class society. However, we need to change our attitude towards financial planning to truly enjoy the kind of simple and comfortable life we aspire to have.

For a family with children, I include their education as part of the daily needs especially if they are already of school age now and I strongly suggest that a College education fund be set-up while they are young that goes side by side with setting-up your retirement fund. One big mistake that a lot of Filipino parents do is to set aside saving for retirement in favour of setting up our children’s education fund and run the risk of running out of time to build-up enough to become self-sufficient in our old age.

Most Filipinos keep just one account, whether in the bank or investment funds for these 3 requirements so the tendency is we spend for daily or emergency needs what could have been for retirement. To avoid this, we should have 3 different programs for each and make sure you invest or save in funds that match your needs. Short-term needs should be in easily accessible funds while long-term needs (10 years or more) in aggressive funds that offer better returns. A rule of thumb is to set aside 5% of your annual (or monthly) income for education fund (if your children are still very young) and 20% for your retirement fund (to give you more options on what to do and continue to be productive in your golden years); build an emergency fund equal to 6 months of your cost of living and do not touch it unless it is for emergency and full-proof your financial plan by having income protection coverage (ie life insurance and health insurance) ideally 10 times your annual income (there are many insurance products that can give you the security of a big coverage that is easy on your pockets and the younger you are, the lower will your premiums be).

Think about it as having 3 wallets – each serving a specific purpose. You can never over-save or over-invest. Include funding your financial plan in your priorities. You will thank yourself for this.


Where do I start?

Your life goals is the best place to start. Defining what you want in life – not where you are now but where you want to go.

First, Envision the future you want

How does your retired life look like? All your children are settled down and have their individual families and you are empty nesters with your spouse. What would you be doing by then? Maybe you envision yourself to be living with one of your children or maybe you choose to live alone. Whatever it is, visualise what kind of lifestyle you will have then. Maybe you want to live in a farm with a couple of relatives, travelling once a year abroad and being able to visit your children wherever they are once a quarter; being able to continue doing your healthy lifestyle with regular yoga exercise and visits to the salon once every 2 weeks and socialising with your “amigas” and “amigos” on a regular basis.

How many years from now will that “future” be?

Since such future assumes your children are all settled down, it also means that they have all finished their college education (which should be part of your financial plan and I will write about this in another article). Bear in mind that preparing for the “future that you want” once retired should go side by side with setting-up the education fund for your children. One cannot be set aside and wait for the other to be finished. Lest, you lose your build-up stage.

Here’s a simple template to start your mind thinking.

Start with your long-term goals…then work back what it should be in the medium term and the short term.

Know the price tag of the future you want (then assess what you currently have)

The next step is to put a price tag to the future that you have envisioned for yourself. You want to live in a farm, so when are you buying the property (if you haven’t inherited one)? How much will that cost? What investments can you make now that can provide you the passive income later? For example, you might want to build a 4-door apartment or buy a condo that will give you rental income later. Have an estimate cost to buy or build it.

The other big ticket item to prepare for will be the money you need for your daily expenses and/or the source of passive income I mentioned above. Start your mind into thinking using this simple My Personal Financial Plan template. If you want to build a vacation or retirement house 20 years from now (long-term goal), how much money should you have in 20 years? Using the template, work back how much you should have in the medium-term and in the short-term. Regularly review this.

As you may have realised by now, living the future that we want requires long-term planning that’s why the earlier you start the better it is as it affords you a growth period – the longer this is, the smaller is the amount required to put it up. You will be surprised how small an amount you need to set aside if you have the discipline to do it monthly while you are young. That’s what I call paying for the future that you want on instalment basis.

Start paying for that future now.

Hi! I am Bing.

I have been in the Financial Services sector for over 30 years and I have personally witnessed how financial planning can lead to a comfortable life at every stage.

I aim to help stop the “sandwich generation” that has pervaded the Filipino culture for so long – children needing to take care of their parents while they take care of their own family and consequently affecting their own ability to prepare for their own retirement.

I believe living a quality life is a series of small decisions.. It doesn’t need to be overwhelming. We just need to get some sensible advice and that is what I intend to do.

I hope to share my insights on the steps and missteps I took hoping that my life journey can help in your life journey as well.