Money Lessons 2: Fail Proofing your Future

If you asked me back in college what I would want to be, I would have answered that I dreamed of being in the advertising industry. Although I grew up in an entrepreneurial environment, I never really thought I would have the personal or financial capability to go into business. Little did I know that God had planned me to be an entrepreneur after all.Luckily even as a child, my family gave me, my siblings and cousins many opportunities to learn, be involved and imbibe the entrepreneurial mindset. My mom's side of the family was in the garments export business. While my dad himself was a self-made businessman who owned a thriving printing business then and with his brothers built a hospital in Quezon City.With my maternal cousins, we would spend summers working at our Lolo's office typing out purchase orders and invoices, or filing documents. On some days we would be assigned to work inside the factory to pack knit sweaters that would be for export. When we were a bit older, Lolo and our Aunties would allow us to set up sweater sales in the garages of our homes. My Dad on the other hand noticed my "natural skill" for proofreading and would make me check and proofread the artwork of airline menus that we would print in his printing press. When I had time and wanted to earn extra cash, Dad would let me pad the scrap paper from the press and I'd sell padded paper to my classmates. I enjoyed all these experiences growing up, and being used to the work, learning to be disciplined, creative and resourceful while being rewarded with some compensation molded me to what I am today.  I guess I knew then what I know now, that with hard work, comes rewards, and that work can be fun and fulfilling at the same time.These experiences form part of my "money memory." During a recent SoMoms session hosted by Axa Philippines, and Rose Fres Fausto, financial expert and author of "Raising Pinoy Boys", we learned that it is important to look back into the past and help you understand the roots of your mindset and relationship with money. Like in most things in life, understanding yourself puts you in a position of knowing where you need to improve and grow.Just starting with the walk down "money memory lane" was a good beginning and I knew we made the right decision to pursue this financial talk for the SoMoms. It was made extra special by New World Hotel's superb ambience and service. They hosted us at one of their function rooms which was a cozy, classy space...Our very own roomThe special menu for the day, prepared by New World MakatiThe lovely open kitchen inside the function room with our very own chefTWG tea serviceAxa opened the talk by reminding us about the importance of planning for the future. For us parents, it involves income protection, preparing for emergencies and retirement, and  ensuring we have enough to fund our children's needs and education. They shared with us the staggering stats:8 out of 10 breadwinners fail to safeguard their income (from BSP Consumer Finance Survey, 2012)6 out of 10 seniors fail to prepare for retirement (from BSP Consumer Finance Survey, 2012)7 out of 10 patients fail to prepare for health emergencies (from Philhealth, 2011)Only 14 out of 100 students who enter Grade 1 will graduate with a college degree (CHED, 2011)This was a surprise to me, "education cost should only be 10% of household income". Woah.The campaign to Fail Proof your future is a wake up call to make smart money decisions now.  How else can we do this?  After all, it is true that "we all want our kids to be all set for life." Besides funding their schooling, it entails much more from us modern moms and dads. It is also important for us all to be financially intelligent, us parents and the kids included.  FQ or financial intelligence is "the ability o make sound decisions on personal finance". Here are some lessons I learned that day that would help us get on the road to increasing our FQ:1) Money matters should be a family affair. Set goals as a family.2) Differentiate between needs and wants.3) I learned this from my friend at Irenas Bookkeeping, use this formula when budgeting every month: Income- savings = expenses. This is the famous "Pay yourself first" principle. Keep 20% of your salary as savings or for investment.4) Go beyond saving, invest for growth!5) Set up an emergency fund which should comprise of one (1) year living expenses, (if you are a businesswoman, like I am). Make sure you have life insurance and property insurance. The formula for your retirement fund should be: your annual expenses x number of years before you estimate you will go to heaven!  Compute, compute...6) Give back to the less fortunate or a cause you believe in.Rose, who taught her 3 now grown-up boys how to invest since they were young, shared these very interesting tips as well:7) Start the financial journey of your child now. Create their own financial statements and use this as your aid. First expense is savings and investments. Update their FS every quarter When they are old enough, explain the FS to them and allow them to see their assets growing.Our children's allowance is actually one of the best steps to be a millionare. Using the magic of compounding interest, young children can actually grow their money if they manage it wisely. Rose actually has a worksheet for this in her site.She also says that even if our kids don't use their allowance, we should give it so they learn to save, but make sure all their expenses are shouldered by themselves too.I remember during our family trip abroad, my boys asked what can they can do to grow their money. While we were abroad, they had been gifted in cash by their generous titos and titas who wanted to treat them to some extra pocket money. They each had a nice amount which, I was happy to know, they were interested in saving instead of spending in one go during vacation. They asked us if it would be best to add to their savings account, or if there was a better way like investing it somewhere, and they even asked if they could invest it in Creative Juice, our family business.I knew then that my boys were ripe for the money talk. But after listening to Rose, I realized that I was super delayed if I base it on her own experience with her boys. All is not lost, Gary and I just need to start with our boys now, and include Reese as well.--So many lessons learned in one fruitful morning! From the speakers, we realized there are so many so many bases we need to cover, we also have to be careful not to get too overwhelmed. For now, we take the easier baby steps towards becoming truly financially healthy and protected, and make sure to take our children along for the ride in our quest for knowledge and our journey towards financial health and success. Now that is another lesson learned in progressive parenting, don't you think?Time to take more steps towards Fail Proofing our future.The SoMoms in attendance with Axa representatives and the Faustos in this #betterme sessionMyself with Kris, fellow SoMom of ocmominmanila.com who arranged for this talk, and speaker Rose Fres FaustoThis banner struck a cord. At the end of the day, would you want your child to give you a failing mark when it comes to their financial security?Thanks for the heads up, Axa Philippines!---Learn more about Fail Proofing your future and also get a chance to win great prizes from AXA Philippines, including a Trip for 4 to LegoLand Malaysia. Click on the photo below to join through the Fail Proof your Future Facebook page.Sign up for free to join! https://www.facebook.com/FailProofYourFuture/app_302332076570122.Besides the trip to LegoLand, the following Minor prizes are also at stake:Gymboree PackagesPasses to Mind Museum, Nido Discovery and Manila Ocean ParkSchool Supplies Package from National BookstoreMusic lessons from the Yamaha School of Music and Center for Pop MusicDesktop & printer packagesTo read more about raising your child's FQ or about Rose Fres Fausto, visit her blog here.She also wrote about our sessions in her column in philstar.net:Part 1: click here.Part 2: click here.For updates on New World Hotel, follow them on Facebook here.