HAPPY NEW YEAR to All! It’s great to start the promising year learning personal financial tips from the expert via free videos you can download or view online. These personal finance education free YouTube videos were brought to you by Mr. Francisco J. Colayco, entrepreneur, businessman, financial adviser and video-sharing website YouTube owned by Google. Mr Colayco shares his expertise in personal finance and investing with these 10 videos also called Ten Commandments on Personal Finance.
Commandment #1: Pay Yourself First.
Income – Savings = Expense
Savings should not be the other way around which is Savings = Income-Expense. Use the 80/20 Rule and pay yourself first. Set aside 20% of your monthly income for savings. This will go a long way. Use only the remaining 80% for expenses.
Commandment #2: Define your Financial Target at Each Phase.
People go through 4 stages in his financial journey:
1. Start up Phase – All your income comes from active income (personal effort/sweat).
2. Build up Phase – 20% of income comes from passive income
3. Fine Tuning Phase – Income comes from 50% of passive or investment income.
4. Retirement Phase – All income comes from passive or investment income already.
At each stage, define your financial goals! Make a balance sheet and define your assets and liabilities. Remind yourself of your worth everyday. Each year, aim for your assets to increase.
Commandment #3: Stop Spending on Things that Decline in Value.
Invest on Things that Earn for you! Every asset should be an earning asset!
Sometimes we tend to splurge our earnings on things like cars which depreciate in value over the years or buy land which is of no use to us at the moment. This should not be. Although land may increase in value over the years, idle land, is actually an expense for you because of the taxes that you will be paying every year. And If you really need a car, just go for something within your means.
Commandment #4: Protecting Your Greatest Asset: Yourself.
We must have financial fall backs during emergencies. First, insure yourself (Life Insurance and Health Insurance). Not for yourself but for the love ones who you will be leaving behind but are dependent on you. Next, get a Health insurance. This time this is for yourself. Third, develop your spiritual health. This will bring you peace of mind. Lastly, continue developing yourself. Knowledge is power.
Commandment #5: Grow with the Economy and Beat Inflation.
There are 2 ways to beat inflation. First is to earn more than the inflation rate. Second is not to buy products that increased in price greater than the increase in your income. Aim to earn 2-4% greater than your countries inflation rate.
Commandment #6: Trust the Power of Compound Interest.
When we save, do not be tempted to use your earnings for personal use right away. Instead leave the earnings, learn to roll it, let it earn through compounding.
Commandment #7: Assess risks and option: the higher the return the higher the risk.
Some financial institutions offer super high returns which are unattainable at times. Beware of these as they are more likely to be a scam. Remember: The higher the returns, the higher the risks!
Commandment #8: Make Money Work For You – The Power of Leverage
Sometimes borrowing money is not bad if you know where to use it. A debt is good if you are able to invest this and earn more than the interest rate of the debt. Just make sure to pay back on time so as not to increase your debt because like your savings, your debt can also compound in interest.
Commandment #9: Invest and Diversify
Start investing to earn passive income such as stocks, mutual funds, bonds, real estate or online real estate. Take note though that what may work for others may not work for you. Then learn to diversify. Don’t put all your eggs in one basket. Diversifying makes your portfolio more stable in such a way that if one segment drops, your other investments can pull you up.
Commandment no. 10: Use the Power of ONE: Strength in Numbers
Join cooperatives, organizations, or associations that have the same financial goals as yourself. These organizations can help you earn more especially if you only have a little amount to invest. Some organizations offer fund pooling so the group can invest in less riskier but with higher return investments. Find one in your neighborhood now!
Francisco J. Colayco, Ph.D., is an entrepreneur, a venture developer and a financial advisor. He is also the Chairman of the Colayco Foundation for Education, Inc. Other than performing advisory services to business and professional organization and individuals, he takes the lead in educating the general working class, OFWs and students on how to manage their personal finances. His advocacy is further exemplified in the books he has written: Wealth Within Your Reach. Pera Mo, Palaguin Mo! Consistent bestseller in 2005 and 2006 and won the 2004 National Book Awards in Business and Economics. Making Your Money Work. Pera Mo, Palaguin Mo! 2. A consistent bestseller in 2006 and nominated in the 2005 National Book Awards in the business and economics category. Pera Palaguin Workbook, written together with Dr. Helen Valderrama is also a consistent bestseller in 2006. He has recently written Money for Kids. Pera Mo, Palaguin Mo! A Parent/Teacher’s Guide to Financial Literacy for Kids together with Dr. Nina Yuson Lim.
Mr. Colayco’s over 40 years of working experience covers service contracting in the Middle East, manufacturing, trading, construction, shipbuilding, management consulting, banking and financial services. He was conferred a Doctorate in Humanities Honoris Causa by the National University. He holds degrees in AB Economics and Masters in Business Management from the Ateneo de Manila University.
Hope these personal finance education free YouTube videos will give you lessons on building wealth, investing and realizing your financial goal to financial freedom.
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