by venus zoleta, on category "Personal Finance"
December 20, 2018
The breadwinner of the family is an unsung hero, to say the least. It isn’t easy—and never will. Raising an entire household by yourself is a huge sacrifice. As the sole provider, you always prioritize your family’s needs over your own, even if it means putting your personal dreams on the back burner.
For Pinoy breadwinners, financial freedom looks like a far-fetched idea. It feels as though your hands are tied to many responsibilities like paying the bills, sending kids to school, making both ends meet, and finding more ways to earn income. It seems no single penny will ever be left for you.
But you can absolutely achieve financial independence, even as the breadwinner of the family. The key is to manage your finances wisely.
Here are eight money management tips for OFWs, solo parents, children assuming the parent role, or anyone running a single-income household.
Do you know where all your money is, where it’s going, and why? If you can’t confidently answer “yes!”, now’s the time to start being on top of your finances. Even if another family member (like a spouse or parent) is in charge of household budgeting, you yourself must know the answers to these questions.
Assess your financial situation to know where you stand right now. So you can do that, personally and regularly track your net worth, spending, and reasons for spending.
There are different tools you can use to keep your finances in check, like Excel, personal finance apps, or traditional pen-and-paper method.
The usual struggle of any breadwinner of the family has to do with their loved ones’ bad money habits and behaviors. A parent or spouse who splurges on vices or luxuries. Able family members who make no effort in finding a job. Siblings who don’t take their studies seriously or always ask money for “school projects.” Relatives who borrow money but never pay them back.
Sound painfully familiar? Just because everyone depends on your income doesn’t mean you have to bear the burden alone. You may be the unsung hero, but playing the hero all the time can take a toll on your physical, emotional, and mental health.
Sit down with your family to make them understand your real financial situation, the problems you’re going through, and how each one can help. Together, make a plan on how your family can help supplement your income and reduce spending, such as taking on part-time or work-from-home jobs, starting a small business with low capital, and avoiding unnecessary expenses.
Straightforward communication with your family sparks or strengthens their sense of accountability and responsibility, which can definitely help you manage your finances better.
Even if you’re earning a six-digit salary, you have every right to refuse entitled family members who constantly borrow money, request gifts or dole-outs, and rely on you all the time. You aren’t being a bad parent, child, or sibling when you don’t accommodate your family’s requests. You do have your limits, so you have to set your boundaries.
If you’re a parent and your kids always demand new toys, gadgets, or any expensive stuff, gently and calmly explain to them that times are hard these days and you need the money for more important things like buying food and paying for your rent.
If you’re a breadwinner of your parents and siblings, let them know that your financial support has its limits, as you have your own dreams to pursue someday, like traveling the world or starting your own family.
Being a good breadwinner of the family doesn’t necessarily mean earning a high paycheck. Rather, it’s all about having the right money habits and training your dependents to follow your example.
Take every possible opportunity to impart to your loved ones how important money and hard work are, how to live frugally, and being responsible with money. Consider opening savings accounts for children and training the older ones on saving money or starting a business.
Although you’re the breadwinner of the family, you don’t have to spend your full salary on their needs every month. You have to think about your future, too.
Every payday, set aside an amount for your emergency fund, investments, insurance, and other financial must-haves. You can use separate envelopes or bank accounts for these different purposes.
Investing, let alone saving, is extremely hard for someone who solely provides for the family. But being the breadwinner of the family isn’t an excuse not to invest.
Rather than just save money in the bank, put a percentage of it in investment instruments such as mutual funds and stocks where growth is higher. Investing is an effective way to beat the impact of inflation on your savings.
Learn about investing as soon as possible so that your money will have more time to grow, and you can more easily achieve your long-term financial goals.
To get started, read up on the basics of investing online and attend financial seminars. The Philippine Stock Exchange (PSE) and COL Financial conduct free public seminars separately. They’re great places to start learning the ropes of investing in the stock market. If you’re too busy, you can visit the PSE Academy website and learn from its reading materials and free webinars.
Like investments, insurance may be among the least of your priorities as the breadwinner of the family. But don’t treat it as just an added expense. Insurance protects your family from financial burden in case the unexpected happens to you.
For breadwinners, one of the insurance products to consider is variable unit-linked life or VUL insurance. It’s a life insurance and investment rolled into one financial product.
Whatever insurance type you choose, make sure to list all your qualified dependents as beneficiaries. If you have dependents who are under 18 years old, appoint a trustee or guardian in the meantime (Minors can’t receive insurance benefits until they hit the legal age).
Also, decide if you’ll declare your beneficiaries as revocable or irrevocable. If you choose revocable, taxes will be deducted from the benefit pay-out. But the advantage of having revocable beneficiaries is that you can make changes to your insurance policy any time without asking their consent.
On the other hand, irrevocable beneficiaries will receive the benefits tax-free. But you’ll have to get their consent each time you make any change to your policy.
Building a retirement fund is another thing most breadwinners forego because they have to prioritize their family’s needs. But come to think of it, all the years you’ve spent working to support your family financially will be put into waste if you aren’t able to save for your future self.
If you’re thinking the SSS pension you’ll receive when you retire will be enough to cover your living expenses, you’re mistaken. Find other ways to boost your retirement income.
Good thing, there are several affordable choices for Filipino breadwinners who want to start saving for their retirement such as the SSS PESO Fund and PERA investment.
Money management is crucial to providing sufficiently for your loved ones while being able to prepare for your financial future. Being the breadwinner of the family is tough, but you can definitely be in control of your finances.