Fit Right in Christmas

Financially Fit Even After Christmas



Credited to: Francisco Colayco



We are just now feeling the effects of the global downturn of financial markets. The situation is unprecedented and nobody really knows how soon or how long the recovery will take. More importantly, nobody knows how the financial markets will look like after the dust settles. For sure, investment banking will no longer wield the financial clout it used to have. Most players in the industry will have probably de-leveraged and be more strongly capitalized. Unfortunately, this could also mean less credit being made available even to qualified borrowers. The bottom line is we must all be more conservative and assume that our own economic prospects may not
yet be as bright the coming year. These times call for belt tightening but aggressivepursuit of new income generating activities. Even with uncertainty, Christmas is still Christmas. When you receive your 13th month pay and/or bonus, your probable immediate reaction is a desire for self-gratification. After all, you deserve it after having worked and scrimped so hard over the past months because your salary was not enough. Salaries are never enough even if it is. You will surely admit that even if you are able to cover your living expenses and save, you still want
more. Then, you get a bonus that you see as a prize for work well done. You will surely be tempted to splurge. But before you start splurging, can you remember what we have discussed in this magazine regarding Active Income.


• Active income is the income you earn by working.
• You must set aside 20% of this hardearnedMoney
• Active income is to be used only foreveryday expenses and for savingsand investments.


Your 13th month pay and bonus are both Active Income. If you do not work, you will not get it. Therefore, you have to treat it like any other Active Income but with a twist. Since your regular salary covers your everyday expenses, then most of your 13th month and bonus should go into savings and investments. Maybe it is too much to ask that you save all of it but budget your bonus mostly for savings and a reasonable portion to support some increases in your December expenses.


DO NOT BY ANY MEANS SPEND ALL OF IT FOR ENTERTAINMENT OR GIFT GIVING!


Strictly speaking, it is only passive income that you can use for your giftgiving and parties during the Christmas season. Remember that passive income is the income you earn from your savings.
The income will come to you whether you work or not. If you are tempted to use your passive
income for the holidays, remember that if you use it instead of “rolling it over” or reinvesting it to earn more income, you will have to find a way to replace it so that you can still meet your Net Worth Goal for your retirement. After all, having a good retirement is when you have sufficient passive income to support your retirement lifestyle. You need to really save for it now while you still actively earn. If you spend it now, your retirement will surely suffer. If you really want to spread good cheer and sharing during Christmas, remember to cut down on your everyday expenses during the months or weeks before Christmas. If you have not done so during the past weeks, you will just have to reduce your Christmas expenses this year and make up for it next year. You can start cutting down on your daily expenses starting January so that you can spread more cheer for Christmas 2009. This means setting aside perhaps more than 20% for savings to be able to share more during Christmas and for that matter any other holidays you want to celebrate (including birthdays and others). Remind yourself that your life will not end after Christmas and New Year’s Day. There is nothing wrong with giving and sharing. In fact, it is one of the noblest things to do especially when we give to those who have much less without expecting anything in return. Just remember that you cannot share money that you do not have! Your first financial obligation is to yourself. You have to plan and prepare for your own future. Finally and most important, let us remember what Christmas really is. The birthday of Jesus Christ who was born in a manger. All the consumerism of Christmas is man-made. We can be happy and share but let us remember that life will continue and we will have to prepare for our future while we still have the means.


I wish you all a Blessed Christmas. For 2009, may your troubles be less! May your blessings be more! May nothing but happiness, peace and prosperity come through your door!


credited to and written by: Francisco J. Colayco