'Secrets on how to manage personal finances in tough times'

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MANILA, Philippines—In these tough times, knowing how to manage your personal finances may well be what will determine if you are to survive or not. When it comes to the topic of “Effective Personal and Family Finance Management,” the expert that comes to mind is Ernesto Escalante. Ernee, as his friends call him, has a finance background, then later headed the Human Resources team of San Miguel Beer and then the Logistics Head of the Lopez Group. He is a general management consultant with bragging rights in several disciplines. Ernee is one of the main speakers in the Rainbow Life Seminar Series and will share his views on this subject matter on November 25. Below are some tidbits of wisdom from Ernee:

Tita: When and how did you recognize the need to manage your personal and family finances?

Ernee: I felt the need to manage my money because I always never had enough of it starting way back my childhood days when I was totally dependent on my parents for allowances. This became even more important for me when I had to provide not just for myself but also for my growing family.

Tita: Is there a framework you use when you plan and manage your finances?

Ernee: Initially, it was the debit-credit or T-transaction approach in basic accounting which I learned in my college days. This served as a system for ensuring a commonsensical philosophy that my expenses should not exceed my income. This approach then evolved to something more sophisticated to consider the practicality of availing loans for important asset acquisitions and to be more prepared for the future needs of my family.

Tita: What are the most important skills and competencies required to do well in this area? Can an ordinary person do it?

Ernee: A person must know how to add and subtract (the easy part) and must have foresight and self-discipline (the more difficult components).

Tita: What mindset or mental attitude is required to do well in this area?

Ernee: Learning from yesterday, enjoying today, and gearing up for tomorrow based on a well thought out vision for the many more days after tomorrow and guided with a set of personal values (such as integrity and frugality) emanating from the spiritual belief that we are just passing this world.

Tita: Please give tips how one can begin to manage the area of personal and family finance?

Ernee: First—Learn from the past by recording and understanding how you spend your income. Second— Live within your means. Third—Save for your future.

Tita: Today, many young people get a relatively good salary but still get into debt, some even pawn their atm cards or resign from work just to avoid collection calls from credit card companies. If a young person wants to go out of debt, what steps can he take?

Ernee: Refer to my tips plus a strong resolve to pay the debt in the shortest possible time.

Tita: Would you recommend a young couple to take an educational plan for their children? How can they avoid what happened before when education plan companies could not pay their obligations?

Ernee: This is definitely part of preparing for the future. Although the future will always be uncertain and carries a lot of risks, it can be managed to a good extent with assistance from reputable and competent professionals and institutions.

Tita: How can we save more of our salaries? What is the right level? How about insurance, what is its role in financial planning?

Ernee: The “right” amount of savings depends on one’s personal circumstances—this can be determined by the current and future level of needs and wants of an individual for himself and for his family. Personally, I consider insurance as a good scheme to manage the uncertainty of the future with its unforeseen risks.

Tita: How about investments? What is best given the economic crisis?

Ernee: Do not panic and bear in mind that the world does not end today no matter how difficult it may seem. If the world does end today, you will wake up to a different world tomorrow. This different world tomorrow will depend on how you prepared for it spiritually.

Tita: We heard you became financially independent at a relatively young age, what is your secret?

Ernee: The secret is my strong philosophy that what I am now depends on how I lived my past and how I prepared for today—which will continue to move forward tomorrow (whether I like it or not!). Managing one’s finances is just part of managing the totality of one’s life (here and beyond). —
Tita D. Puangco

(For information on Escalante’s talk and the Rainbow Life Seminar Series on Nov. 24, 25 & 26, 2009, visit http://rainbowlifeseminars.wordpress.com or call tel. nos. (632) 556-3215, 556-3216, 556-3219.)