Where to put your extra P5,000 to P10,000

As you know, I attended Bo Sanchez' How to be Truly Rich Seminar last February 6, 2010 at the St. Francis Theater in Lourdes Mandaluyong and there Bo Sanchez talked about investing your money in the right places. He advises us to save 20% of our income every month.

What do we do with the 20 percent? It depends on your current situation.You also have your current finance and debt situation to consider. Here are some questions to think about:

1. Do you already have an Emergency Fund?

      What's an emergency fund you say? An emergency fund is just that, money set aside for a rainy day or any emergency. Your emergency fund should be equal to at least 3 to 6 times your monthly salary. So, for example, if you're retrenched or get sick, you'll have enough money to cover your expenses for the next few months til you get better or find another job.

2. Do you have any debts?

     This is self explanatory. If you owe any one or any company any money then you have debt.You can use what is called a FREEDOM FUND to hasten your debt payments. Let's say, for example, you pay P5,000 monthly for your car. You add the FREEDOM FUND to your monthly payment of P5,000 so that your balance will go down much faster. The next thing you know you're already debt free!

So if you don't have an emergency fund yet plus you also have debt. Here's how you divide your 20%
     Place 1/3 of 20% in EMERGENCY FUND
     Place 1/3 of 20% in FREEDOM FUND (for paying off debt)
     Place 1/3 of 20% in WEALTH FUND (money for investing)

Just adjust this accordingly depending on your situation. Once you already have your Emergency Fund in place then you can then already allocate 1/2 each to your Freedom and Wealth Fund or if you don't have any debts then allocate half each to building your Emergency Fund and Wealth Fund.

Also remember, if you have any particular debts that must already be paid then you can put your full 20% towards your FREEDOM FUND.

Additionally, if your emergency fund is already in place and you're debt-free then you can also place the entire 20% in your Wealth Fund.

We'll talk more about the Wealth Fund soon.


- designstudentny