The Basics of Cash Flow Pinoy Style

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I just found a good reading that discusses the basics of cash flow the Pinoy way. The article from an unknown author was a good reading and an eye opener, worthy of being shared to Pinoys around the world. So, here it goes.

The basic is. What pattern do you see if you will get a P100.00 bill and monitor where and how it is transferred from 1 possessor to the other? How does it flow? The pattern for a typical Pinoy is, you earn from your work, you spend it on food, gadgets, clothing and other basic needs. Before you reach the next payday, you almost have no more money. But that’s ok payday is just a few days ahead and it doesn’t matter if I run out of money, I am expecting money again any time soon.

This cycle goes on and on and you make some sidelines or create other ways to earn but it seems that money was never enough. (I am tempted to explain further, but let’s stick with the basics).

So you can’t leave the job that you have because a week without work would affect the cash flow you have to support your family and needs. As much as you wanted to accept another job, the gap would make you pay less for a couple of days, which makes you a slave to your boss.

At least, you have a job to support your needs.

So to illustrate.. Cash is flowing inside your pocket.

Years have gone by doing your monotonous routine.

Question… what if you get fired? Or you were forced to retire because there are new and younger people ready to take your place. What would you do?

As an OFW, Makati Executive, Top Salesman, Engineer, Attorney, Teacher, etc… What if it all ends? The sweet cash that enters your pocket every 15 th and 30th suddenly comes to a halt.

There are two things you can buy with your money… An asset and a liability. To describe each… An asset brings money inside your pocket; a liability takes money out of your pocket. Another way to see, it is that an asset if you buy one, will bring the money you spent for it back to you 2 or 3 folds. A liability, when you buy it will not give your money back at all.

In other words, if it’s an asset, you can expect a return of investment, if it’s a liability, then say goodbye to your cash.

The problem with a typical Filipino is, while still working, they try to earn money just to buy liabilities!

I have seen overseas Filipino workers who gets back to the country with gold chains and if possible wearing five pairs of sunglasses!.. they have dvd player(s), stereo component, expensive clothes, jackets, host drinking sessions, lots of appetizers, party, perfumes, and couldn’t walk anymore because of too much luggage.

And also, there are these employees in the Philippines who has new cellphones every week, new mag wheels for their cars, their closets are already overflowing with clothes and yet they still have the guts to say “I have nothing to wear anymore!”

Guys, think about it… what you bought… will it bring money back to you? I know what you have in mind… you have to enjoy what you worked hard for. That’s right, but think of something that will last… think of your future.

I have seen the worst of people who were prestigious lawyers , executive secretaries of top rank business men, people who worked for big companies, earned a fortune and got a big retirement pay by the millions… Now…. They are gone.

Why? Because of their cash flow… went in… went out.

I need not to mention basketball players, actors, singers, etc… Check what is their career path… next after acting, singing and playing… POLITICS. Why? Because the millions that they earned was spent on liabilities!

Going back… all the liability they bought, was sold for a cheap price! I’m wearing a gold chain now, which I got from a seaman… he bought it for P35,000 and sold it for 8,000 to me. Jewelries are not an asset! Why? It is true that its value is increasing through time, but if you’re starving, you will sell it at the cheapest and fastest price possible! It doesn’t end there, they will sell their cellphones, dvd players, stereos, the car, and the house!.. that’s the cash flow of most overseas Filipino workers.

The question is … “WHAT IF THE INCOME STOPS?”

A typical Pinoy would say: “my son, study hard ok?, when we get old, you’ll be the one to provide my financial needs.” Do you see something wrong with this? Yes it is wrong.

You have to establish something today that will take care of your future.

But wait, what should we do in order to attain that?

You must create a source of income that will continually make money flow inside your pocket. Start a business! While you are working as an executive or an OFW, or a professional. .. START A BUSINESS and MASTER that business till you get out of that company. So that if your cash flow stops with that company, you still have a fall back that will take care of you until you grow old.
Now don’t tell me to invest my money on pensions and plans… NO WAY!, Maybe you’ve heard of the news about those who paid loyally to Pension Plan companies and couldn’t claim their benefits, and in the end they were the ones who were sued! DON’T ENTRUST YOUR FUTURE TO OTHERS! MAKE YOUR OWN SOURCE OF INCOME, EVEN THOUGH HOW SMALL, AS LONG AS IT IS YOUR OWN AND NOT OTHER’S PEOPLE’S MONEY…

Imagine yourself when you reach an older age… You have money that the company gave you as your retirement pay… what will you do?

You can consume the money till you’re old… but what if it is not sufficient? What if you are a very bad person that’s why heaven doesn’t want you yet? And you grow older beyond what you expect and spent all your retirement money?

Or maybe, you can start a business and use the money for capital… not! here is reality, 9 out of 10 businesses, FAILED… the only one that succeeded will then be copied by your neighbors instead of buying a franchise from you… think! At age 50, you are struggling trying to make a business work! What if it fails?!

So, what really is the answer?

The answer is, stop buying liabilities and instead buy assets now. I don’t care if it is a banana-Q store, balot, ice candy or a sari-sari store, etc… start now! Because, your experience here will teach you what to do in the future. It’s so hard to struggle in business when you are 60 yrs old.

You have to create a source of income separated from the source of income from your work. That when the time comes that you have to stop working, you will have your own source of money! Create assets, start a business that will be there to support you and your family. I AM NOT TELLING YOU TO QUIT YOUR JOB! I’m telling you to start a business while you’re working and stop spending your money on liabilities and start putting them on assets!

Money spent on LIABILITY… will never come back… money spent on ASSET… will at most double your money.

But wait… is it really bad to buy good and nice clothes? NO! Just be sure that the money you spent for luxury is coming from your asset. The business has to be prioritized! If you lose your job, at least you have a business to start on.

If before you could live with just having a pair of shoes, don’t change that (YET)! If before you buy clothes from Divisioria, think twice before going to Rustan’s. Do you really need it?

Create assets and lessen liabilities. Invest and learn now… start a business!

But what business? Any, as long as you think it is workable and doable! I am still looking for partners for my HOME MASSAGE SERVICE! SPA MAGIC! And my business CAR MAGIC is still franchising. .. (JOKE!) But really… think of something unique that you can start with.

Some people started their businesses with a very small capital. If they used that money to buy a gadget, new shoes or any liability… then maybe by now their businesses are gone.

Again, I hope that this BASIC CASH FLOW article helps…. I wish all of us become financially free!