I am so happy to announce that I will fully commit myself and this blog- blognigi to advocate personal finance more specifically targeted to low-minimum wage earners.
My journey to financial freedom I would say has just begun and there are a lot of things to do and so much things to learn and being an advocate I will try my best to document every step I take to achieve Financial Freedom whether it may give inspiration, information and lessons learned (mistakes I've committed) that I’ve experienced along the way.
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As my first post, I just like to state the obvious reason and answer the question “Why do Filipino low income or minimum wage earners reach financial freedom way slower than others?”.
To start it off I just like to give a little background on my previous job. I totally understand the position of having a minimum salary because I had a minimum salary way back 2011 to 2013 where I work under the agency for a government institution. Even though I work in the government directly I am still considered working in a private sector because I am under an agency. Anyway, I work here for two years and five months to be exact.
So let me list down the reasons why low-minimum wage earners attain financial freedom way slower or worst they didn’t able to free themselves from financial hustles and even accumulated debt.
1. Minimum Wage in the Philippines is Equal to Total Expenses for the Month
We have to admit that the minimum wage here in the Philippines is just enough for monthly expenses (ex. Food allowance, transportation allowance, utility bills, essential groceries like laundry soap, cleaning products etc).
If this is not true maybe we can save around P1000.00 to P3,000.00 pesos a month and the rest of our salary will go to expenses already. Also, the amount you save will depend on how huge is your responsibility in a household (if you are single, supporting your parents, working student)
2. Low-Minimum Wage Earners Spends Saving for Recreation or Refreshing Wardrobe
Being a minimum wage earner for sure cannot be a just work-home-work-home scenario. At some point we needed recreation and since our salary is mostly spent on Food/Transpo/Utility/Groceries already what is there to spend on recreation? Naturally, you will get it from savings and eat your heart out spending quality time with your friends or family (which I totally agree with).
For refreshing your wardrobe, if you are a lady you will totally understand what I meant. Refreshing your wardrobe is kind of pricey, yes you can buy cheap items but I tried it already and trust me it did not last long. So at some point in time, you needed to buy pricey shoes/jeans/coat and cash it out using your hard earned savings.
3. Savings is Important but not Being Prioritized
Yes as a minimum wage earner we know the value of savings, but like I said a person cannot just live like work-home-work-home scenario, we need a balanced life so recreation plays a crucial part. So even if we know the value of savings, when we needed to breathe a fresh air and go out for a vacation, naturally we spent our savings for that reason.
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4. No Plan After Savings- or Wrong Reason for Why He/She is Saving
Nine years ago when challenges come one after the other I realize the value of being financially free.
If only I am rich I can able to help my parents with these, I can buy them a new refrigerator a new car or they don’t have to work because they are too old and it pains my eye just to see them sweat because of hard labour.
These are the challenges one may face and have them realize the importance of having a lot of money or in this case being financially free.
It is true that I value savings over the course of nine years but what’s next after savings? To be honest I don’t have a plan at all. I just want to hold a huge amount of money and that’s it.
Does holding 5,000 pesos in cash will make us financially free?
The answer is NO.
And I don’t know that before. Sadly a lot of us are financially illiterate.
One should have a concrete plan after saving money.
If you are familiar with Peso Sense group in Facebook they popularized the “peso sense challenge/ipon challenge” where everyone can join (saving a certain amount of money using a money calendar provided by the group). There’s a lot of positive response about it and everyone seems to be inspired to save.
So after being inspired to save what is next?
Saving P50,000.00 to P100,000.00 a year will not make you financially free.
If you join the peso sense Ipon challenge for the reason of spending it for construction of your house (to upgrade its appearance) then you are not saving for the reason of being financially free.
Planning on how to make that savings work for you should be the goal here (but of course this still depends on the person this is just my personal opinion of how I should spend my savings).
Like for me, I already mentioned that I needed to travel this year, but I have a huge doubt about this one. If I spend mine for ex. P50,000 savings for travel what is next for me? Work hard again and back to square one. Nothing is achieved. Back to hustling and work payday after payday. So with that being said, I am giving a hard thought about my travel for this year which is moved next January.
Why?
Because I want my money to work for me someday.
Delaying my vacation now and put it on the right investment or business will mean higher income next year. And hopefully in the future, if I maintain the rhythm I can able to establish a portfolio wherein I don’t have to work anymore because my passive income will be more than enough for me to live in a month or year.
That is my long term goal actually and I believe a lot of people want the idea as well.
5. Low-Minimum Wage Earners Saves Small Amount of Money for Investment/Business Which Means Longer time In Reaching Financial Freedom
Well in business I think that even with a small capital you can earn huge ROI (return of investment) but for investment like stock market we already have an idea that it takes time to for it to gain a substantial amount of money.
Also I like to add that even you have the thought of investing money to stock market or FarmOn (online farming) or other investment vehicle you might go through the feeling of being uninspired because saving money might take forever for you to qualify for investing and lack of knowledge might discourage you to try which totally makes sense because I took forever to save that money just to give it to someone or an institution promising me a high percentage of income (ex. Doubt that you might lose money because you are not well knowledgeable about the investing platform)?
6. Social Security
Relying on social security alone upon retirement doesn’t mean financial freedom. Yes social security helps a lot but freedom to do some other things like travelling will not be possible with social security alone.
In my opinion, having social security is great but it’s even greater if along with social security you are taking charge of your own retirement by having passive income.
Well, I think I already exhausted my own reason why does low-minimum wage earners take a longer time to reach Financial Freedom.
For sure I will put another post related to this one.
Hope you are inspired like I am to escape the payday after payday loop and start to do something to take charge of our finances.
That is it for now.
Thank you for reading all the way!
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