Manila

Who should use/read this Primer?
YOU are the primary user, especially if you are a person who is newly-employed whether in the Philippines or overseas. And your first task is to share this primer with YOUR FAMILY – your parents, your wife, your children or whoever will receive a share of your hard-earned income. This is because this primer requires you to do some exercises that need information from them. You may also have to make some important financial decisions while reading this primer. It is best that you make these decisions JOINTLY with them.
In short, this primer is for YOU and YOUR FAMILY.

Where does your money go?
You could say,
n• to your wallet
n•to your bank account
n•to your mother/father or relative/guardian
n•to your wife, if you are married
n•to all of the above

These are the immediate destinations of your money. Ultimately, however, your money actually goes to
n•Consumption
n•Protection
n•Savings & Investment
n•Taxes

What is “Consumption”?
You spend for Consumption items so that you can survive and advance in your work, at the very least, or enjoy some luxuries, at most. Except for education and information, once these items are consumed, you cannot get a return on your payments. They are lost forever. That is why they are called ‘consumption’.

Included in Consumption are expenses for your
n•Basic Needs – food, clothing, shelter, transportation, education, information, leisure
n•Non-Basic Needs – jewelry, expensive luxury items, cigarettes, alcohol, etc.

What is “Protection”?
These payments protect you and your family in case something untoward (for example, disease, an accident, or death) happens to you. Buying insurance is the main form of protection.

Payments for Protection include
n•Medical/Health Insurance (including PhilHealth)
n•Social Security System (SSS) or Government Service Insurance System (GSIS) contributions
n•Life, Accident, Disability Insurance
n•Non-Life Insurance – vehicle, property insurance (against fire, etc.)

What are “Savings and Investments”?
Unlike Consumption items, payments to Savings and Investments (S&I) are not “lost”. On the contrary, they accumulate and grow for future use. One way of looking at S&I is “payments to yourself” because they actually go to you (and your family) and no one else. If you put money into a Time Deposit Account in a bank, the money remains in your name. So you actually pay yourself. The bank just keeps the money for you. You still own it.

Under Savings and Investment are deposits or payments into your
n•Savings Account
n•Time Deposit Account
n•Long-Term Funds – trust, pension, investment
n•Real Estate – House and lot down payments, installments (not rental payments)

What are Taxes?
Taxes are payments you make to the government so that public goods and services can be provided to you and all other citizens of the country. The amount of taxes you pay are based on the amount of your income, your real property, and the purchases of goods and services that you make. OFWs are exempt from income tax but not from other taxes. All local employees pay all taxes.

Where SHOULD your money go?
We said previously that your money usually goes to consumption, protection, and savings and investments. But it need not go to those three main items in that order! In fact, the reverse is actually the IDEAL order of payments – Save, Protect Yourself and Your Family, before you Consume.