Practical Money Management & Strategies

1. THE IMG FINANCIAL SOLUTIONS Practical Money Management & Strategies By: Tommy P. Tandog, AFP, SMD

2. SOLUTIONS FOR A CHANGING WORLD IT’S A NEW WORLD Our world is changing fast. It creates massive chaos and new challenges as well as new opportunities. THE RULE OF MONEY IS CHANGING… PEOPLE LIVE LONGER TODAY… 83 vs. 47(1910) PEOPLE SPEND FASTER TODAY…

3. IT’S A NEW WORLD Before Now • Degree • Degree • Good Job • Good Job Good Income Good Income • But Why in debt?

4. IT’S A NEW WORLD BEFORE one source of income was enough TODAY having multiple income streams is a necessity

5. IT’S A NEW WORLD TODAY the 10 children can not raise a parent. BEFORE a parent could raise 10 children.

6. THE NEWMIDLIFE CRISIS Shorter Productive Life BEFORE NOW Work in the first 20 years and may struggle in the next 40 years to survive and retire. Work between the age of 25 – 65 and retire for the next 20 years. Uncertainty and Insecurity Job security is the thing of the past. Average time of employment at one particular job is 4.4 years. (Economic New Release: Employee Tenure Summary, 2010) The next crisis in our lives is the retirement crisis.

7. THE CHALLENGING TIMES The Global Financial Crisis of 2008 Has Put Millions of Families in Great Economic Hard Times. An Increase in debt, bankruptcies and foreclosures. More lay off & Stressful Jobs Business Failures Time Magazine, A Flight for the American Economy, June 5, 2011

8. THE CHALLENGING TIMES MANY FAMILIES ARE FINANCIALLY STRUGGLING Argue over finances -89% of divorce in the US due to money problem.

9. THE CHALLENGING TIMES More people are expected to be trapped in an endless cycle of financial frustration!

10. FOUR BASIC FINANCIAL MISTAKES Financial planning is not a priority.  Lack of Financial Planning Entrust their financial future in the hands of others.  Depend on Someone else Don’t believe in delayed gratification.  No Discipline Not interested to master financial literacy.  Lack of Financial Intelligence

11. 0 20 25 35 45 55 65 75 85 95 Most People Don’t Want To Fail, They Just Failed To Plan Expenses Income Income Learning Years INCOME Dependent Productive Working Years Retirement Years FOOD If you live 20 years more… 20years X 365 days = 7,300 days X 3 meals 21,900 meals X P50/meal P1,095,000 Million HEALTHCARE  Medical inflation is 3 to 4 times economic inflation.  How comfortable your health- care situation after 60 depends on a decision you make today! SSS/GSIS Pensioner Financially Independent

12. LIFE THE X-CURVE OF WEALTH & RESPONSIBILITIES BIG RESPONSIBILITIES BIG SAVINGS 2M 2M  ? 1.5M 1.5M You Work Hard for the Money Retirement Years Money Working for You INCOME LIVE TOO LONG DIE TOO SOON 2M X 10% /year P200,000 Protection Investment FOOD HOUSING CLOTHING EDUCATION HEALTH DEBTS 200T /year 500K 500K LOI Living on Interest NO SAVINGS NO MORE RESP. 0 0 YOUNGER OLDER 65  85 P200,000/year x 10 = P2M X 10% INCOME REPLACEMENTFormula= Annual Income x 10 HOW MUCH PROTECTION & INVESTMENT IS ENOUGH? P200,000

13. SOLUTIONS FOR A CHANGING WORLD INCREASE CASH FLOW • Make More Money... Manage Your Time • Manage Income... Reduce Expenses  MANAGE DEBT • Create A Strategy for Escaping the Grip of Debt CREATE EMERGENCY FUND • Prepare for Emergency Expenses BUILD LONG TERM ASSET ACCUMULATION • Replace Your Income (Live Too Long) ENSURE PROPER PROTECTION • Protect Your Family (Die Too Soon)  PRESERVE ESTATE • Protect Your Assets

14. INCREASE CASHFLOW Standard of Living LUXURY FAMILY COMFORT Cash Flow BASIC POVERTY

15. INCREASE CASHFLOW 3WAYS TO INCREASE CASH FLOW Make More Money ●Earn Extra Income ●Learn to save & invest Reduce Expenses ●Live Below Your Means ● Manage Your Income  Acquire Assets not Liabilities

16. INCREASE CASHFLOW To get something you never had, Do something you have never done before. Challenge yourself to GROW & make a CHANGE!

17. INCREASE CASHFLOW The way you manage your Time & Money can make you Rich or Poor!

18. INCREASE CASHFLOW How do you manage your spare time? A.) MAKE MORE MONEY B.) WASTE TIME -Sleep -Watching TV/Movie C.) WASTE MONEY -Shopping, -Spending, Etc…

19. INCREASE CASHFLOW How do you manage your MONEY? A.) SAVE SOME B.) SPEND ALL C.) SPEND BEFORE YOU RECEIVE IT

20. CHANGE your money habits – develop the habit of SAVING, not spending! It’s not what you earn that counts, it’s what you keep. With consistent savings habit, you can create millions in your lifetime. INCREASE CASHFLOW

21. INCREASE CASH FLOW From Expensive Lifestyle To Preparative Lifestyle  LIFESTYLE B LIFESTYLE A

22. HOW ARE YOU DOING SO FAR? INCREASE CASHFLOW ? 10 P200K P2M x = Number of Years Worked Ave. Annual Income Total Amount Earned SAVINGS

23. POVERTY IS NOT LACK OF MONEY IT IS MISMANAGED MONEY Luke 15:11-16 - The Prodigal Son He went to a place far away, where he wasted his money in reckless living. He spent everything he had. INCREASE CASHFLOW

24. INCREASE CASHFLOW In Genesis 41-47, God told us that life is a CONSTANT CYCLE. That we live in a world of duality; day-night, hot-cold, right-left, up-down, bountiful-famine… GOD ALSO REVEALED TO US HOW TO SURVIVE THE CONTINUOUS CYCLE.

25. INCREASE CASHFLOW INCOME – 20%SAVINGS = 80%EXPENSES • “keep one fifthof the crops during the 7 years of plenty. The food will be a reserve for the country during the 7 years of famine.” Genesis. 41: 34=36

26. INCREASE CASHFLOW People spend their whole lives looking for an easier way, a GET- RICH - QUICKscheme. Proverbs 13:11 The more easily you get your wealth, the sooner you will lose it. The harder it is to earn, the more you will have.

27. INCREASE CASHFLOW “SET GOALS FOR YOUR MONEY BECAUSE OTHERS ARE SETTING THEIR GOALS ON HOW TO GET ALL YOUR MONEY”

28. MANAGE DEBT FUTURE INCOME PRESENT INCOME LACK OF INCOME    PRESENT NEEDS FUTURE NEEDS Food Shelter Clothing Bills Health Education Etc…

29. CREATE EMERGENCY FUND Consider how you would pay for the following unexpected expenses:  Temporary loss of income (loss of job/ business failure)  Major repair (car, home, computer, etc.)  Major hospitalization, extended elder care, etc. What is your first line of defense?  Debt or charging your emergencies to your credit card is not the answer! SOLUTION: Save 3 - 6 monthsof your monthly income as an EMERGENCY FUND!

30. ASSET ACCUMULATION RICH PEOPLE HAVE MULTIPLE SOURCES OF INCOME. AVERAGE & POOR PEOPLE HAVE ONLY 1 OR 2 SOURCES OF INCOME.

31. YOU CANNOT ACHIEVE MANY OF YOUR GOALS IF YOU HAVE ONLY 1 SOURCE OF INCOME. ASSET ACCUMULATION “Never rely on a single source of income.” – Warren Buffet

32. ASSET ACCUMULATION 3KINDS OF PEOPLE HOW THEY MAKE MONEY Big Income Big Effort Active Income Passive Income Little Income Little Effort Effort = Income 1 2 3

33. ASSET ACCUMULATION ACTIVE INCOME ● Job – salary ● Doctor – patient ● Actor – movie ● OFW – contract ● Boxer – bout ● Agent – commission ● Contractor – project ● Basketball - contract Work Hard for the Money • ❶Income from your direct labor. • ❷Job, skill, talent, profesional fee, etc… • ❸You stop working- your income also stops.

34. ASSET ACCUMULATION PASSIVE INCOME ❶ Income keeps coming even if you’re not working. ❷ You stop working – your income never stops. LOI- Interest Income from Investments (Mutual Funds, Stocks, Bonds, etc. ) LORI - Royalty Income LOR - Rentals Income, etc. LOAD - Living on Alms & Donations

35. ASSET ACCUMULATION The trick to developing multiple sources of income is to focus on making them passive income. WEALTH = the number of years you can survive when you stop working.

36. ASSET ACCUMULATION IF YOU LOSE YOUR INCOME TODAY, HOW MANY YEARS CAN YOU SURVIVE? YOUR INCOME IS USELESS IF YOU FAIL TO CREATE PASSIVE INCOME.

37. ASSET ACCUMULATION Know The Secret of the Financial Industry Understand How Money Works! The Rule of 72 is a very important concept in understanding the Power of Compounding Interest . 72÷ Interest Rate = number of years to double the money.

38. The Rule of 72 72 ÷ Interest =# of years $ DOUBLE ASSET ACCUMULATION • The Power of Compounding • Interest When You Save. 72 ÷ 1 = 72 Years!! 30 10T Age + 72 1% 102 20T

39. ASSET ACCUMULATION The Power of Compounding Interest 72 ÷ 4 = 18 yrs 72 ÷ 8 = 9 yrs 72 ÷ 12 = 6 yrs 6,000,000

40. HIGH COST OF WAITING ASavings Accumulation AGE 12% End Year BSavings Accumulation AGE 12% End Year 20,000 22,400 22 0 0 22 20,000 47,490 23 23 0 0 20,000 75,590 24 0 0 24 20,000 107,060 25 0 0 25 20,000 142,300 26 26 0 0 20,000 181,780 27 0 0 27 20,000 22,400 28 0 203,590 28 20,000 47,490 29 29 0 228,030 20,000 75,590 30 0 30 255,390 20,000 107,060 31 0 286,030 31 20,000 142,300 32 32 0 320,360 20,000 181,780 33 0 358,800 33 34 0 401,860 34 0 203,590       60 0 7,651,410 60 0 3,876,440 61 0 8,569,580 61 0 4,341,610 62 0 9,597,930 62 0 4,862,610 Sacrifice Now & Enjoy Later Enjoy Now & Suffer Later

41. ASSET ACCUMULATION 20/can 2 cans/day 1,200 14,400 Soft Drinks 100/meal 5x/week-4x/mo 2,000 24,000 Dining Outside Snacks 100 1 per day 3,000 36,000 1,000 1,000/ month 1,000 12,000 Extra Cellphone Load 5,000/session 3x a year Hair rebond, color, straight 5,000 15,000 Gimmicks- partying, etc. 500/session once a week 2,000 24,000 Foot Spa, pedicure, etc. 200/session 2x per month 400 4,800 1,000/bottle 1 bottle/month 12,000 Diet pills 1,000 100/ticket 8 tickets/month 800 9,600 Movie Tickets 1,500/card 2 cards/yearly 3,000 Credit Card Renewal Fee 100 4,800 Magazines 1per week 400 Coffee 30/cup 2 cups/day 1,800 21,600 Cigarette 40/pack 1 packday 1,200 14,400 Lotto tickets 20/ticket 1 ticket/day 7,200 600 Video games, CD rental 200 once a week 9,600 800 Total Expenses 212,400

42. WEALTH CALCULATOR

43. ASSET ACCUMULATION Can you cut down on the following? Softdrinks, Coffee, Cable TV, Bottled Water, Sweets, New gadgets, Sweets, Shopping, Driving a Big Car, Eating Out, Partying etc? What if you can make small changes in your spending habits and start saving P17/day (500/month)?

44. ASSET ACCUMULATION SMALL CHANGE IS BIG $MONEY P17/day P500/month @ 12% in 35 years P2, 906, 778 P34/day P1,000/month @ 12% in 35 years P5,813,557

45. ENSURE PROPER PROTECTION STEPS TO GETTING LIFE PROTECTION ❶ Step 1: Determine if you need life protection (Insurance). ❷ Step 2: Determine how much coverage you need. ❸ Step 3: Choose between Term & Cash Value Insurance. • Two Main Categories of Life Insurance • Term Insurance – you pay the insurance only. Cheaper, unbundled…your savings is in your hand. • Term Insurance + Savings – You pay the insurance + savings, bundled... Your savings is in the hands of insurance companies (dividends, cash value, etc.)

46. FAMILY FAMILY Financial Security Basic PROTECTION POVERTY

47. Make sure your children will inherit your estate. When a man dies, his children need to pay an estate tax (20% of his net estate) to effect transfer of his estate to them. Protect what you have built... A proper estate plan can take care of your children during your life and after your death. PRESERVE YOUR ESTATE

48. THE SECRET TO WEALTH Do you want to know the Secret of becoming Wealthy?

49. THE SECRET TO WEALTH There are NO secrets in becoming wealthy! All you need is to accomplish the Six (6) simple steps!

50. THE SECRET TO WEALTH INVESTMENT Income – 10% Tithing- 20%Savings = Expenses EMERGENCY FUND MANAGE DEBT PROTECTION Protect your Family, Your Health, Your Assets INCREASE CASHFLOW   Increase Income - Reduce Expenses BUILD A SOLID FINANCIAL FOUNDATION