Patricia Paredes, whose employer shut down in April, is back with us to describe her relationship with money throughout her career. We learn that her money mindset plays a pivotal role in keeping her calm and positive during this stressful time.
Like most of us, Patricia just enjoyed her salary at the onset of her career. She would record her expenses obsessively and splurge with the extra money to reward herself for not overspending. She didn’t have much money saved in the first half of her career, but everything changed when her brother gave her a book called Secrets of The Millionaire’s Mind as a gift.
The book by T. Harv Eker helped her explore the things she subconsciously learned about money throughout her life. She followed the steps in the book to unlearn what was not beneficial and adopt a new money mindset to live a more satisfying and stable financial life.
So Patricia took on the challenge to change her habits and set up the recommended 7 bank accounts for 7 different goals: Play, Financial Freedom, Long-Term Savings, Education, Giving, and Necessities.
Every month, no matter how much money she gets, she always contributes 10% of her income to each of these bank accounts while allocating 50% to her necessities.
And guess what, her investment in these goals has really paid off. Now that she’s in between jobs and the world is in chaos, she doesn’t have to worry about paying bills and making sure she and her loved ones have the comfort and security they deserve.
Related episode: Losing your Job and Moving Forward with Patricia Paredes
Building your Emergency Fund
It is easier to invest in multiple goals when the money keeps rolling in. But these days, that’s not the case for most of us.
Financial Advisor Kyla Rivera-Soong recommends starting an emergency fund with 10% of your income as the main priority of your financial wellness.
An emergency fund is a safety net in the event of a major financial emergency, and it covers at least 3 to 6 months of your living expenses. Having an emergency fund turns those potentially life-changing (and usually intensely embarrassing) situations into mere conveniences.
So how do you start building your emergency fund?
First, set a goal. Because when you’re actively thinking about it, you are more likely to take action. Second, have a separate bank account. Even if you can’t fund it yet, you need to have a dedicated savings account for this purpose. Third, it’s okay to start small. Be it a hundred pesos, coins—and even your tax refund! —can ultimately build your emergency fund.
“It might not seem like it now, but over time those small amounts will add up. A little plus a little, plus a little, equals a lot,” to quote Bola Sokunbi of Clever Girl Finance. Bola also recommends adjusting your savings amount when your income increases over time.
With this advice and the perfect example of Patricia’s calm during this storm, we hope you’re ready to take the first step to your financial wellness and start building your emergency fund!
Related episode: Personal Finance is Personal with Ton Patron
About the Guests: Patricia Paredes has 17 years of combined experience in consumer engagement, brand development, and business building. She has worked as a Marketing manager with HOOQ and Alcatel Mobile. Kyla Rivera-Soong is a Financial Advisor at Sun Life Financial since 2012.
Written by: Jenn Simons-Castillo and Heherson Soldevilla
Published on: June 24, 2020