One of the upsides of the current upheaval in the global financial system is that people are more careful about spending their money. Rightly so. With many people facing a clear and present danger of losing their jobs, the smartest move would be to stretch one’s money as much as possible. Because you’ll never know if tomorrow you will still have a job.

In the US and other western countries, it is inevitable that a number of big and small businesses will go pfffttt and close shop due to the financial crisis, displacing thousands of workers. Many companies will also downsize their operations to ensure their long-term survival in the face of a slowing economy which will jack up the number of jobless people. That is why our OFWs are worried sick about their jobs. The government, through DOLE and the DFA, has in fact, started monitoring job losses of Filipinos worldwide.

In Singapore, the employers of some of our domestic helpers are reportedly becoming more irritable because of their investment losses. If employers of our DHs in the Middle East, Europe, Singapore and Hong Kong were hit badly by the global financial storm they may no longer be able to afford the services of domestic helpers and we could be seeing a steady stream of distressed OFWs coming home to an uncertain future. Anxieties about job security are not just confined to OFWs. Even local employees have reason to worry about their jobs, especially those in companies which are largely dependent on foreign markets like the export industry and BPOs.

You really shouldn’t wait for a crisis to happen before you start to worry about your financial situation. Always remember that a lot of good things don’t last. Sooner or later the good times will end. You may be earning well now but there’s no guarantee that 5 or 10 years hence you will still be on easy street. You should be prepared all the time. Save as if there’s always a financial crisis looming in the horizon. Save as if your income would stop flowing anytime soon. With this kind of attitude towards saving you will be able to accumulate sufficient monetary resources that can tide you over when the next economic turmoil hits. Let me share with you a number of strategies to help you save and build your defense against a financial crisis.

Create a spending plan. It’s a must especially when income is tight. The spending plan or budget helps you control and manage your money because it tells you where each peso should go. It helps you minimize, if not eliminate, unnecessary expenses. Remember to include in your spending plan a budget for your regular savings, which ideally should be about 20% of your net income. Don’t waste your time by creating a spending plan that you have no intention of using.

Spend your money wisely. In good or bad times, you should make it a habit to buy only things that are necessary. If you have to purchase something “nice-to-have” but unimportant do it occasionally. And save for it instead of conveniently charging it to your credit card. Get rid of unnecessary expenses like smoking, heavy drinking and frequent “gimiks.” You can also reduce your expenses further if you give up your love affair with signature wear and expensive cappuccino. During tough times, these things should be the first to go. Now is a good time to evaluate your lifestyle. If your way of life is causing you financial pains, why continue with it? Shift to a more modest lifestyle; one that is financially low maintenance.

Freeze your credit cards. And I mean this literally. I first heard about this tip from best-selling author Efren Cruz. To limit your credit card use, submerge it in a glass of water then put inside your ref to freeze. (Don’t do this for cards with electronic chips because it will short circuit and get damaged.) Frozen credit cards will reduce your expenses because studies show that you will spend 25-30% less if you use cash exclusively. Thaw your frozen credit card only when you really have to use it.

If you are like the lady who I recently heard brag about her six credit cards, get a pair of scissors and cut up your cards. Leave just one or two; that’s all you need. Too many cards will just temp you into spending more than you can afford.

Be a hunter. You should make every peso count and always try to get the best value for your money. Be an expert at stretching your income. Hunt for the best bargains (without compromising quality) so you can buy more for less. This is the mark of a true smart saver. Remember that expensive doesn’t always mean good quality.

Here are some other things you can do to cut down your expenses and save more money.

1. Be contented with what you have; envy is often expensive.

2. Do not gamble; you probably have a bigger chance of getting hit by lighting than hitting the jackpot.

3. Take public transport; you will be helping the environment while helping your pocket.

4. Bring lunch to work; you can save more than 50% and get to enjoy home-cooked food daily.

5. Don’t be a techno gadget freak; some gadgets cost a lot and lose value soon after you buy it.

6. Spend more time at home; you will spend less.

Posted: October 20, 2008
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