If you would like to get an idea on what I am up to, all you need to do is to see what kind of books I am reading. I was attending art classes late last year so I usually borrowed art books from the library. But my collection of borrowed books made a sudden shift this year.

Here are some of the books I have been reading the past few months:

  • The Wealthy Barber by David Chilton
  • The RESP Book – The Complete Guide to Registered Education Savings Plan for Canadians by Mike Holman
  • The RRSP Secret – Defend and Build Your Wealth With This Powerful Investment Strategy by Greg Habstritt
  • The Naked Investor – Why Almost Everybody but you gets rich on your RSP by John Lawrence Reynolds
  • The Pension Puzzle – Your Complete Guide to Government Benefits by Bruce Cohen
  • You Can’t Take It With You by Sandra Foster
  • The Ultimate TFSA Guide by Gordon Pape
  • Multiple Streams of Income by Robert Allen
  • Rich Dad’s Success Stories by Robert Kiyosaki
  • 101 Ways to Cut Your Expenses
  • Suze Orman DVDs on Personal Finance Management

Yes, I’m into Personal Finance right now. I take joy in planning and what better thing to plan that my family’s financial present and future.

I am not an expert on personal finance but I hope that this blog would help or even be an eye opener to you. Or at least read this so you’ll be up-to-date on what I’m up to these days since you may not have heard anything about me for at least a year.

I wanted to call a family meeting right after the New Year celebration to discuss the year that was (2011), the present (2012) and the future. I had my print-outs of 2011 expenses complete with bar and pie charts but my 2 young kids didn’t really care. I reminded them of the meeting a week before but they must have forgotten or got distracted by playing games and other more fun stuff than what was on my meeting agenda.

So I took it as a personal burden/crusade to go ahead and plan for 2012 and the years ahead. As of last week, my wife made a decision to join the crusade and is now on-board and up-to-speed on the plan. Actually, she is running the show now so I better find myself another art class to keep me busy.

Here’s a high-level overview of how we made our family’s financial plan.

Identify Targets and Objectives

Listed below are our family financial objectives for the next 5 years. It is important that all family members have an input and agree on the objectives. Otherwise, your plan will just be a personal rather than a family financial plan. (Note: Your kids can’t have any input on the plan if they didn’t attend the Family Financial Planning Kick-Off Meeting)

Our financial decisions will be based on these objectives. Without any objectives it would be difficult to know where we are going. Objectives give us a sense of purpose, a reason for why we are doing things. The objectives will decide or make it clear whether we are purchasing a “need” or a “want”.

  • Continue saving for our kids education
  • Slowly build-up retirement funds
  • Pay the mortgage as soon as possible
  • Get a Personal/Life Insurance
  • Create a Will and Testament
  • Live withinbelow our means
  • Continue enjoy life, travel
  • Continue building our wealth in heaven

Develop a Plan

Achieving the objectives we listed above starts from having a grasp of our spending habits as well as a good understanding of our commitments or bills we need to pay.

I had been monitoring our family finances since 2001. But for the purposes of future planning, the 2010 and 2011 historical data are enough to give me enough information to forecast future expenses. I have created a new spreadsheet to keep track and forecast of our financials to the next 8 years.

Our Financial Plan lists all money coming in and all expenses. A monthly view of both income and expenses gives us a better understanding if we are living below our means. I said below our means as opposed to within our means to give room for savings.

Here are the categories I used to group and monitor our expenses.


  • Salary
  • Other source of income such as benefits and bank interests


  • Utilities
    • Water and Sewer
    • Phone, TV and Internet
    • Electricity
    • Gas and Heat
  • Insurance
    • Car Insurance
    • House Insurance
    • Life Insurance
    • Medical Insurance
  • Transportation
    • Car Payments
    • Car Maintenance
    • Gas
    • Parking and Fare
  • House
    • Mortgage
    • Maintenance
    • Property Tax
  • Leisure and Entertainment
    • Shopping
    • Leisure Class
    • Movies
    • Eat Out
    • Road trips
  • Food
  • Other Expenses
  • Investments/Savings
    • Education
    • 6-month Emergency Fund
    • Retirement

Savings Formula

I have learned this formula more than a decade ago. Most of us use this formula to manage our money.

SAVINGS = Income – Expenses

Of course, since we don’t run out of expenses, chances are there will be no money left for savings.

The correct formula is: EXPENSES = Income – SAVINGS

That is, based the financial objectives I listed above, our family decides on a target saving each month. The monthly target savings determine our monthly expenses. Of course, there are monthly expenses that are fixed such as mortgage and utility bills. But there are other monthly expenses that if controlled can make room for savings.

You will be in trouble if you are spending more that you are earning.

Balance of Present and Future

Keep in mind that you have to enjoy the present as well. You won’t enjoy the future if you don’t enjoy the present because the present (the now) was the future (like 5 years ago).

Enjoyment may mean different things to different people. You have to know what each one in your family enjoys and spend on that.

Learn The How’s

Either you consult with an expert or be an expert (or at least be informed) yourself.

  1. Familiarize yourself with how government benefits work.
  2. Familiarize yourself with your company benefits.
  3. Familiarize yourself with how taxes work
  4. Discuss financial management with your friends and co-workers.
  5. Arm yourself with knowledge on personal finance and investment instruments.

Knowledge is power. You are better equipped to execute your plans if you have a sound knowledge on financial management.

Risk Management

You have to prepare for the unexpected or expect the unexpected ahead of time. Risk is an uncertain event, that if occurs , has a positive or negative effect.

Some of the risks that have negative effects that you need to plan for are:

  • Losing your job or any of your source of income
  • Accident
  • House burned
  • Family member got sick

Get insurance to handle these risks.

Prepare for Your Future in Heaven

I am currently reading a book on estate planning. I just started with the book but the title already taught me a lot. The book title: “You Can’t Take It With You”.

Regardless of how much I have saved for the future, I can’t take it with me. Sure, my wife and kids will enjoy the family savings but they still can’t take it with them.

What’s my point? Invest in your future in heaven.

Here’s a simple breakdown of how we spend our money. And I suggest you do something similar.

10% for our future in heaven

20% for our future on earth

70% for the present

Let me end this blog with a story.

A rich man who owned mansions and real estates died and went to heaven. He was greeted by the angels and was asked to follow them to the house they built for him in heaven. They passed by big houses and mansions. The man is getting more and more excited, he did after all stayed in mansions on earth. To his dismay, the angels led him to his a small nipa hut. The angels said, “God wanted to build you a really nice house, but that’s all the money you are sending Him could buy”.

Build your mansion in heaven!