'May PERAan' is SBS Filipino's new podcast series which features financial experts seeking to answer the most common questions about money and finances.
While remittances are part of the cultural practice of Filipinos, finance broker Maria Papa shares that there are three numbers to keep in mind before you start sending dollars back home - 50, 20 and 30.
Highlights
- 50% of your salary should be directed to bills (rent, utilities and others).
- 20% should be saved.
- 30% allotted for leisure activities and wants. Part of this can be directed to remittances.
1. 50% towards bills
Bills, such as rent, food and utilities, need urgent attention. These should be paid off first before anything else.
Under the assumption that your salary is adequate and you are living within your means, 50% of what you earn a month should go to paying bills and debts.
2. 20% towards savings
Or 25% (if possible) should be automatically set aside as savings.
In the short-term, savings are important as they can be dipped into during emergencies and job loss. According to Maria, the amount should be enough to last you three to six months without a salary.
In the long-term, savings will allow you to achieve bigger goals such as buying a house.
"Buying a house is the start of your weath-building," Maria shares, "The value of a house increases over time. If let's say you work 40 more years, you want to be able to retire with a roof over your head and a fully paid house."
3. 30% towards leisure (and remittances)
Discretionary expenses fall under this bucket, such as holidays, eating out and shopping for wants.
Remittances should be taken from this 30%.
"In my experience and observation, many who send remittances to their family typically send around 500-1000 AUD a month," Maria shares.
While Maria understands the need to help family, especially elderly parents, she says to avoid dipping into savings and instead maybe taking 5% from your leisure funds as remittance.
"Some clients of mine work as nurses and what they do is do a bit overtime and that's what they send back home. The good thing is the conversion of peso to dollar is significant," Maria adds.
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Disclaimer: This article is for general information only. For specific financial advice, you should consider seeking independent legal, financial, taxation or other advice to check how the information here relates to your unique circumstances.
