Employees should learn how to manage their income

One of the most perplexing phenomena confronting our employees, including OFWs today, and perhaps at all times, is the sad reality that their incomes, no matter how much, are never enough. Whether that employee is a top ranking corporate executive or a lowly minimum earner, the endemic problem that cuts across salary levels, and breaks borders of ranks, status and positions, is that salaries are never sufficient. Expenses always exceed incomes. Whether he is employed in the business world or in the government bureaucracy, every employee always faces the perennial problem of budget deficit and mounting debts. What is the cause of all these?

Most wage-earners, regardless of ranks and positions, have to grapple with the recurrent challenge of insufficient income. No matter how much an employee earns, the payables always exceed the receivables. Faced with these difficulties, employees end up borrowing money via usurious loans with onerous interest rates. And since these borrowings are often repeated in endless cycles, the employees would be either buried in debts or drowned in usurious interests. Those among them whose lives are not anchored on solid vales might be  tempted to become corrupt, or to venture into some illegal and immoral sources of extra incomes, like vices and crimes such as gambling and drugs. What is the root cause of this recurrent problem?

There are only two possible causes to this phenomenon: either the salaries are too low vis-a-vis one’s expenses or his expenses are grossly and inordinately high in relation to his income. Knowing this, there are only two ways to deal with his problem. First, employees should increase their income. Second, they must lower their expenses. The incomes could be augmented by getting extra jobs or sideline businesses, no matter how small and simple. The expenses can be lowered by eliminating wastages and luxuries beyond the workers’ capacity. Employees must learn how to budget and how to manage their finances.

More than 12 million Filipinos are abroad in the hope of increasing their incomes. Many of them are doing some difficult, dirty, dangerous, degrading and deceptive jobs which, in many instances, end in diseases, disability and even death. These OFWs do send home large amounts of money earned by having double or even triple jobs. And yet, they and their families still end up impoverished because they don’t control the expenses of their dependents. The expenses expand geometrically while incomes are generated in trickles from multiple sources, with much difficulty and even risks to health, safety and security. The OFWs remain poor not because they are lazy but because they do not know how to manage their income. It is not a matter of lack of hard work. It is a simple lack of smart lifestyle.

There are only three things that can be done to an employee’s salary: SPEND, SAVE and INVEST.

The ideal scheme is to spend 50 percent, to save 25 percent and to invest 25 percent. But since that is extremely difficult to implement, an employee can start with spending 75 percent, save 10 percent and invest 15 percent. Overspending can be curbed by avoiding any ostentatious display of luxuries, minimizing consumption and sticking to budget. Every member of the family should cooperate in lowering power and water consumption. No one should go to the malls just to be lured into buying goods because these are on sale not because they are needed.

Employees should stop spending beyond their means. They should throw away their credit cards. They cannot afford to borrow beyond their capacity to pay. They should stop hanging out in luxury coffee shops. They should find means to earn more and to spend less. They should learn to think of and manage their personal and family economy and stop acting stupid. They should discipline themselves and their family members. They should learn from the Chinese who came here with nothing and end up being the richest people in the country and in the whole world.

Families should stop keeping up with the Joneses. Family incomes should be increased with spouses engaging in micro and medium-scale enterprises and cottage industries and young children being conscious of the family economy and learning to live within their means. There are a lot of income sources to venture into. And there is no shortage of capital. There is only shortage of will. The problem is simple. But the solution requires a difficult and disciplined approach. It is difficult but it can be done. The truth is: I have done it myself.