Photo Courtesy: Marvin Germo

Photo Courtesy: Marvin Germo

With the help of a friend, I was so blessed to get a scholarship and study Introductions and Basics of Finance in University of Michigan’s Online Course program. We are about 400K students all around the world who shares the mentorship of Gautam Kaul. It was during his classes where I understood that I made some fatal mistakes in my financial life. And because I got so much value from this experience, I want to share some financial wisdom with those in their 20’s like me. I shall dedicate a blog page soon for investing and personal finance stuff in this blog in the first quarter of 2014.

You have to realize that ignorance is expensive. I don’t care how much you are earning in your 20’s because if you have no idea how to handle it, chances are, you may not keep it to your 30’s, 40’s or 50’s.

Before going further, let me share with you my personal finance pie. This is where I allocate my income for financial prudence and financial freedom in the future. Keep in mind that income in taxation means, “anything that comes in”, so this does not refer to your salary alone. If you have some entrepreneurial ventures while earning a salary, consider it as one. You can choose to practice this or not, in any case, I am sharing it with you.


Tithes 10%                      

In Malachi 3:10  God said, “Bring ye all the tithes into the storehouse, that there may be meat in mine house, and prove me now herewith, saith the LORD of hosts, if I will not open you the windows of heaven, and pour you out a blessing, that [there shall] not [be room] enough [to receive it].” This means that we shall return to God 10% of our income and He even left a challenge that if we do what He asks, He will return what we have given a hundredfold. You know why? Because you can never out give the generosity of the Lord.

Savings and Investments 30%    

After knowing your income for the month, set aside the money either for savings or investments immediately. Sometimes, when we have money, our interest is easily lured into buying stuff that we don’t need. A savings fund can also be used as emergency fund or funds you can use for new capital ventures. What you can do is either you go to your bank and deposit that money or auto-debit your account to transfer funds directly to your investment portfolio. You can ask you bank more of this.

Learning Fund 10%        

Learning fund is an income you set aside to enrich your knowledge about certain areas where you feel you are weak. In my case, I sought seminars and conferences that talks about personal finance. Most of the time, these seminars are not available in my city. So preparing an amount for it is indeed essential. I also join even business networking presentation even if I don’t have any interest to seek membership. You know why? Because I always feel good to be surrounded with positive people with great hopes and financial dreams. Their energy excites me.

Splurge 50%          

I say splurge although some financial pundits may wince to this word. I make it a point to not only reward myself but also to pay myself. I don’t withhold the good stuff that I want to experience. I am working to experience the good of life and share what I could and not to horde things inexorably. Anyways, I’ve set aside savings already.

But I don’t think this income pie is for everyone. If you are married with obligations, certain types of liabilities like debts, monthly car or house and lot amortization, kids in college –  then you need to do some revisions that will make you live just within your means.

Never spend the money that you have not earned. That is like giving your wallet a cancer.

Many 20 something today earn a big amount of cash but with empty bank accounts. No savings. Continuously spending and at the time where there’s nothing left to be spent, resort to borrowing. I also did this mistake, and I am grateful to have learned early.

To be continued…


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