Published 11:53 AM, February 12, 2016
"All you need is love," the song will have you believe. While the sentiment is tempting, most level-headed young couples know that to be untrue.
They know that the foundation of a happy marriage rests on other factors, not purely on love: the comfortable home, healthy and educated children, and the means to enjoy a vacation – things made possible by money.
Such reality makes proper financial planning an integral part of a young marriage but unfortunately, in the Philippines, it’s something that tends to get lost in the romantic glow, according to 3 financial experts gathered by top financial comparison site, eCompareMo.com.
“We, Filipinos, do not have healthy attitudes towards money. It's not discussed in the family and this tends to make us ignorant and to make us live in fear,” said Aya Laraya, an investment advocate and the man behind Pesos and sense, an educational company and TV show focused on personal finance and investing.
This is one of the biggest reasons why families often make decisions that lead to bad financial positions, ending up mired in debt to support unrealistic lifestyles.
Oftentimes, couples don’t even know how much each other earns, so there is no way you can map out a proper plan, Laraya pointed out.
This, he emphasized, is why “it's so important that we bring financial matters out of the shadows.”
Today, there are so many different options to save and make money available to young couples of any income level. Talking openly about money is a hard step to take, it but once that’s done, a couple can start investing properly for their future, he said.
The cost of courtship and breakups
Before one walks down the aisle, however, it's also worthwhile to look at what is needed to get there.
The traditional Filipino courtship, wherein the guy is expected to woo the girl, is by no means cheap, said Burn Gutierrez, chairman of Angat Pilipinas Coalition, a non-profit financial advocacy made up of OFWs.
Based on his research of typical Filipino dating habits, a dinner date at a good restaurant costs on average a minimum of P1,000 ($21).
That translates to P24,000 ($505) a year if a couple decides to do this every payday, he pointed out.
Flowers, the traditional token of love, costs between P2,000 ($42)-P5,000 ($1,005). Throw in a movie date for two with snacks and that’s another P500 ($10.5)-P1000.
As he put it succinctly, "The longer you are shy, the more expensive it is."
All that money spent is also no guarantee that a couple will indeed stay together and should a break up happen, there are costs to that too.
Speaking from personal experience, Gutierrez shared how a bad break-up left him unable to focus and cost him multiple promotions in his previous job as an auditory. He ended up being left behind by his peers.
This is not uncommon. The Wall Street Journal reported that in the US, the annual of heartbreak due to marital woes came up to $11 billion ($522.9 billion) stemming from lost productivity, absenteeism, and increased errors and accidents, based on a study done by the Grief Recovery Institute.
Gutierrez advised single people to be aware of these costs to avoid being swept off their feet, financially speaking. He recommended setting aside a portion of one’s income for dating expenses, and sticking to it.
Not only will it help get the girl but it serves as good practice when the relationship gets more serious, he said.
MONEY MATTERS. (from left) George Siy, Aya Laraya and Bern Guitierez emphasize that the first step towards financial freedom couples should take is being open to each other about money. Photo by Chris Schnabel/Rappler.
Start investing now
As the relationship solidifies, couples can start investing their savings for a shared future but often they don’t know where to begin.
People get intimidated because of the amount of choices they have in investments today and often have misconceptions like investing is only for the rich, Gutierrez said. He pointed out that one can start investing with as low as P5,000.
For him, the problem isn’t the wealth of information available but lack of education on how to use it since technology now makes investing really easy.
People can invest online and there now even services like ecomparemo.com or moneymax.ph which allow users to find and compare the merits and terms of different kinds of loans and insurance policies.
“All you need is the Internet. If you don’t prosper now, it’s your choice. The opportunity is there, the products and systems are there,” Gutierrez stressed.
The key is taking time out to educate yourself, and to start immediately. That way, the nest egg can begin growing.
“You spend 8 hours a day working to make money or trying to make money. How much time do you spend trying to make that money work for you?” he asked.
Ideal environment
Fortunately for young married couples, the recent economic development has created the ideal environment for them to start investing.
“This is the best time to invest. Never has the Philippines been growing this fast and crucially, never before have interest rates been this low,” said George T. Siy, president and CEO of Marie France and a former director of Security Bank.
Now is the best time to borrow for investments as well, as deposit rates for savings accounts are only at 1%, which means you’ll lose on inflation. So instead of putting money in savings accounts, it's best to invest elsewhere, Siy pointed out.
Siy recommended, however, that loans taken out should ideally go to investing in education or a profit-making asset.
“One of the most common mistakes young couples make once they have a bit of money is immediately buying a car, which depreciates immediately. They, starting out, should accumulate assets first,” he said.
Siy recommended starting a business as the best investment a new couple can make if they have the right idea and the inclination for it.
Short of a business, Siy tagged buying a property as the ideal investment, and pointed out this year as the ideal year for doing so.
“The low interest rate environment coupled with low construction costs make it feasible for a young people to buy a house early on instead of renting,” he said.
About a decade ago, interest rates were between 15% to 17%, he said, while current housing loan interest rates average less than half of that.
You can now buy a low cost house outside Metro Manila, with the amortization costs, in general, in the area of P2,500 ($52.6) per square meter – roughly the same as what it would cost to rent a few years back, he explained.
Siy also advised couples to canvass when financing a house as terms could easily increase by 50% over 3 to 5 years with adjustable rates.
It’s the same with stocks. Since the stock market has dropped nearly 2,000 points in the last year and half, you can start accumulating stocks now and you’ll be near the bottom and can ride the upturn when it comes, he added.
Investing in insurance is also always a good idea to guard against unforeseen circumstances and ensure comfort and financial security, Siy said.
For true peace of mind though, careful attention should be paid to your choice of who you decide to share all of these things with.
“Your spouse, after all, will be the most important investment you’ll make in your life,” Siy said.
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