Last Updated on April 13, 2017 by Marie Bautista
Hey, everyone! Happy Monday morning!
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Here’s hoping your Monday is fine, making me the only person in this world to hate Mondays!
For my Money Mondays Series, I am sharing here a post by J3 Patino of Stock Market For Pinoys. The article – like the title says – is absolutely brilliant, something I can’t even think of myself (because I am that kind of person who loses her senses when I see the word “Sale”)! In this Season of Love, Sale,Shopping and Giving, why don’t you go in depth on how much your spending efficiency is?
Let’s face it. We all
love to shop more than we want to save.
After all, saving is a boring necessity, while shopping is an exciting
adventure. We are actually proud of
something when we get great items at cheap prices. This is why we frequently hear these kinds of
conversations:
love to shop more than we want to save.
After all, saving is a boring necessity, while shopping is an exciting
adventure. We are actually proud of
something when we get great items at cheap prices. This is why we frequently hear these kinds of
conversations:
“Ay ang ganda naman
ng shoes mo!” (Wow, you really have nice shoes)
ng shoes mo!” (Wow, you really have nice shoes)
“Yes, nakuha ko yan
at 50% off! (I got it at 50% off!)
at 50% off! (I got it at 50% off!)
Now, I won’t get all preachy about this and say that we
should talk more about saving. After
all, I also love shopping and I’m also proud of it when I get great finds. So, instead, I’d like to share with you a
concept that can help you become a better spender. In this post, I’ll be focusing on HOW you
spend, rather than WHAT you buy.
should talk more about saving. After
all, I also love shopping and I’m also proud of it when I get great finds. So, instead, I’d like to share with you a
concept that can help you become a better spender. In this post, I’ll be focusing on HOW you
spend, rather than WHAT you buy.
The concept is called
“Spending Efficiency”. Basically, it is
a measure on how well you’re spending each peso that you have. For each financial transaction you make, you
have a corresponding spending efficiency.
A high spending efficiency means that you’re a good shopper, while a low
one means that you’re paying more than what the item is worth (in other words,
you’re at the losing end of the financial bargain.
“Spending Efficiency”. Basically, it is
a measure on how well you’re spending each peso that you have. For each financial transaction you make, you
have a corresponding spending efficiency.
A high spending efficiency means that you’re a good shopper, while a low
one means that you’re paying more than what the item is worth (in other words,
you’re at the losing end of the financial bargain.
To compute for your spending efficiency, just use the
following formula:
following formula:
To make things clearer, here’s a very simple example on how
it is used. A bag is being sold at
P1,000.00. There is a sale on-going and
you bought it at 50% off for P500.00.
it is used. A bag is being sold at
P1,000.00. There is a sale on-going and
you bought it at 50% off for P500.00.
The spending efficiency on the purchase of the bag computed
as follows:
as follows:
So what does a 200% spending efficiency mean? Basically, it’s telling you that you’re
getting twice as much value for the peso you spend. You should be proud of spending at that
efficiency level! (Bongga! This is saving me from the guilt of buying that bag on sale I got after watching Catching Fire!)
getting twice as much value for the peso you spend. You should be proud of spending at that
efficiency level! (Bongga! This is saving me from the guilt of buying that bag on sale I got after watching Catching Fire!)
On a daily basis, we usually spend at 100% efficiency. We pay for exactly how much the item is
worth. If the jeepney fare is P6.50,
then we pay exactly P6.50. If the
Sulit-Value meals are P49.00, we pay exactly P49.00 for it. For our basic necessities, we have been
accustomed to spend at 100%
efficiency. This is the minimum level of
efficiency that many of us find subconsciously comfortable. So when it comes to regular expenses, there
isn’t much to talk about when it comes to spending efficiency. The fun starts when it comes to the big
expenses.
worth. If the jeepney fare is P6.50,
then we pay exactly P6.50. If the
Sulit-Value meals are P49.00, we pay exactly P49.00 for it. For our basic necessities, we have been
accustomed to spend at 100%
efficiency. This is the minimum level of
efficiency that many of us find subconsciously comfortable. So when it comes to regular expenses, there
isn’t much to talk about when it comes to spending efficiency. The fun starts when it comes to the big
expenses.
I think it’s with the big expenses where one’s “greatness as
a spender” is put to the test. So for the
rest of this post, I’d like to give you 3 more examples on spending efficiency:
a spender” is put to the test. So for the
rest of this post, I’d like to give you 3 more examples on spending efficiency:
Example 1: A Home-Entertainment System
Marie wants to buy a new
home entertainment system this coming Christmas as a gift for the
family. She takes the family out to the
electronic shops in the mall to check out what the younger kids (and the older
kid that she married) wanted. They went
to different shops until they found an entertainment system they simply
couldn’t resist. The details were as
follows:
home entertainment system this coming Christmas as a gift for the
family. She takes the family out to the
electronic shops in the mall to check out what the younger kids (and the older
kid that she married) wanted. They went
to different shops until they found an entertainment system they simply
couldn’t resist. The details were as
follows:
The
Ultimate Home Family Entertainment Bundle:
Ultimate Home Family Entertainment Bundle:
- 50-inch Flat-Screen TV
- Blu-Ray and DVD
Player (with a Free Blu-Ray
Disc of Avatar) - 5.1 Surround Sound
System - PS3-Converted
Package (with a controller and
2 games) - Free Home Installation
And best
of all, at the bottom it read:
of all, at the bottom it read:
- Only for P60,000
- Flexible Payment:
Zero-Percent Interest - Terms: Pay P5,000 only
for 12 months.
Everyone in the family was excited. Marie and her husband knew they could afford
it. The kids were just excited at the
brand-new TV and entertainment system.
It was a very nice trip to the mall.
it. The kids were just excited at the
brand-new TV and entertainment system.
It was a very nice trip to the mall.
The following week, Marie went back alone to the
entertainment store to purchase the Ultimate Home Family Entertainment
system. The sales clerk asked if she
would be paying for it in cash (which would bring the price down to P55,000.00
only). She decline the offer, and gave
her credit card and asked for the 12-months payment scheme. After a couple of minutes, she was informed
that the entertainment system would be delivered and installed in her home
within 3 days time. Marie went home that
day excited with their great purchase!
entertainment store to purchase the Ultimate Home Family Entertainment
system. The sales clerk asked if she
would be paying for it in cash (which would bring the price down to P55,000.00
only). She decline the offer, and gave
her credit card and asked for the 12-months payment scheme. After a couple of minutes, she was informed
that the entertainment system would be delivered and installed in her home
within 3 days time. Marie went home that
day excited with their great purchase!
Now, let’s compute for Marie’s spending efficiency.
In this example, Marie is only getting 91.6% of her money’s
worth. So she inefficiently spent 8.4% of her money in buying the
entertainment system. So is Marie a good
shopper? Well, that’s for you to
decide. However, in terms of efficiency
alone, Marie is not spending well.
worth. So she inefficiently spent 8.4% of her money in buying the
entertainment system. So is Marie a good
shopper? Well, that’s for you to
decide. However, in terms of efficiency
alone, Marie is not spending well.
Example 2: Pag-IBIG Housing Loan
Mario is buying a home worth P1,000,000.00 through a
Pag-IBIG Home Loan. The financing terms
he got was thirty (30) years to pay translating to amortizations of P14,654.00
per month. Now, we’ll skip the
story behind the transaction and just go
straight to the spending efficiency of Mario.
Pag-IBIG Home Loan. The financing terms
he got was thirty (30) years to pay translating to amortizations of P14,654.00
per month. Now, we’ll skip the
story behind the transaction and just go
straight to the spending efficiency of Mario.
In order to get the spending efficiency:
Ouch! This is a very painful spending efficiency. Basically, Mario is only utilizing (getting a value of ) P18.90 for every P100.00 he is spending! If you were Mario, would you be happy about
getting a house when in the end you’re losing almost 80% of your money?
getting a house when in the end you’re losing almost 80% of your money?
Example 3: College Funds
Norman is preparing for the college education of his
kid. In 15 years, he expects that he
will be needing P5,000,000.00 in total for the tuition fee, allowances, school
materials and other miscellaneous expenses.
Norman also assumes he’s spending all of the P5,000,000.00 whether it’s
consumed or not. He’ll just probably use
the excess as a graduation gift to his child.
kid. In 15 years, he expects that he
will be needing P5,000,000.00 in total for the tuition fee, allowances, school
materials and other miscellaneous expenses.
Norman also assumes he’s spending all of the P5,000,000.00 whether it’s
consumed or not. He’ll just probably use
the excess as a graduation gift to his child.
Norman consulted a financial adviser and he was told that he
only needs to set aside P10,008.00 per month and let it grow at round 13% per
year with the stock market. So he
dutifully set aside P10,008.00 per month into the stock market for the next 15
years.
only needs to set aside P10,008.00 per month and let it grow at round 13% per
year with the stock market. So he
dutifully set aside P10,008.00 per month into the stock market for the next 15
years.
True enough, at the end of 15 years, he had P5,000,000.00 in
his stock market account. Now with this
transaction, let’s get Norman’s spending efficiency.
his stock market account. Now with this
transaction, let’s get Norman’s spending efficiency.
Amazing! Norman was
able to get almost 3 times more bang for each peso he had. I’d say, he’s an amazing shopper for his
kid’s college education!
able to get almost 3 times more bang for each peso he had. I’d say, he’s an amazing shopper for his
kid’s college education!
Now that we’re done with all 3 examples, I hope that you’re
wondering how efficiently you’re spending your money. Are you powerfully maximizing each peso you
have by spending at more than 150% efficiency?
Or are you getting ripped off with 50% efficiency?
wondering how efficiently you’re spending your money. Are you powerfully maximizing each peso you
have by spending at more than 150% efficiency?
Or are you getting ripped off with 50% efficiency?
Take note that while the examples above were Housing Loans,
and College Educations, it can easily be applied to your travelling and
shopping goals. Instead of that
P5,000,000.00 being spent on education, it can as easily be spend as a shopping
fund, or a travel-the world fund! What
I’m saying is you should try simply to increase your spending efficiency,
regardless of where you spend it.
and College Educations, it can easily be applied to your travelling and
shopping goals. Instead of that
P5,000,000.00 being spent on education, it can as easily be spend as a shopping
fund, or a travel-the world fund! What
I’m saying is you should try simply to increase your spending efficiency,
regardless of where you spend it.
To help you have a spending efficiency higher that 100%,
check out J3’s free online seminar series called: Take the Leap, Invest Within the Week Free ito, mga sis!. Within 5 training videos, you’ll be ready to
invest safely, conveniently, and profitably in the stock market.
check out J3’s free online seminar series called: Take the Leap, Invest Within the Week Free ito, mga sis!. Within 5 training videos, you’ll be ready to
invest safely, conveniently, and profitably in the stock market.
Like J3, I am being mentored by Bo Sanchez of the Truly Rich
Club and I am thankful of the boundless knowledge, wise words, and information
from Bo and other Truly Rich individuals.
You can be part of this wonderful club by joining here.
Club and I am thankful of the boundless knowledge, wise words, and information
from Bo and other Truly Rich individuals.
You can be part of this wonderful club by joining here.
WOW! This is a lot of computation.
Hello ms marie. I emailed you last week… But you havent replied yet ;( sorry to comment here.im patiently waiting for your rply. This is Aira.
Hi, Aira! Hala, sowee, natabunan siya ng other emails. I answered na and do email me if you have other Qs
Hello ms marie. I emailed you last week… But you havent replied yet ;( sorry to comment here.im patiently waiting for your rply. This is Aira.
The spending efficiency concept never crossed my mind! Thanks for introducing me to it! 🙂 looking forward to your next "money Mondays" post.
This is great Money Monday's, never thought about this much until reading your post. Consider and compute how you stretch every money you have and save more…:)
Wow, very useful info indeed! 🙂 I will apply this to all my purchases. Thanks for sharing!
i like this post because i learned a lot by the time i was done. wow. spending efficiency never really crossed my mind before. pero i think i'm doing more than okay since i usually pay with cash everytime i purchase a gadget. mas makakatipid kasi.
I learned a lot from this one. I just want to know how much, in percent, can we consider that we are spending efficiently?
Interesting… I'm on a spending diet this season. Starting the new year with a new attitude; save more, need less. 🙂
Eliz
Ui, this is a nice guide to follow. Ma-try nga! Ako naman, I'm also easily attracted to sales. To curb my spending, though, I ask myself: would I buy this if it weren't on sale?
Wow, very informative, sales tend to attract me as well or buying in bulk to lower the cost of the item.
After read the article i have known that An Absolutely Brilliant Investing Perspective For People Who Love To Spend! This is a one of the great article which is very useful to me as well. Thanks a lot mate.
Imran
These are a lot of good stuff to think about – lol makes me remember my mom LOL!
my head aches when i see a lot of numbers ahaha, am not good in math but i need to learn those simple computations above to know if i get my money's worth 🙂
I guess it's always best to get things at a discount to increase shopping efficiency.
something very interesting to learn here. thanks for the information.
Love the spending analysis. I do a similar concept to this but not really extreme.