In my last post, I promised to write more about Nuvali. Sadly, these past few weeks has seen me suffer from “Nuvali fatigue.” For those who are waiting for my follow up feature on Nuvali, its draft is already half done and it shall be published. To ease the fatigue, I’ll write about something that I hope some will find worthwhile.
It’s true that it’s every Filipino’s dream to own a house. But more than dreaming, it’s imperative that you make a thorough examination of your financial position before you take the plunge.
Last year, I came across a survey by Registered Financial Planners Institute Philippines (or RFP Philippines). It was designed to find out the Filipinos’ spending and saving habits. They used the survey as part of their free financial planning seminars to help employees of companies manage their personal finances at a time when the global financial crisis was at its worst.
Looking at the survey questions, I realized that they can also serve as a tool for Filipinos to assess their financial readiness to build or buy a house. Note that I am adapting this survey for something it was not originally intended for. Thus, take the survey as a mere approximation, not an absolute measure, of your readiness to own a house.
With permission from RFP Philippines, I am reprinting below their survey questions. I hope that by answering these question, you will be able to gauge how near, far or really far out you are from owning your house.
Age: _____ Gender: ___________
Monthly Gross Family Income:
P20,000 to P35,000
P36,000 to P50,000
P51,000 to P65,000
P66,000 to P80,000
P81,000 to P95,000
P96,000 – above
Home Ownership (choose one)
__Own, __ Rent, __ Living with parents/relatives
A) How would you describe your financial situation? Would you say you:
1. Live comfortably
2. Meet your expenses with a little left over for extras
3. Just meet basic living expenses
4. Don’t have enough to meet expenses
5. Don’t know
B) How often do you worry about money matters?
1. Often
2. Sometimes
3. Rarely
4. Never
5. Don’t know
C) How would you describe the extent of this crisis’ impact on your personal finances?
1. No impact
2. Some impact
3. Major impact, but I can handle it
4. Very high impact, I’m having difficulties
5. Wouldn’t say
D) How often would you say you spend money on things you can’t afford?
1. Often
2. Sometimes
3. Rarely
4. Never
5. Don’t know
E) Have you ever felt that your financial situation was out of control?
__Yes, __ No
F) How closely do you watch the amount of money you spend?
1. Very closely
2. Fairly closely
3. Not too closely
4. Not at all closely
5. Don’t want to say
G) To what extent is this increased watchfulness a result of the ongoing crisis?
1. Not at all connected to the crisis
2. To some extent a result of the crisis
3. A direct result of the crisis
4. Wouldn’t say
H) Are you always aware of how much money you are spending or you just have a general idea?
1. Always aware
2. Have a general idea
3. Neither
4. Both
I) Which expenses are you having most trouble budgeting for now but are still including in your expense list?
1. Entertainment and recreation
2. Food and dining out
3. Shopping and personal items
4. Bills and utilities
5. Car/cars
6. Home and housing
7. Luxury items
8. Children and schooling
9. Credit card payments
10. Medical
11. Taxes
12. Insurance
13. Regular savings for retirement
14. Investments
15. Health insurance
16. Debt payments
17. Others
18. Nothing
J) If you need to cut back on your expenses, which items would you need to remove from your list or have already scrimped on in recent months? (Choose up to three)
1. Entertainment and recreation
2. Food and dining out
3. Shopping and personal items
4. Bills and utilities
5. Car
6. Home and housing
7. Luxury items
8. Children and schooling
9. Credit card payments
10. Medical
11. Taxes
12. Insurance
13. Regular savings for retirement
14. Investments
15. Health insurance
16. Debt payments
17. Others
18. Nothing
K) Which items do you splurge on, even when you know you should not? (Choose up to three)
1. Food and dining out
2. Entertainment and recreation
3. Shopping and personal items
4. Home and housing
5. Children and schooling
6. Bills and utilities
7. Cars
8. Medical
9. Luxury items
10. Travel
11. Others
12. None of the above. I have everything under control
L) Do you or your spouse have a formal budget for your household?
__ Yes, __ No
M) Would you say you are saving and investing as much money as you should, or should be saving and investing more?
1. As much as I should
2. Should be saving and investing more
3. I don’t know
N) Do you have savings in the bank that you can count on when there’s an emergency?
__ Yes, __ No
O) How many weeks’ worth of living expenses can your savings cover?
1. One to two
2. Three to four
3. Five to six
4. Seven to eight
5. Nine to ten
6. More than ten
P) Have you resorted to borrowing money in the last six months to cope with financial needs?
__ Yes, __ No
Q) Do you foresee a need to borrow money in the next six months to cope with financial needs?
__ Yes, __ No
R) Have there been unexpected expenses over the past year that have severely set you back financially?
__ Yes, __ No
S) Which unexpected expenses have set you back financially?
1. Medical
2. Cars
3. Home and housing
4. Life events and children
5. Work-related
6. Travel/vacation
7. Taxes
8. Pets/veterinary bills
9. New baby
10. Need to take care of parents/relatives
11. Business-related expenses
12. Others
End of Survey
Simply reading all the questions will produce a feeling of anxiety among many of us. Suddenly, we are confronted with issues that many of us never thought of or, worse, denied. For most of us, we equate our readiness to own a house on just two factors: our monthly gross family income and savings.
If there are things the survey wanted to find out, I think they’re the respondents’ prudence in spending only on what’s essential; their willingness to provide for unforeseen but necessary expenses and making sacrifices along the way.
Since I’m not qualified to interpret your answers, I will lead you to an article dated August 2008. It’s titled Pinoy Financial quotient, pass or fail? by Mr. Noriel Malacaman.
In this article, Mr. Malacaman concluded the following:
- Budgeting is not a habit for Filipinos
- We don’t have a monthly budget, and if we do, we do not stick to it.
- Insurance is not a priority, making us vulnerable to a much higher financial crisis.
- Saving is not automatic; we do not set aside money during salary day.
- Filipinos don’t have retirement plans, some have not started planning. It is either they don’t have an idea of how much they need for retirement, or they have some savings but don’t know if it is enough.
- Most of us also have savings that are not enough in cases of emergencies or retrenchment.
I decided to include Mr. Malacaman’s article in this post because by answering the survey questions, you will get an idea of where or how you stand given his conclusions. The more your answers confirm his conclusions, the farther you are from owning your house.
This post is not intended to dispel your dream, but to remind you that some hard choices will have to be made if you are serious about owning your dream house. Buying or building a house is one of life’s most exciting and important decisions. It’s always easy to lose focus between the house you dream about and what you can actually afford. It takes an honest assessment of your financial position, careful planning and willingness to make sacrifices to make the right decision.
What’s more tragic than living in your dream house and paying amortization for, say, five years and just see it foreclosed on the 6th because you ignored to carefully assess your financial situation and plan before building or buying your house and refused to make sacrifices along the way?
Owning your dream house is as much a lifestyle decision as it is a financial one.
It’s a fact that many Pinoys fail or refuse to acknowledge.
Thank you so much to RFP Philippines’ Program Coordinator, Ms. Paula Minerva and to Mr. Henry Ong, Program Director who allowed me to use their survey. You may also check out their Multiply site here.
Thank you also to Mr. Noriel Malacaman for his insightful article.
To everyone, thank you so much.
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