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The Wallet Therapy

July 16, 2012



The wallet therapy


Monday, 16 July 2012 20:18 Edmund Lao / Personal Finance

NOWADAYS, due to the high standard of living, accumulating wealth is a monumental task, especially in this modern world. One can always see billboards advertising mall-wide sale during payday. No wonder, during this period, people go nuts in spending away their hard-earned money. People do not plan what to do with their money. They let other people plan what to do with their money. That is why many companies are putting up ads in order to get their money through consumerism. The effect is a sick wallet! The cure to an ailing wallet is wallet therapy!

Two Saturdays ago, I was invited to attend a Bizwiz Resources seminar titled “Wallet Therapy and Stock Trading.” Mr. Boom Agustin, a good friend of mine, shared his experience on personal finance. Nothing beats experience in acquiring knowledge.

Just like our body that gets sick due to viruses and bacteria, our wallets get sick due to a common virus called LBYM (Living Beyond Your Means) and the most abused instrument is the credit card, whose power comes from our ignorance of how it works. People with this virus experience symptoms like lean wallet, depleted bank accounts, trinkets and unpaid dues, all of which result to insecurity, broken relationships, negative outlook in life, and a victim mentality.

What is the cure?

No matter how bad the situation is, financial freedom is not impossible. We can be financially free if we have the will. Attitude is our most powerful medicine and going to the intensive care unit (by investing in financial knowledge) is the first major step to get treatment. 

The following steps are recommended:

1. Go on a diet and control your cravings. Most of the times, poor health resulted from a poor diet. To remedy this, doctors would prescribe going on a chosen diet. There will be a list of what to eat and what not to eat while undergoing medication. The patient needs to make a sacrifice so that he can improve his health. The same goes with personal finance. He has to check his buying habit and list down what to buy and what not to buy. He has to delay instant gratification, pay himself first, and save at least 10 percent of his income and feel good about it.  Keep in mind the correct financial formula: Income – Savings = Expense.  Every purchase should make us think if the purchase is a trinket or a treasure. A treasure is something that would help make our money earn money and a trinket won’t.

2. Create an emergency fund. Allot three to six months of income for emergency. Never leave everything to chance. The usual problem is that there is always an emergency but no fund. It will be better if there is emergency fund but no emergency. The fund can then be made to work for you. The more the fund works, the more our wallet bulges.

3. Build passive income. Passive income is the best income one can earn. This is the income earned without exerting physical effort and trading his time for money. According to Warren Buffett, one does not deserve to buy something until his passive income is greater than the cost of the item. As a rule, enjoy life using passive income.

4. Get a regular checkup. As human beings need regular health checkup to determine his condition, it pays to regularly have his finances checked. As one looks for a medical doctor for his physical health, he should consult a financial expert like RFPs to give him a credible and trustworthy advice.

5. Stay properly nourished. By being properly informed on food intake, one can expect a better health. The same goes with financial health. By investing in financial education, he can increase his ability to earn by safeguarding his investment from losses and staying away from scams. 

6. Invest to grow money. One of the best ways to sophistically grow money is to invest in the stock market. The earlier one invests his time and money, the better since time will be on his side. The advantage of investing early is that he can use cost averaging to ride out the market fluctuation. Investing in stock has yielded better return on the long term.

7. Be selfish. This is the most important thing Boom said and it makes sense. By being selfish, he did not mean to be greedy. What he meant by that is that one should think of himself before thinking of others. For how can a person love, help and bless others if he himself failed to love, help, and bless himself? By making one’s self financially stable first, he can then help others. This is a classic example of walking the talk. For how can we expect a person to teach and help us if he himself is a pauper?

The only way to cure a sick wallet is to have the proper mindset, attitude, and behavior toward handling money.  All the things discussed above will not help unless one decides to act on the information given to him.

To end this article, here are two inspirational Bible verses:

Proverbs 13:11  “Dishonest money will dwindle, but money gathered little by little will surely grow.”

Proverbs 13:22  “A good man leaves an inheritance to his children’s children.”


Edmund Lao is a Registered Financial Planner of RFP Philippines. To learn more about personal financial planning join RFP batch 28 on July 21 to Sept 15. Inquire now at or visit for details and reservation.


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