NU #3: Financial Health by Budgeting by T. N. Gaudi

NU #3

26 January  2013

MBAH 10-B / Entrepreneurship

Financial Health

(Spending Habits)

By T. N. Gaudi

The scope of this NU12 is limited to allocating or budgeting finances to be able to maximize its value. This paper does not cover on improving income streams. It is recognized however that income generation is still key if one wishes to be financially fit.

The central problem presented here is that people usually spend all of their income just a few days or weeks upon receiving it. One of the primary reasons why this happens is that people spend beyond their means without actually being aware of it. The result is that they have no more left for savings and investments and worse is that they sometimes even incur bad debts. My objective here is to create and illustrate a system which relatively anyone can easily adopt and make as habit. This system should be able to help achieve financial leverage.

The system is similar to the envelope system which allows allocating resources or any windfall into different funds upon getting hold of it. The key to this system however is in the automation of the parts of the process so that we could create a type of forced savings or forced allocations. Automation promotes consistency and eliminates the volatile reactions of human behavior in the context of spending or financial management.

Basically the allocations should be categorized into four major funds namely:  the basic fund, the contingency fund, the savings fund, and the investment fund. The basic fund should be allocated for monthly living expenses including spending allowances. The contingency fund should include preferably 3 to 6 months of your monthly living expenditures and should only be utilized when an unforeseen need or a catastrophic event arises. The savings fund is allocated for short to medium term projects that also include term insurance and the annual allocation for health care insurance among others. The investment fund is actually a retirement fund wherein you allocate a portion of your savings (10% to 20%) and where you hedge and grow it by putting it in higher yielding facilities such as in bonds, mutual funds, and especially in the stock market. Creating an investment fund will allow you to harness the power of compounding while hedging your resources from inflationary forces.

By using the services offered by the bank for free (almost), one can make arrangements so that funds are automatically allocated from the main account to the 4 major funds. For the contingency fund it is best that it is in higher yielding deposit accounts such as the time deposit or SDA (this account should be preferably applied without an ATM access). For the basic fund, this should be put in a regular savings account and can be applied with an ATM access card for convenience since also this account will be drawed from upon regularly. For the savings fund, it is preferred that it is placed in a current account that yields higher interest than a regular savings account. For the investment fund, any regular savings account that can preferably be registered online will do. This is so that it will be easier to manage investments especially if it is diversified into different instruments. 3.5

I believe that this particular arrangement will help change behavior towards managing one's finances and will create a habit that will allow for the improvement and growth of one's financial health.

NU #1: An Apt App by T. N. Gaudi

NU #1

15 December  2012

MBAH 10-B / Entrepreneurship

An Apt App: The ≡appRapt

By T. N. Gaudi

Urban living has its awesome rewards as well as some annoying quirks. The most tired remarks I hear a lot from fellow urban dwellers all point out to the fact that travelling or commuting in this city is painfully hard - everyone living in metro manila should know. Not only is it so inconvenient but it also costs us a lot of our most precious resources - money, time, effort, and every cost related to the risks we take when commuting in heavily polluted and often chaotic and unsafe environments.

However, relatively recent developments have made a lot of difference in our commuting. One such development that is much cherished and welcomed by urban dwellers is the augmentation of our metro rail system. Commuting folks here in metro manila appreciate how much faster intra/intercity commutes have been because of our city rail lines. Be that as it may, our metro rail transit system is far from being perfectly convenient - talk about very long queues and overcrowded platforms especially during peak or rush hours.

The government, I believe, is very aware of and is familiar with these day-to-day inconveniences. It does not take a genius however to see that upgrading our train systems, so as to have more cars to accommodate more commuters especially during peak hours, is not that easy - it costs and it costs a huge lot.

Since most of the commuters who patronize our rail system, in my opinion, have access to web services, I suggest that an app be created specifically to make inter/intracity train commutes more bearable. This app will be called ≡appRapt - a play on the word 'abrupt' which is how we wish our commutes will be, and which is actually derived from the combination of the words 'application', 'rail' and 'rapt', showing a bit of pinoy humor.

The ≡appRapt app is somewhat the counterpart to MMDA-TV5's Metro Manila Traffic Navigator. However, this app will be focused on monitoring the status of passenger volume and traffic, and the quality of service in the MRT and LRT lines. Not only will it function as a monitoring tool but more importantly as a tool for continous improvement through crowdsourcing and feedback sourcing among others.

The concept is fairly simple but the implications of this app are extensive. The ≡appRapt will bring about the following benefits:

1. Better informed commuters;

2. More efficient train system;

3. Less congested train stations;

4. More satisfied and productive patrons;

5. Faster and safer commutes;

6. Happier citizens;

and much much more.

So to make our train commutes more 'appRapt ', let's exactly do just that – ≡appRapt it! 4