Filipino Money Mistakes that Keep on Happening

Filipino Money Mistakes that Keep on Happening

 

The middle to upper classes in the Philippines earn a decent income and have a more affluent life compared to the lower-income earners. But why are those earning at least Php30,000 still find themselves living from paycheck to paycheck and have no savings?

 

The problem is not the lack of money but the lack of proper money management. When potential money mistakes are handled well, fewer people will become broke. Here are the common Filipino money problems and tips to avoid them.

 

1. Delaying real estate tax payments

Photo courtesy of stevepb via Pixabay

After purchasing a new property, be it a house or a condo, many Filipinos are so excited to move into and design their new home that they forget the after-sales fees, like the annual real estate tax. Property owners in the Philippines are required by law to pay this tax, also called real property tax (RPT), which is 2% (for properties in Metro Manila) or 1% (for properties in the provinces) of the assessed property value.

 

Missing your RPT payments can lead to serious, painful consequences. Late payments incur penalties of 2% to 72% on the unpaid amount. If you don’t pay anything at all, the local government will tag your property as tax delinquent, and it will be sold in a public auction. For instance, the Quezon City government took over a property after failing to pay its RPT worth Php 57 million for about 10 years.

 

The money, sacrifices, and time you’ve invested in your property will all go to waste just because of failure to pay your taxes.

 

Why Filipinos keep making this mistake:

 

  • Mañana habit – Filipinos often procrastinate, leading to payment delays.
  • Financial difficulty – Some property owners lack budget for it.
  • Failure to keep track of due dates – Those managing too many properties often lose track of their payment due dates.
  • Unawareness – Many first-time homeowners aren’t aware that they’re required to pay the RPT.
  • Inconvenience – It could be a hassle to personally go to the treasurer’s office if it’s located far from where the property owner lives.

 

Tips to avoid it:
 

  • Pay your RPT in advance to get discounts ranging from 10% to 20% on your annual tax due.
  • Pay in installments. If you can’t pay the lump sum every year, you can pay in quarterly installments that are due on the last day of every quarter (March 31, June 30, September 30, and December 31).
  • Don’t delay it. Pay on time to avoid incurring late payment penalties. Make sure your RPT is paid on or before January 31 every year.
  • Pay your RPT online if your property is in Quezon City, Valenzuela City, Muntinlupa City, Naga City, or any city with an online tax payment facility.

 

2. Lack of emergency fund

Photo courtesy of George Hodan via PublicDomainPictures.net

Emergencies happen anytime, whether you like it or not. You could lose your job. You could be diagnosed with a serious illness. Your house or car could be damaged by a typhoon. Do you have funds to cover your expenses should any of these emergencies occur?

 

Living from paycheck to paycheck, many middle income earners fail to build an emergency fund. During an emergency, they find themselves buried deep in debt because they borrow money from their relatives and friends or take a loan from a bank or their employer.

 

Why Filipinos keep making this mistake:

 

  • Bahala Na mentality – Filipino spirituality and optimism can be a negative thing when it comes to money matters.
  • Poor savings habit – Filipinos tend to overspend but save less, especially during the holidays when they receive their bonus.

 

Tips to avoid it:

 

  • Stash away 3 to 6 month’s worth of expenses in a savings account separate from your main account.
  • Also have an emergency fund in cash good for at least one week, which you can use during calamities, power outages, and other situations when it’s difficult to access your bank.
  • Build an emergency fund first before you start investing. Otherwise, you’ll be tempted to spend your investment money during an emergency.

 

3. Being too generous with money

 

Photo courtesy of Kate Ter Haar via Flickr, Creative Commons

Two words that can quickly drain a Pinoy’s money: “Libre!” and “Pautang!” If you’re too generous, you’ll always be broke. Especially if you’re an overseas Filipino worker, the common misconception among family and friends is that you’re well-off. You’re not a money-making machine, and you don’t deserve to be treated that way.

 

Why Filipinos keep making this mistake:

 

  • Pakikisama Filipinos are naturally helpful, many times to a fault. They couldn’t refuse a family or friend who borrows money because they feel they’re obliged to help.
  • Hiya – How many times have you been teased by friends and colleagues about treating them coffee or snacks? The hiya factor keeps you from saving more money.
  • Utang na loob – Having close family ties is valued in the Philippines, and the utang na loob culture is very much part of it. Nothing wrong with it, but anything in excess can be bad for your financial well-being.

 

Tips to avoid it:

  • Learn to say no, whether it’s a pesky colleague joking about free food or a relative who guilts you into lending him money.
  • Keep your family from being too dependent on you. There are many ways you can help. Tough love is one of them. Lending them money each time they ask for it will only encourage them to keep making money mistakes.

 

4. Racking up huge credit card debts

Photo courtesy of lcb via Pixabay

Photo courtesy of lcb via Pixabay

In itself, using a credit card isn’t bad. It’s useful for emergencies and purchasing big-ticket items like appliances and furniture—as long as you use it responsibly. However, one of the money mistakes credit cardholders make is accumulating debts.

Why Filipinos keep making this mistake:

 

  • It’s easy to overspend. According to psychologists, it’s easier for consumers to pay with a card than part with their cash.
  • Nobody has ever gone to jail because of credit card debts. In the Philippines, failure to pay credit card debts is not a criminal act. However, it’s bad for your credit history, hurting your chances of getting loans from the bank in the future.

 

Tips to avoid it:

 

  • Pay the full amount due every month. Otherwise, the interest charges on your credit card balance will accumulate over time.
  • Don’t max it out. You’ll just make it harder for yourself to pay off your outstanding balance.
  • Think twice before you have that card swiped. Consider if you can afford something with cash. If not, then don’t proceed with the credit card purchase.

 

Do you have family and friends who keep making these money mistakes? Show them you care about their financial health by sharing this post. Sharing is caring!

Author Bio:

PATRICIA EVANS

Huffington Post Blogger, Interior Designer, Travel writer

A mum blogger who loves travel and interior designing

Patricia Evans is a part time interior designer and a full-time mother. She has worked in Marketing before but she quit her job to pursue her true passion: fashion and interior design.

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