The value of money

By Atty. Farah G. Decano

 

WITH interest rate barely at 1 percent per annum for a savings account in more popular banks, what could be our motivation for saving money? Inflation rate nationwide continuous to escalate from 3.5 percent in December last year to 4.2 this January.  It may not seem wise to save money and allow its value to erode over time.

Nowadays, however, we don’t maintain a savings account as a way to earn money. It is now an emergency fund where we could draw resources from with ease. So, the value that is eroded from our savings is actually our cost for knowing that we got ourselves covered when we find ourselves tight on the budget.

There are insurances, too.  They could take care of risks and other emergencies that may result in extraordinary expenses that our savings could hardly cover.  Like maintaining a savings account, there is a cost to having an insurance.  We call them premiums.  The payment of premium could mean the denial of our satisfaction on some things in exchange with the peace of mind that we are shielded by funds. The catch, however, is that, in addition to the payment of premiums, the access to insurance benefits is dependent on stringent conditions.

Then, there are the investments. They are supposed to be income generating from the initial capitalization. But like savings and insurances, investments do come with costs: the loss of peace of mind for the risk of reducing or wiping out the initial funds, the opportunity costs of money, and the possible need to add to the fund such as labor and skill, depending on what investments we place our money on.

I am reminded of T. Harv Eker, author of the “Secrets of the Millionaire Mind”  fame. He said, “[Poor people see a dollar as dollar to trade for something they want right now. Rich people see every dollar as a seed that can be planted to earn a hundred more dollars…then replanted to earn a thousand more dollars.”

I don’t measure my money only against the value of money at a later time. Instead, I also measure my money against time itself.

There are events that would present themselves only at certain times in our lives. There are moments that are never to return.  And these instances require the use of money. Should we part with our extra moolah and make these opportunities special? Or should we keep this money and boringly allocate them to either savings, insurance money, or investment funds?

There are moments in our lives, not necessarily induced by some need, but have more value than the amount interests or profits we earn from our funds.  For as long as my emergency fund has gotten me covered and my income generation capacity is unscathed, I won’t pass on these rare moments and would not hesitate to spend my money in creating an ambience of extraordinariness.  I simply reduce the issue to whether I should hold on to my extra money or take advantage of this crucial moment? I’d give up my money, in a jiffy.

My example would be mama.  My mother is in her late eighties.  Shall I scrimp on my money and think of its future value or shall I lavish her with all the comforts in life that my extra money could afford? My answer is predictable. Her remaining time with me is more precious than any profit that my extra fund could earn.  I have little understanding for some children who can very well afford a little comfort for their elderly parents but choose not to. They seem to prefer allocating their money to other purposes such as travel, leisure, and extra investments.

Eker probably would probably call me “poor.”   Yeah. A poor one whose heart is in the right place.  I give credit to my late papa for this value ingrained in me.

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