How to protect your money against inflation

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Metro Manila (CNN Philippines, October 4) — With the Philippine peso sinking to all-time lows against the US dollar and amid rising inflation, a wealth coach shares fool-proof ways to not only protect your hard-earned money but also make sure it grows.

On Monday, the Philippine peso recorded a new all-time low of ₱59 to the US dollar. This foreign exchange trading close marks the 12th time the peso set record lows for the year.

Meanwhile, the Bangko Sentral ng Pilipinas sees inflation — the rate at which prices of basic goods and services increase — to accelerate further from the 6.3% rate recorded in August. 

Chinkee Tan gives these five tips to help us thread through these uncertain financial times.

1. Have a financial plan

Tan said the first thing you need to have is a financial plan where you can monitor your budget and track the amount of money that goes in and out of your finances.

2. Cut down unnecessary expenses

Whipping out a meal on your own might help with finances these days. According to Tan, it’s important to steer clear of spending on unnecessary expenses, such as eating out or ordering food.

He said it's important to reduce the consumption of drinks and food that are not "essential," such as coffee and other juices. If we cut this down, it would have a big impact on our finances.

3. Save up for emergencies

An emergency fund is money that you can spare for at least three to six months in the event of a sudden loss of income, Tan explained.

“Nasa kakayanan ng tao. Mahirap maglagay ng percentage. ‘Pag sinabi nating 10% or 20%, ang tanong kaya mo ba? Mag-umpisa ka sa maliit. For example, ₱500 or ₱1,000 a month. Kung ano ang kaya mo,” he said.

[Translation: Save based on what you can. It's hard to put a percentage. When we say 10% or 20%, can you do it? Start small. For example, ₱500 or ₱1,000 a month.]

4. Avoid “bad debts” at all costs

Now is not the time to borrow, Tan said, especially if it’s a “bad debt” or money that you owe that does not profit or grow. Examples of these are debts used to pay bills such as tuition fees and rent.

Meanwhile, debts that are considered “good” are those that you use for investments, businesses, or money that will generate income.

Tan emphasized that the value of the peso or movements in the market would still be uncertain in the next few months, so avoid having debts at all costs.

5. Invest in money-making assets

The best way to combat inflation is to invest, said Tan, especially in income-generating assets and assets that will increase in value, such as property, stocks, or cryptocurrency.

“Maganda mag-invest sa panahon ngayon dahil ang market po ay ‘depressed’ o mababa ang presyo,” he said.

[Translation: It is good to invest at this time because the market is ‘depressed’ or the price is low.]

On spending amid the holiday season, Tan suggested turning bonuses into business capital and investments.

If you really need to shop for Christmas gifts, Tan suggested purchasing locally made products. “Buying Filipino” could be less expensive and subsequently supports the local economy.

“Kapag bumibili ng local products, hindi kailangan ng dollar, we are supporting our local economy. Iikot po ang ating pera. Lalakas ang economy at hindi na tayo dependent sa imported products,” he stressed.

[Translation: When buying local products, no dollar is needed, we are supporting our local economy. Our money goes around. The economy will grow stronger and we will no longer depend on importing products.]