Learn the Most Important Reasons to Save Money By Miriam Caldwell, About.com Guide http://moneyfor20s.about.com/od/reasonsandwaystosave/tp/Top-7-Reasons-to-Save-Money.htm 1.

Save for Emergency Funds It is important to have an emergency fund set aside to cover unexpected expenses. This could cover an unexpected car repair, your emergency appendectomy or a sudden job loss. Ideally your emergency fund should be about three to six months of your expenses. If you are just starting out you should put aside at least $1000.00 for this. In addition to your emergency fund you need to make sure you have a plan and good insurance in place to help you survive the unexpected financial events in your life. 2. Save for Retirement Another important reason to save money is your retirement. The sooner you start saving for retirement, the less you will have to save in the future. You can put your money to work for you. As you continue to contribute overtime you will be earning more interest on the money you have, then you put in each month. You should at least be contributing up to your employer's match and eventually you will want to contribute ten to fifteen percent of your gross income. 3. Save for a Down Payment for a House A third reason to save money is for a down payment on a house. Your negotiating power goes a lot farther when you have a significant down payment towards your home. You will receive better interest rates, and be able to afford a bigger home. You can determine how much you save towards this each month depending on your circumstances. 4. Save for Vacations and Other Luxury Items A fourth reason to save money is to have fun. You can save up for your tour of Europe or that Caribbean cruise. Additionally you can be saving for fun large ticket items such as a Playstation 3 or a new boat. Your negotiating power is stronger if you have cash in hand on bigger purchases. Plus you do not want to be paying off your trip to Europe in five years. 5. Save for a New Car A fifth reason is to purchase a car with cash. You will be amazed at how much money you can free up in your budget if you do not always have a car payment. You can also negotiate the price of the car much lower if you are willing to pay cash at the dealership.

6. Save for Sinking Funds A sixth reason is to build up your sinking funds. A sinking fund is money you set aside for future repairs or improvements on your car, home or other possessions. This planning can help you to stop dipping into your emergency fund every time you need to fix your car. 7. Your Education A seventh reason to begin saving money is for your future education. Each year more people return to school to earn their masters or doctorate degrees. You may also consider saving for your child's education when the time comes. Banking System: The Philippines has a comprehensive banking system encompassing various types of banks, from large universal banks to small rural banks and even non-banks. As at 31 March 2011, there are 19 universal banks, 19 commercial banks, 73 thrift banks, 595 rural banks, 40 credit unions and 15 non-banks with quasi-banking functions, all licensed with the Bangko Sentral ng Pilipinas (Central Bank of the Philippines) under Republic Act No. 8791, also known as the General Banking Act of 2000, share roughly the same powers. Different Banking Institutions in the Philippines: 1. Universal bank- A universal bank has the same powers as a commercial bank with the following additional powers: the powers of an investment house as provided in existing laws and the power to invest in non-allied enterprises. Local universal banks: Government-owned- Development Bank of the Philippines, Land Bank of the Philippines Privately owned- Metropolitan Bank and Trust Company, Rizal Commercial Banking Corporation 2. Commercial Bank- A commercial bank has the power to: accept drafts and issue letters of credit discount and negotiate promissory notes, drafts, bills of exchange, and other evidences of debt accept or create demand deposits receive other types of deposits and deposit substitutes buy and sell foreign exchange and gold or silver bullion acquire marketable bonds and other debt securities; and extend credit

Local commercial banks: Bank of Commerce, BDO Private Bank (subsidiary of Banco de Oro), Philippine Bank of Communications Foreign banks with commercial banking operations: Australia and New Zealand Banking Group, Citibank, N.A., Deutsche Bank AG, Hongkong and Shanghai Banking Corporation, Standard Chartered Bank 3. Thrift Banks- A thrift bank has the power to: Accept savings and time deposits Act as a correspondent with other financial institutions Collection agents for government entities, issue mortgages, Engages in real estate transactions and extend credit. Thrift banks may also maintain checking accounts Act as a depository for government entities and local government units and engage in quasibanking and money market operations subject to the approval of the Bangko Sentral ng Pilipinas 4. Cooperative and Rural Banks Rural and cooperative banks are the more popular type of banks in the rural communities. Their role is to promote and expand the rural economy in an orderly and effective manner by providing the people in the rural communities with basic financial services. Rural and cooperative banks help farmers through the stages of production, from buying seedlings to marketing of their produce. Rural banks and cooperative banks are differentiated from each other by ownership. While rural banks are privately owned and managed, cooperative banks are organized/owned by cooperatives or federation of cooperatives. A rural bank has the power to provide adequate credit facilities to farmers and merchants or to cooperatives of such farmers and merchants and, in general, to the people of the rural communities of which the rural bank operates in. Micro-Finance in the Philippines: 1. Bombay 5-6: So-called because of the manner in which they lend, five-six (5-6) moneylenders charge a nominal interest rate of 20 percent over an agreed period of time. A person who borrows 5 pesos from a

5-6 moneylender over a period of one week repays 6 pesos, including 1 peso interest. Neither Filipino nor Indian 5-6 moneylenders require collateral or documents from their borrowers. 2. Paluwagan Scheme: The paluwagan is an informal pooled fund practiced for decades in the Philippines in neighborhoods and offices. Any one can put up a paluwagan, inviting people to come in as members. Each member will contribute a set amount on an agreed date, and frequency of contributions can be daily, weekly, or monthly. One of the members is the designated collector. On a specified date, monthly for instance, one member will receive all the contributed money. The next month, another member will receive the pot, and it goes on monthly until all the members have taken their turn to receive the entire funds contributed for the month. The purposes of the paluwagan are to help members save, and to enable them to receive a bigger amount of money in one lump sum. 3. Pawning of ATM Cards