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It saddens me every time I read about a celebrity, way past his/her prime, now saddled with insurmountable debts, had to file for bankruptcy. I’m referring to Dionne Warwick, reportedly down to $1000 cash, and who filed for bankruptcy ($10M in debt). (Source: CNN).

News like these are not uncommon. My point – this is not exclusive to celebrities, once rich and famous at the peak of their career, but even those who were once rich but not necessarily famous, have trudged this path of ignominy. Many times, this could be attributed to a lack of Financial Planning on the part of the “victim”.

Joseph PrincipleThat is why, as an advocate of Financial Planning, I preach the gospel of the “Joseph Principle”.

Just what is this “Joseph Principle”?

In the book of Genesis (Chapters 41 & 42) of the Holy Bible, Pharaoh asked everyone except God to help him interpret the dreams he had.  No one could help, until Joseph, a man of God, was called for by Pharaoh himself and was asked to interpret Pharaoh’s dreams.  Joseph, with God’s help, was able to interpret the dreams and told Pharaoh that the seven healthy cows represented seven years of harvest while the seven gaunt cows  represented seven years of famine.

Since Joseph knew that Egypt was in the midst of an economic boom, Joseph told Pharaoh that for the next seven years they should save one fifth (20%) of the harvest of Egypt during the seven years of abundance. This way, when the famine came they would have enough food to survive the famine that is inevitable.

Because of this, Pharaoh placed Joseph in charge of Egypt because of the wisdom he displayed when Pharaoh needed to have his dreams interpreted. The plan worked to perfection. When famine came, Egypt never experienced hardships. Other countries that were greatly affected by this famine even asked for help which Joseph, as Egypt’s CEO, graciously gave.

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In the context of today’s reality, we can learn much from the Joseph Principle. The Philippines is in the midst of economic boom. For how long will this last, nobody knows. Who knows if history is merely repeating itself? Now is a good time to save and invest esp. while the economy is good. This is an opportune time to make your money work for you because hot money is coming in with the recent investment grade our country earned and many people, or should I say investors, will be looking to cash in on the gains, short term or long term.

Setting aside the economic status of the Philippines, any time that we are not hit by a calamity or a tragedy is a good time to be thankful for. Therefore, prepare for emergency funds. A minimum amount of the emergency fund should equal to at least 3 mos. of your salary. Good, if 6 months. Ideal, if 12 mos. or more. For we will never know when we will be hit by a calamity (death, major sickness, accident, etc.) that could entail a large amount of money and eventually large debt, if we are caught unprepared by it.

Save, save and save during good times. Now, if you want your money to work for you, try investing. Just apply due diligence. There are many investment vehicles: mutual funds, stocks, UITFs, even variable life, among others. Just do not get into something you don’t understand. Talk to an expert or to someone you trust or get someone to refer you to a reliable agent.

If you say that saving is difficult, just look at the ants. Ants are creatures of little strength, yet they store up their food in the summer (Proverbs 30:25). If the ants can do it, there’s no reason why you cannot prepare for the rainy days ahead.

The crux of the matter is that we should be prepared at all times and there’s no other way to prepare than to force yourself to save. You can start in small amounts. And when you have gotten the hang of it, you can start saving and investing in big amounts.

Try and apply the “Joseph Principle” in your life and save yourself from a lot of trouble when the uncertainties in life hit you.

Be grateful if you will be spared. Be more thankful if you are prepared.

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