David, 38, has been stationed in the Philippines for a decade now. As the regional director of a foreign digital marketing firm, he is responsible for handling teams of marketing officers to make sure they deliver the best metrics to their clients.
He says he’s earning more than enough to comfortably live in one of the most upscale townships in Metro Manila. “Over P200,000 per month is all I’m willing to say on this,” he says.
Despite this, he makes sure every month that he puts part of his earnings on different forms of investment.
“I personally hold an investment portfolio of about 70% in stocks and shares and 30% in cash cryptocurrency,” he shares. “Each month I try and use at least one-third of my salary for cash savings or stock purchases.”
While it seems like David already has figured out how to spend his hard-earned money as a director here, he—like any other person in a directorial or executive position—is still prone to financial pitfalls that are exclusive to the people on top of the food chain.
Is it really lonely at the top—even financially? We talked to two high-earning people to find out.
Problem # 1: Keeping up with the Joneses
David admits he had an instant lifestyle upgrade when he was promoted to the regional director post. “I think this is part and parcel of career growth,” he reveals. “You want bigger TVs, more gadgets, nicer holidays, better food.”
To the uninitiated, lifestyle inflation is the direct correlation between income and spending: the more money you earn, the more you spend.
Problems arise when a person who gets a raise marks his lifestyle upgrades as “necessities,” leaving him with little or nothing to spend on savings and investment. Worse, lifestyle inflation can also lead to crippling debt.
Solution #1: Strike a balance between saving and spending
While one cannot deny the happiness brought by fancy jewelry and dapper suits, you can mitigate this by making your money grow by saving and investing.
Jendee Sapo-de Guzman, a Registered Financial Planner, says in an interview that enjoying the fruits of your labor isn’t so bad, but one must carefully balance “saving for the future, mindful spending and enjoying life.”
“For so long as the cashflow permits, plus an emergency fund set up, it is fine to spend on something they want,” De Guzman explains.
Problem # 2: You’re pressured to meet your subordinates’ expectations
David said he’s always been generous to the people around him. He would use money out of his own pocket to treat employees to weekly nights-out, out-of-town holidays, and team dinners to keep their morale high.
However, some of his employees started expecting him to pay for everything in the long run, which caused him disappointments and huge credit card bills after.
Solution #2: Learn how to say no
According to Susan Newman, author of The Book of NO—250 Ways to Say It—and Mean It and Stop People-Pleasing Forever, being a “yes man” can cause exhaustion, both in your energy as well as finances.
“Most of us want to be viewed as a team player, supportive of our colleagues and working together for the good of the organization,” she said in an interview with Fast Company.
To effectively say no, she says one should avoid lengthy explanations that would give people a chance to second-guess your position or even make a counter-offer.
Problem # 3: You don’t get your hands dirty
Newton, an assistant vice president of a Makati-based firm, built his own business through two things: a personal loan he borrowed from the bank and constant enrichment of his knowledge.
“I spend more on education and personal development than clothes and other things. It still has something to do with my image,” he said. “The more I understand how money works, the more inclined I get in investing and in trying to build my retirement portfolio.”
Unfortunately, not everyone is hands-on when it comes to their finances. Some leave their entire wealth in the hands of other people.
Solution #3: Learn more about personal finance
Even if you’re taking home a huge paycheck, it won’t mean a thing if you have no idea what to do with it. Financial education is key to success.
Without a solid foundation on how finance works, the only thing you will do with your money is spend it.
Rather than instant gratification, the goal should always be to use the money you earn to attain financial freedom in the future.
Problem #4: You splurge on the wrong things
Both our subjects admit that, at some point, they bought themselves big-ticket items. They see this as a reward for their hard work.
Newton said that he bought himself a car and a condominium unit after his last promotion. According to him, he never missed a payment and even spoiled his car with upgrades and the best car insurance he could afford.
Meanwhile, David charged some expensive item to his credit card “with debt being so cheap at the moment it kind of makes sense to do it this way.”
However, he said that he would avoid subsequent purchases of expensive items to prevent his credit cards from spiraling out of control.
Solution #4: Pay yourself first every now and then
In the field of personal finance, delayed gratification is king. However, there are times splurging can be good for your financial health, especially if you can afford it.
According to a Forbes article, “frugality fatigue” happens “when you get tired of being too restrictive with your spending—causing you to go overboard when you do finally crack open your wallet.”
Some of the ways to combat frugality fatigue is by adding a variety on your big-ticket items and keeping your splurge proportionate to your budget.