Trick for budgeting in the PH

[ladislav]

My trick in budgeting.

To see how much the Peso will buy in the PH, I deduct one zero.

Let me explain:

Say, an expat wants to know how much he would need.
And then, people start saying, "Well it depends on your lifestyle".

And some say, "Oh, you can live like a king on 150,000 pesos a month".

But you can live like a king in parts of the US for that kind of money, too.

People like the PH because it's supposed to be cheap. So, why is everybody bragging about his/ her Php 200,000 a month pension?

Here is my formula for the common man, not for the upper crust expats:

35,000 pesos in the PH will give you roughly the same lifestyle as $3,500 in the USA per month. Excluding imports. But if it is PH or cheap Chinese products or services, that is how it will be.

Do not translate by bank rate, translate by purchasing power parity.

What costs $50 in the USA will cost Php 500 in the PH. More or less.

And how much is 35,000 pesos in nominal terms? $700. So, if you want to live in the PH how an American lives on $3500 in the USA, you would need $700 in the Philippines more or less.

Are you with me? Say, you are an expat on a fat pension of $5000 a month. In pesos, it is 250,000. So, having 250,000 pesos in the PH will be like having 25,000 dollars to spend in the USA.

So, basically, get the peso equivalent, deduct one zero and then, your lifestyle in the PH will be just like if you had that amount in dollars back home.
In some parts of the USA, you can live a very basic life on USD 2000 a month. So, if you have Php 20,000 a month that is the kind of lifestyle you will more or less live in the PH.

This is a rough ( very rough) guideline with many, many exceptions.

And those exceptions are Western amenities and imported products.

But if it is all local, it seems to work. At least for me.

[publicduende]

My trick in budgeting.

To see how much the Peso will buy in the PH, I deduct one zero.

Let me explain:

Say, an expat wants to know how much he would need.
And then, people start saying, "Well it depends on your lifestyle".

And some say, "Oh, you can live like a king on 150,000 pesos a month".

But you can live like a king in parts of the US for that kind of money, too.

People like the PH because it's supposed to be cheap. So, why is everybody bragging about his/ her Php 200,000 a month pension?

Here is my formula for the common man, not for the upper crust expats:

35,000 pesos in the PH will give you roughly the same lifestyle as $3,500 in the USA per month. Excluding imports. But if it is PH or cheap Chinese products or services, that is how it will be.

Do not translate by bank rate, translate by purchasing power parity.

What costs $50 in the USA will cost Php 500 in the PH. More or less.

And how much is 35,000 pesos in nominal terms? $700. So, if you want to live in the PH how an American lives on $3500 in the USA, you would need $700 in the Philippines more or less.

Are you with me? Say, you are an expat on a fat pension of $5000 a month. In pesos, it is 250,000. So, having 250,000 pesos in the PH will be like having 25,000 dollars to spend in the USA.

So, basically, get the peso equivalent, deduct one zero and then, your lifestyle in the PH will be just like if you had that amount in dollars back home.
In some parts of the USA, you can live a very basic life on USD 2000 a month. So, if you have Php 20,000 a month that is the kind of lifestyle you will more or less live in the PH.

This is a rough ( very rough) guideline with many, many exceptions.

And those exceptions are Western amenities and imported products.

But if it is all local, it seems to work. At least for me.

A laudable effort, that of giving a simple formula to calculate purchase parity between the US and the Philippines. As you say, there are many exceptions. I would add, so many exceptions that the formula should be havily adjusted depending on where you live, what you eat, the amount of nightlife, and the amount of goods and services (e.g. flight tickets) that cost more or less the same all over the world used per month.

In Metro Manila, P35,000 is just about enough to live a decent bachelor life: cheap 25 sqm studio flat in a not-so-glamorous part of town, home-cooked meals using local products, beers and pica-pica at local bars maybe once or twice a month, mid-range restaurant dinners maybe once or twice a month. That's it.

Have a girl or two to take care of, let alone impress, and you need at add at least another $200 ($10,000) a month.

The main problem is that, whatever is local, tends to be of a much lower quality. While one may not mind buying plastic kitchen utensils from the downtown market, eating local processed food, or the cheaper kind of estrogen-laden pork, will not be good for your body and is not a sustainable choice for any foreigner...as it is not for any local. Ever wondered why such an incredible amount of Filipino men die from cardiac troubles or cancer before they reach 55?

[Yohan]

Let me add to this calculation that you should consider to save up every month some money of your foreign income for unexpected medical treatment.
In Philippines you have to pay out of your own wallet. Pay cash or die early.

Also keep always enough money ready in your banking account to buy a ticket to abroad in any case you have to leave quickly out of whatever reason.

About living costs of PHP 35000,- it is possible (surely about double of income of many many Filipinos) but do not expect a very nice room and a swimming pool within the compound. LOL

For a Western foreigner, single, spending only php 35.000 per month this is really a basic life-style and I can only advice you to consider this as the minimum expenses.

Better start your calculation with php 50.000 or 60.000 with a better room, better food and some money for entertainment...
also be aware in Philippines they really charge you for everything, you go to a beach (and many are privately owned) you pay.
You go to a place nearby in the mountains, privately owned and you pay...at least in Cebu, but some security nearby is often useful.
Many places are difficult to reach with public transport, you need a taxi and you have to give the driver some money to wait to bring you back and of course you pay etc. etc.
At least around Cebu City life is like that but surely similar also in other places in all Philippines.

[publicduende]

Let me add to this calculation that you should consider to save up every month some money of your foreign income for unexpected medical treatment.
In Philippines you have to pay out of your own wallet. Pay cash or die early.

Also keep always enough money ready in your banking account to buy a ticket to abroad in any case you have to leave quickly out of whatever reason.

About living costs of PHP 35000,- it is possible (surely about double of income of many many Filipinos) but do not expect a very nice room and a swimming pool within the compound. LOL

For a Western foreigner, single, spending only php 35.000 per month this is really a basic life-style and I can only advice you to consider this as the minimum expenses.

Better start your calculation with php 50.000 or 60.000 with a better room, better food and some money for entertainment...
also be aware in Philippines they really charge you for everything, you go to a beach (and many are privately owned) you pay.
You go to a place nearby in the mountains, privately owned and you pay...at least in Cebu, but some security nearby is often useful.
Many places are difficult to reach with public transport, you need a taxi and you have to give the driver some money to wait to bring you back and of course you pay etc. etc.
At least around Cebu City life is like that but surely similar also in other places in all Philippines.

Good point @Yohan, good point. I never spent a lot on healthcare, lucky me, but I would say yes, everything that requires medical attention, from a suite of blood tests to cancer surgery, just needs to be done in a private clinic or hospital. And private clinics and hospitals in the Philippines tend not to be cheap.

Either that, or a good health insurance which, for someone with prior illnesses and/or at risk age, may well be in the P200K/P400K a year. So, 4000/8000 USD a year extra.

[Yohan]

@publicduende
My point was only to show if you are a foreigner living in Philippines, you cannot live so cheap like a local Filipino grown up in poverty somewhere in Tondo in Manila or under the Mactan Bridge in Cebu.

I do not live in Cebu, but visited it often for a few weeks. As a foreigner while in Cebu I expect my hotel room to be comfortable with working toilet, AC and hot water, swimmingpool, restaurant within the compound and such comfort and of course I have a travel health insurance. Do not ask me how much money I spend, especially when my daughter is coming with me and we visit my fosterdaughter. Well it's only for 14 days or so.

However in case living in such a city like Cebu longterm I would of course not stay in a hotel but in a reasonable rented apartment to offer me some comfort too. I do not want to live in a basic little room with everything inside desolate and electricity if available, (expect brown-outs all the time) to be dangerous for your life if you touch the wrong cable and children living in the garbage or in the cemetery next to my room etc. You know what I mean.

Such a room in a moderate area in Cebu 40 to 50 m2 and utilities will cost me around php 35.000 or more per month and surely not less.
I think in Cebu I need around php 80.000 - something like that monthly.... about minimum php 2500,- per day and add some money for medical care etc.

If you look for some moderate comfort, nice home, good meals, some entertainment, etc. and also some security and medical care, php 100.000 is quite realistic. Just my opinion.

It's not such a cheap life for a foreigner, it's the wrong idea that with very little money you can live like a king in Philippines.

[publicduende]

@publicduende
My point was only to show if you are a foreigner living in Philippines, you cannot live so cheap like a local Filipino grown up in poverty somewhere in Tondo in Manila or under the Mactan Bridge in Cebu.

And I can't agree more with your point, @Yohan

I do not live in Cebu, but visited it often for a few weeks. As a foreigner while in Cebu I expect my hotel room to be comfortable with working toilet, AC and hot water, swimmingpool, restaurant within the compound and such comfort and of course I have a travel health insurance. Do not ask me how much money I spend, especially when my daughter is coming with me and we visit my fosterdaughter. Well it's only for 14 days or so.

However in case living in such a city like Cebu longterm I would of course not stay in a hotel but in a reasonable rented apartment to offer me some comfort too. I do not want to live in a basic little room with everything inside desolate and electricity if available, (expect brown-outs all the time) to be dangerous for your life if you touch the wrong cable and children living in the garbage or in the cemetery next to my room etc. You know what I mean.

Such a room in a moderate area in Cebu 40 to 50 m2 and utilities will cost me around php 35.000 or more per month and surely not less.
I think in Cebu I need around php 80.000 - something like that monthly.... about minimum php 2500,- per day and add some money for medical care etc.

If you look for some moderate comfort, nice home, good meals, some entertainment, etc. and also some security and medical care, php 100.000 is quite realistic. Just my opinion.

It's not such a cheap life for a foreigner, it's the wrong idea that with very little money you can live like a king in Philippines.

One thing I noticed is that even barely middle-class Filipinos love to indulge, from time to time. Perhaps considering how small and crammed the typical Pinoy family home is, staycations in hotel rooms or cheaper resorts are really, really popular. Young couples treat themselves to one or two nights in a luxury hotel or condo AirBnb, or a fancy restaurant, etc. They probably won't be able to afford more than one of such escapades per month, but if they have the cash, stay assured they'll want to get a taste of what it is to live above their means, even for a few hours!

[Yohan]

One thing I noticed is that even barely middle-class Filipinos love to indulge, from time to time. Perhaps considering how small and crammed the typical Pinoy family home is, staycations in hotel rooms or cheaper resorts are really, really popular. Young couples treat themselves to one or two nights in a luxury hotel or condo AirBnb, or a fancy restaurant, etc. They probably won't be able to afford more than one of such escapades per month, but if they have the cash, stay assured they'll want to get a taste of what it is to live above their means, even for a few hours!

One or two nights?

There are many who do not even have that money, they go there in morning and go back in evening, resort hotels in Cebu-Mactan have often a one-day visitor entrance fee including a lunch buffet, and swimmingpool and a reserved wooden structure with benches and roof in the garden, some resorts offer a tent etc. - arrive around 10:00 AM and back home 05:00 PM. Some cheap resorts do not offer even food, they charge you a fee, PHP 200,- or so for your reserved place and you have to bring your drinks and food with you or order them by mobile phone from a nearby Jollibee for delivery.
Many have no swimming wear and rent them for php 50,-.

https://menus.ph/jollibee-menu/

Thailand in this sense is much better, as it is not allowed by law to own a beach as a private individual or company. A beach is always open to public for free.

[publicduende]

One or two nights?

There are many who do not even have that money, they go there in morning and go back in evening, resort hotels in Cebu-Mactan have often a one-day visitor entrance fee including a lunch buffet, and swimmingpool and a reserved wooden structure with benches and roof in the garden, some resorts offer a tent etc. - arrive around 10:00 AM and back home 05:00 PM. Some cheap resorts do not offer even food, they charge you a fee, PHP 200,- or so for your reserved place and you have to bring your drinks and food with you or order them by mobile phone from a nearby Jollibee for delivery.
Many have no swimming wear and rent them for php 50,-.

Well, yes and no... The one-night staycation for Valentine's Day, wedding anniversary or birthday is quite common. One night in a fancy resort is probably around P8,000. Then of course it depends on how well-off these people are.

There are quite a lot of middle-class people here in Manila, couples with a combined income comfortably in the P150K a month range. As it usually happens, money begets money, so those who make this kind of money are the elite-educated ones who come from families of money.

[Yohan]

There are quite a lot of middle-class people here in Manila, couples with a combined income comfortably in the P150K a month range. As it usually happens, money begets money, so those who make this kind of money are the elite-educated ones who come from families of money.

I don't know if you are familiar with cities and jobs in the Visayas, but people earn far less in that region than in Manila for sure.

For example my fosterdaughter was working in Cebu in one of the branch offices of a major bank (I think, No. 6 in Philippines) for 3 years, her salary was PHP 12.000,- despite 4 years in the Sto.Carlos University, graduated, her cousin is working in one of the largest hotels in the city (not on Mactan, with these beach resorts) her salary after 6 years is PHP 9000, and a free meal (there is always something left from the buffets)

Luckily my fosterdaughter could now change the job and works for an Australian company in Cebu, her salary php 20.000,- + a small health insurance.

This is in Cebu City, but income is even less on other islands and often jobless rate among young people is 50 percent or more.

Last month was terrible because of the huge storm, also the house I financed for her lost the roof. Electricity came back a week ago, still no internet in the eastern/northern part of the city. Carpenters who made a new roof have a very little income, the company was asking for 3 people doing the work including all materials php 30.000,-

Car companies in Cebu are the worst, if you work there for sale they give you no salary at all. You sell something, cars or parts, used or new, you get a commission, something between php 2000,- up to max. 20.000,- - if you cannot sell even some parts or tires etc. you stand in the shop one month and get nothing, just zero. Still nothing sold next month, they just kick you out.

I know a young man, a family relative of my fosterdaughter, who was servicing compressors etc. in a small company, his salary was php 8000,-. He gives PHP 2000,- to his (ex)girlfriend for his two children. Left were php 6000,- enough for one month living and one day in a resort for lunch, pool and rest in a tent.
I remember his old motorcycle, tube broke down when going back, calling us by mobile phone for help. He did not even have php 200,- for a new tube in his empty wallet. Just a few coins. He was happy, I gave him PHP 500,- for repair.

Now he is working on a small cargo ship as mechanic, can live on the ship, has a small cabin for himself and free meals + PHP 10.000,-.

[publicduende]

I don't know if you are familiar with cities and jobs in the Visayas, but people earn far less in that region than in Manila for sure.

For example my fosterdaughter was working in Cebu in one of the branch offices of a major bank (I think, No. 6 in Philippines) for 3 years, her salary was PHP 12.000,- despite 4 years in the Sto.Carlos University, graduated, her cousin is working in one of the largest hotels in the city (not on Mactan, with these beach resorts) her salary after 6 years is PHP 9000, and a free meal (there is always something left from the buffets)

Luckily my fosterdaughter could now change the job and works for an Australian company in Cebu, her salary php 20.000,- + a small health insurance.

This is in Cebu City, but income is even less on other islands and often jobless rate among young people is 50 percent or more.

Last month was terrible because of the huge storm, also the house I financed for her lost the roof. Electricity came back a week ago, still no internet in the eastern/northern part of the city. Carpenters who made a new roof have a very little income, the company was asking for 3 people doing the work including all materials php 30.000,-

Car companies in Cebu are the worst, if you work there for sale they give you no salary at all. You sell something, cars or parts, used or new, you get a commission, something between php 2000,- up to max. 20.000,- - if you cannot sell even some parts or tires etc. you stand in the shop one month and get nothing, just zero. Still nothing sold next month, they just kick you out.

I know a young man, a family relative of my fosterdaughter, who was servicing compressors etc. in a small company, his salary was php 8000,-. He gives PHP 2000,- to his (ex)girlfriend for his two children. Left were php 6000,- enough for one month living and one day in a resort for lunch, pool and rest in a tent.
I remember his old motorcycle, tube broke down when going back, calling us by mobile phone for help. He did not even have php 200,- for a new tube in his empty wallet. Just a few coins. He was happy, I gave him PHP 500,- for repair.

Now he is working on a small cargo ship as mechanic, can live on the ship, has a small cabin for himself and free meals PHP 10.000,-.

I used to live in Davao, which is even poorer (on average) than Cebu and can attest that those are the kinds of salaries earned in small, family-owned shops or companies.

The best jobs that can be found in the Philippines are usually for local subsidiaries of multinational companies, or the odd executive job in a large local conglomerate (like a bank, or a construction or logistics company). The quintessential job of this kind is for a call center. I know specialised call center agents with 2 languages (English and Spanish, for example) can easily start from 27-30K and be on 50-60K once they reach Supervisor positions.

Call center agents in Cebu or Davao are usually on a lower salary, maybe starting from 15-20K and going up to 30-35K as Supervisors.

Then there's the entrepreneurial lot who decides to take things into their own hands and open up their own companies, offering services to foreign clients: anything from language translations to concierge, accountancy, copywriting and creative services, up to IT management and software development. These people can easily make a few thousand dollars a month for themselves and at least a few of their core employees.

I have seen quite a few of these entrepreneurial realities all over Manila, Cebu and Davao. Not all Filipinos are passively sitting and waiting for a job that pays a sustenance wage.

As in every emerging country, quality of employment (and earnings) goes hand in hand with quality of education. That's where, I think, the main problem lies: only maybe the top 10% of universities is actually giving useful skills to their students. The University of the Philippines (UP) franchise, the Ateneo and De la Salle franchise, some large historical universities...these cover no more than 10% of the students in the country.

Without an education from these kinds of schools, one has maybe a 10% chance to land a lucrative job, or earn a scholarship to further their studies abroad.

San Carlos is one of the best universities in Cebu. Did your foster daughter graduate with a STEM degree, or Economics, or maybe she did a humanities type of degree? STEM graduates are usually the ones who get technical jobs, paid quite a bit more. The other 2 categories, like everywhere else in the world, are doomed to fight for a smaller and lesser-paid pool of jobs.

One of my wife's best friends landed her first job at L'Oréal, the cosmetics company. After probation and one year of training, she was making $2,000 a month plus perks. Some of her colleagues at the Asian Development Bank juggle multiple part-time and consulting jobs as statisticians or economists and can easily make $4,000 a month.

Obviously I am talking about the top 10% of FIlipinos. My hope is that, if and when the education system improves and more and more Filipinos exit the system better educated and better motivated, the race to the middle class will fatten its ranks.

[Yohan]

@publicduende

...Without an education from these kinds of schools, one has maybe a 10% chance to land a lucrative job, or earn a scholarship to further their studies abroad.

San Carlos is one of the best universities in Cebu. Did your foster daughter graduate with a STEM degree, or Economics, or maybe she did a humanities type of degree? STEM graduates are usually the ones who get technical jobs, paid quite a bit more. The other 2 categories, like everywhere else in the world, are doomed to fight for a smaller and lesser-paid pool of jobs.

Yes, University of San Carlos has a high reputation in Cebu and it is not so easy to enter and not so cheap.
Many ordinary people cannot pay these fees. She was there for 4 years.
https://www.usc.edu.ph
https://www.usc.edu.ph/academics/school ... nistration

The private highschool was also not so cheap either - St. Joseph's Academy in Cebu 4 years.
Without this private high school it would not have been possible to enter San Carlos University, no way.

Public schools are crowded, often in a very bad condition, with teachers near their breaking point. Difficult situation.

-----

I still have a copy of her attendance card of the University of San Carles Commencement Rites, which says
DEGREE:
Bachelor of Science in Business Administration
major in Executive Resource Management

[publicduende]

Yes, University of San Carlos has a high reputation in Cebu and it is not so easy to enter and not so cheap.
Many ordinary people cannot pay these fees. She was there for 4 years.
https://www.usc.edu.ph
https://www.usc.edu.ph/academics/school ... nistration

The private highschool was also not so cheap either - St. Joseph's Academy in Cebu 4 years.
Without this private high school it would not have been possible to enter San Carlos University, no way.

Public schools are crowded, often in a very bad condition, with teachers near their breaking point. Difficult situation.

-----

I still have a copy of her attendance card of the University of San Carles Commencement Rites, which says
DEGREE:
Bachelor of Science in Business Administration
major in Executive Resource Management

Interesting, @Yohan. I assume you had a big role in helping your fosterdaughter, high school through college. Unfortunately, the reality in the Philippines is dire. Even with a degree from San Carlos, a Business Administration graduate will still have to join the numbers game and work hard to get a job that pays $300 a month. The competition is so bad young people need a degree even to work at Jollibee.

In a way, your fosterdaughter did well in landing a job for a major bank. If she sticks around, promotions will happen and salary will increase, albeit not to the levels afforded by the few (and lucky) multinational jobs.

A bit like in Italy, I really don't see any bright future for non-STEM graduates in the Philippines. A bubble of its own is the elite of sons and daughters of doctors and lawyers, who have a clinic or a practice to go to after they finish med or law school.

And then, of course, we have the scion of the (mostly corrupted to the bone) local and national politicians, who will live an easy, pampered life whatever they choose to study, if they ever do.

[Yohan]

Interesting, @Yohan. I assume you had a big role in helping your fosterdaughter, high school through college. Unfortunately, the reality in the Philippines is dire. Even with a degree from San Carlos, a Business Administration graduate will still have to join the numbers game and work hard to get a job that pays $300 a month. The competition is so bad young people need a degree even to work at Jollibee.

In a way, your fosterdaughter did well in landing a job for a major bank. If she sticks around, promotions will happen and salary will increase, albeit not to the levels afforded by the few (and lucky) multinational jobs.

This is a long story. As Japan is not far away and with my second home in Thailand, I often visited Philippines too - there are cheap airlinks between Tokyo/Osaka to Cebu and direct from there to Bangkok.

It was starting around 2003. Anyway she is doing well now, looks very nice, she is married and the husband and all other family members around him are good people, not so rich, but also far away from being poor. They are owners of a comfortable house in good location, car, motorcycle etc. and all have jobs and regular income.

I did not help only her and not only for high school and university. About her, it was starting somehow as a fun-project to do something for a poor child, help the poorest out of the poor children you can find - I would say she was the most suitable candidate. LOL.

I also sent many cartons of items we don't use anymore in Japan to the Philippines with the help of Filipino friends and staff before I retired and moved out of Tokyo (balikbayan boxes).

She is now 26, and we have really very regular contact since around 2005 up to today, my younger daughter visited also her two times already in Cebu.

She is not working in a bank office anymore but for an Australian company in Cebu, which offers better working conditions, a little more than php 20.000,- salary, (about USD 450,- I think) but also regular vacation and a small health insurance. It's OK now.