Basic Finance for Gamers and PC Enthusiasts

Before going any further, it’s good to know first what money is. In the ancient times, people used to do trading or barter. If you have bananas and want some mangoes, you look for a person with mangoes. If the person with mangoes wants bananas, then you can simply just exchange your bananas for that person’s mangoes. If the person with mangoes wants apples, you should first look for a person with apples and wants bananas. After you trade your bananas for apples, you then trade your apples for mangoes.

Barter is tedious so a better way of acquiring goods was invented and that is money.

Managing Your Expenses

If you don’t have money, you cannot buy a game or a PC hardware no matter how affordable it is. Even if [put name of favorite game here] goes on sale for PhP 100 in the Steam Summer Sale, you cannot buy it if you don’t have money.

Income

     – Expenses      

Savings

The formula is so simple but putting in it practice is a bit complicated. For some people, their income and expenses are equal which means no savings. In worst cases, expenses exceeds income which results into debt or borrowing of money. Some finance gurus will tell you it should be like this:

Income

       – Savings       

= Expenses

It’s good because it teaches a person to not spend too much on wants but let me tweak it to improve its practicality for gamers and PC enthusiasts.

Take Home Pay

– Non Negotiable Expenses

       – Savings       

= Gaming Expenses

To explain the formula above, we’ll use a simple but realistic computation of the expenses of an average earner. Here are the assumptions:

• Single and still living with parents. House is owned.
• Fresh graduate and has a monthly salary of PhP 20,000.
• For simplicity, take home pay is 70% of monthly salary.
• Pays the monthly bill for electricity, water, and internet.
• Spends PhP 200 per day for home-cooked food.
• 26 working days per month.
• Parents are healthy and still have income.

Non-negotiable expenses are the monthly bills for electricity, water, and internet and your expenses for food and transportation. Those are the things that we need in our daily lives. You can live without a Starbucks coffee in the morning but you probably cannot live in a house without electricity and water. Having an internet is optional 20 years ago but things are different now. Gamers need internet connection because almost all games now are bought at digital stores such as Steam and GOG. Even if you buy a game disc, you would still need to connect to the internet to download patches and updates. Food and transportation are self-explanatory.

(Trivia: In finance, a negative number is represented by parenthesis.)

Based on the sample computation above, you only have PhP 700 per month to spend for your gaming needs. With PhP 700 per month, one of the following can be bought:

• DiRT Rally @ PhP 1,439.95 which you need to save for 2 months
• PhP 23,000 Gaming PC which you need to save for 33 months
• Graphics card worth PhP 15,000 which you need to save for 22 months

A little bit impatient? There is a way to shorten the length of time you need to save money. Reduce your monthly savings from PhP 2,000 each month to only PhP 500 each month. The PhP 1,500 you freed up can now be re-allocated to Gaming Expenses. With PhP 2,200 per month, one of the following can be bought:

• DiRT Rally @ PhP 1,439.95 which you need to save for 1 month
• PhP 23,000 Gaming PC which you need to save for 11 months
• Graphics card worth PhP 15,000 which you need to save for 7 months

The less money you save, the more money you can spend for your games and gaming PC. Fantastic, right? Yes, it is for short-term happiness but not so much for the long-term. You may have bought your dream PC in a shorter length of time but you sacrificed your opportunity to save money and invest. A portion of your savings should be invested so it can gain money. If you invested less, money gains will also be less. If you invested nothing, you will also gain nothing.

Assets – Friend or Foe?

An asset is anything you own that has value. It can be sold to convert it into cash. There are 2 types of assets – one that decreases in value over time and one that increases in value over time. Gaming PC’s, hand-held gaming consoles, smart phones, and other electronic gadgets are examples of assets the decreases in value over time. If you buy an NVIDIA GeForce GTX 1060 now for PhP 15,000, you cannot sell it for the same price after 1 or 2 years. It’s not good if all your assets decrease in value over time.

Time will come that you will grow old and cannot go to work anymore. You should secure your future with a retirement fund because your monthly pension from SSS (Social Security System) might be not enough. Majority of your assets should be the type that increases in value over time. There is no hard rule on this so don’t over think and just be smart. If you have a newly bought gaming PC worth PhP 50,000 and only have PhP 5,000 in the bank and zero investment in stocks, your future retirement does not look bright.

Stocks, gold, and land are examples of assets that increase in value over time. Since we used a fresh graduate in our sample computation earlier, we will be focusing on stocks. In May 18, 2012, the price of per share of ALI (Ayala Land, Inc.) is PhP 19.00 per share. As of May 15, 2017, it is priced at PhP 37.45 per share. That is a 97.10 % increase in a span of 5 years and a bank savings account cannot give you that kind of gain. If you invested PhP 20,000 in ALI stocks 5 years ago, you would now have ALI stocks worth PhP 39,421. You almost doubled your money without doing anything. For more details on investing in stocks, we strongly suggest you read this article.

How Much to Invest from Savings?

While investing in stocks is great way to increase your money, it’s not a good idea to put all of your savings in stocks. Let’s say you have a savings of PhP 100,000 and you put it all in stocks. Then, your mother had an accident and has to be hospitalized. The economy is not good and your stocks have a paper loss of 30% which means your stocks which have a value of PhP 100,000 before now only have a value of PhP 70,000. Normally, you would not sell your stocks at a loss but since you have an emergency, you are forced to sell it at a loss.

Saving money in a bank is good for the purpose of liquidty. Being “liquid” means having enough ready cash for dealing with unexpected expenses such as the one just cited. There is no hard rule on how much cash you should put in a bank savings account. A good starting point would be 3 times of your monthly expenses. In the sample expenses computation shown earlier, the monthly expense is PhP 11,300. Based on that, there should be at least PhP 33,900 in the bank savings.

Whether you start saving money in the bank first before investing in stocks is up to you. My personal recommendation is to start saving money in the bank then just use your 13th month pay for investing in stocks. Once you have a bank savings worth at least 3 times of your monthly expenses, focus all your salary savings on stocks.