Putting Your Money in Time Deposits
By Carlos Gonzales

Time deposits have been a favorite financial product of many Filipinos. Apart from real estate, putting one’s long-term savings in time deposits is very typical for most people. So what makes them so attractive? And are they still a good investment, given alternatives like mutual funds, unit investment trust funds, and variable unit-linked insurance products? Here’s a quick primer:

What are time deposits?
Time deposits are interest-bearing bank deposit products that have a fixed term or period, during which they cannot be withdrawn. The advantage, says Jesus Vicente Garcia, Executive Vice President and Branch Banking Group Head of Philippine Veterans Bank, is that “time deposits earn higher interest rates, depending on the amount placed and term.”

In contrast, regular savings and checking accounts are considered demand deposits, as they can be withdrawn at any time. They also offer lower rates. According to Garcia, time deposits are also different from special savings deposit, which also offer higher rates, in that “a special savings deposit is documented with a passbook, but both are subject to documentary stamp tax and final tax.”

How long are the terms?
The minimum term is typically 30 days, with 60, 90, 180, and 360 days (or variations thereof) also available. These days, some banks have also introduced longer-term time deposits, particularly two, three, five, and six years.

Are they available in other currencies?
Time deposits are also available in foreign currencies, usually USD, but increasingly, bigger banks are offering time deposits in AUD, GBP, CAD, EUR, JPY, CHF, and other major currencies.

Do you get a passbook, checkbook, or ATM card?
No. Unlike a savings or checking account, as evidence of ownership, you receive a certificate of time deposit, which usually shows the interest rate, term, and maturity date.

What happens when the term ends?
When it matures, you either withdraw the funds or ask the bank to roll over the deposit for another term.

What are the rates?
Interest rates vary. Most banks usually offer tiered rates for longer terms and higher deposit balances. In other words, interest rates are higher the larger your deposit and the longer the term.

How is the interest earned?
Garcia explains that interest is credited or added to the amount of the principal deposit at the end of the term, “which varies depending on the requirements or requests of the client or the period agreed.” The interest is computed from the day you open the time deposit until the end of the term. For long-term time deposits, some banks credit monthly interest income to your savings account. The interest is net of the applicable final taxes and the documentary stamp tax for some banks, he adds.

What happens if you withdraw before the term?
The bank will charge a pre-termination penalty, such that you receive a much lower interest rate.

What fees and taxes are there?
“There are no fees involved; only the government required taxes, such as the final tax on the interest earned and the documentary stamp tax for the certificate based on the principal amount,” Garcia explains. The documentary stamp tax is P1.00 for every P200.00 while a 20% final tax will be deducted from your interest income. But time deposits of more than five years are tax-exempt.

What’s the minimum deposit?
It depends on the bank. Some have minimum deposits as little as P1,000 while other time deposit products, especially those with longer terms and higher rates, require P100,000 or more.

Are time deposits insured?
Yes, they are insured up to P500,000 per account name by the Philippine Deposit Insurance Corporation (PDIC).

Can you borrow against it?
Yes, you can borrow against your time deposit. Some banks allow you to borrow up to 90% of your time deposit.

How do time deposits compare with investment funds?
Time deposits compete mainly with investment funds like mutual funds, unit investment trust funds (UITFs), and variable unit-linked linked insurance products. Garcia explains, “Investments in mutual funds are investments in companies, the fund manager of which is appointed by the investment company, and thus it is not a traditional bank product. UITFs are trust products of the bank, managed by the trust group of the bank. Since these are investments, these consist of various investors whose resources are pooled, hence documented with a premium fund certificate.”

The main advantages of time deposits is they are insured by the PDIC for up to P500,000 and the interest rate is fixed and guaranteed, so you know exactly how much you will earn. The disadvantage is they may not earn as much as many investment funds, except for money market funds.

When should you put your money in time deposits?
Garcia says, “It depends on what is the financial goal of the depositor or investor. If the financial goal is not immediate such as retirement or education (if one has a newborn) and the client wanted a safe and less risky investment, a long-term time deposit (5 years or more) is the best option, since the interest rate is higher, fixed, compounded on a monthly basis, tax free, and documentary stamp tax free for individuals.”

He adds that a regular time deposit is also appropriate for short-term or immediate financial goals, since the interest is higher unlike regular savings or interest-bearing checking accounts. “Some businessmen place their investible funds in regular time deposits in view of the higher rates, sometimes with the intention of securing a back-to-back loan they use in their business and still keep their funds earning while the interest for the loan is paid out of the earnings from their business,” Garcia explains.

Philippine Veterans Bank offers three long-term time deposits, namely Hyper Savers, where the client sets the goal or the amount of income he wants to earn at the end of the term (five years and one day), and the branch computes backwards how much deposit should be placed in the present time.  These are applicable to clients with future plans and thus save up to earn the amount needed after five years. For Maxi Return, the depositor places his or her funds (minimum of P100,000) and earns the applicable interest  from the said investment. And for Advantage Plus, the depositor place his funds (minimum of P100,000) with the intention of withdrawing the monthly interest earned via  credit to his savings account. The principal amount is withdrawn after five years and one day. This is appropriate for depositors who need funds on a monthly basis.

Top 10 5-Year Time Deposits
Say you have P100,000 to put in time deposits and can hold it for five years. Which banks offer the best rates? We checked around and found 10 banks that offer the best bang for the buck.

Disclaimer, you should need to do your own research on each banking institution before opening an account. Rates, based on a P100,000 deposit and held for five years (as of December 31, 2010), may change by the time this issue is out.

SMART SPENDER>BEST VALUE FOR MONEY

Choosing Your Broadband Internet Provider

The choices for high-speed Internet access have expanded beyond cable and DSL to wireless broadband. So which one is best for you?

By Sherwin Chan

It was bound to happen. It was never a question of why, only a reckoning of when. Tommy mustered all his courage, cleared his throat, and began mouthing, “Daddy, I want Internet access.”

Daddy ponders about his son’s request. “Maybe it is about time”, he muses. Growing up on a 56K dial-up and busy lines in between, Daddy almost gets misty eyed. These days, there are cable Internet, DSL Internet, mobile 3G Internet and – still dial-up. He’s unsure of how to go about deciding.

It seems technology grew faster than his hair and now he’s at a loss on which service to choose. With lots of brands vying for his hard-earned money, he has to make a good decision. While he’s happy with the cost control of prepaid Internet cards, he realizes that it’s getting harder to control Internet use.

What should he choose?

Boom with no bust

According to a recent Yahoo and Nielsen study, there are an estimated 20 million Internet users in the Philippines. According to the study, “85% of all online users from total urban Philippines are from the Class D and E socioeconomic class while the rest are from Class ABC”. How the Internet is accessed is a different story. Most of those in the lower socioeconomic sectors access through Internet cafés. On the other hand, “majority of Class ABC respondents said they have a computer at home (88%) and have home Internet access (77%),” states the report.

Filipinos use the Internet mostly for online games, social networking, checking e-mail, and sending instant messages. Filipinos comprise a significant percentage of membership and usage in Friendster and Facebook. There’s also a growing prevalence of online micro-entrepreneurs on sites like Multiply.

With these as premise, providing affordable Internet access will become one of the cornerstones of growth for cellular network providers, not just for DSL and cable Internet providers. Recall that this industry enjoyed spectacular growth after offering prepaid services for mobile phone users. So it’s a no-brainer that the very same companies are adopting the same strategy in marketing their wireless Internet services. In fact, the recent growth of wireless broadband devices has been phenomenal, with all three major wireless providers offering prepaid and postpaid mobile Internet access.

Flurry of choices

So what are the options? There are basically these three: cable, DSL, and wireless. Let’s look at the pros and cons for each as well as what kind of speed and cash out you should expect.

Cable

If you are a speed monger, you might want to look at cable Internet. One of the providers of cable Internet is Sky Broadband. According to its Web site, “instead of using phone lines…cable lines carry more data and have higher bandwidth.” They advertise that they can go up to 12Mbps download speed.

Their plans are divided into SkyCable and non-SkyCable subscribers. The rates are the same, but the speeds are not. For example, at a monthly rate of P999, non-subscribers get only 1Mbps while the cable subscriber gets 1.5Mbps. With the P1,999 plan, the subscriber enjoys 3Mbps speed while the non-subscriber gets only 2Mbps. They also have bundled plans, which includes subscription to SkyCable Gold cable TV and SkyVoice Plan 100 phone service, for P3,999 (6Mbps) and P5,999 (12Mbps). There’s no installation fee but there’s a cable modem deposit of P1,000 (waived for the last two premium plans). There’s also one-year lock-in period.

The rival provider is Global Destiny Cable, which offers a 999 plan for speeds from 256kbps to 1.5Mbps.

Be aware though that cable Internet has its flaws due to its infrastructure setup. With the cable setup, if a lot of users in the neighborhood are sending and receiving data from the Internet at the same time, then you will notice your speed start to bog down. Quoting from an Internet source, “cable modem services share bandwidth among subscribers in a locality”. So if a lot of your neighbors are connected to the cable provider, there might be no difference in terms of speed with DSL.

DSL

DSL has now started taking over the realm of dial-up. Since most of us have phones anyway, adding a modem seems like a practical idea. The three providers that come to mind are Philippine Long Distance Telephone Company (PLDT), Globe Telecom (Globe), and Bayan Telecommunications (BayanTel).

PLDT myDSL offers three plans – Xperience (Plan 999), Xcite (Plan 1995), Xcel (Plan 3000), which come with a free modem. The speeds are as follows, respectively: 1Mbps, 2Mbps, and 3Mbps. They also offer a Plan 990 (384kbps) and 1299 (512kbps), which are bundled with a free landline phone service (modem fee of P1,200).

On the other hand, Globe Broadband offers various packages, namely Explore: Internet@Home, with a Plan 795 with speeds up to 512kbps and a Plan 995 that’s up 384kbps but with a free bundled landline phone service. The Extreme: Internet 2 the MAX packages are Plan 995 (1Mbps), Plan 1295 (1Mbps plus landline), and Plan 1995 (2Mbps plus landline). Globe also offers Tatoo, a broadband prepaid kit for P1,895 with a per-use charge of P5 per 15 minutes, at speeds up to 2Mbps.

Bayan DSL (formerly Sky DSL), on the other hand, offers three types of plans: Plan 899, Plan 1699, and Plan 2699. The speeds are 384kbps, 768kbps, and 2Mbps. If you want a phone with that, the packages go up to Plan 1199, Plan 1999, and Plan 2999 respectively. There’s a one-year lock-in period and a P1,999 installation fee. They also offer you a 15-day money back guarantee.

Since the packages offered by the service providers are almost at parity price, it will all redound to the customer service that one gets from them. According to online reviews, Bayan DSL is a favorite in terms of customer service. And with their money back guarantee, who can beat that?

You should consider though that since most people still use PLDT as their landline, the infrastructure advantage of PLDT is still there. So it’s something you should consider.

Wireless

Wireless Internet is ideal for people who are on the go. It’s also ideal for travelers, writers, and even photo bloggers. However, wireless Internet is not for people who love watching online videos, downloading files, or playing online games.

Recently, the bevy of TV commercials has been from Globe and Smart Communications (Smart). Also silently starting is Sun Cellular (Sun). The two biggest providers have been heavy in their marketing efforts evangelizing everyone to switch to prepaid wireless Internet access with their promise of “speeds of up to 2Mbps”. One commercial even spoofs the Heroes television series.

With wireless Internet, only Smart and Sun offer unlimited usage. Globe breaks down its Visibility packages as follows: with plans 799 (free 40 hours), 999 (free 60 hours), and 1499 (free 100 hours). There’s a one-time P1,000 installation fee. The pre-paid plan has no monthly fees, just a per-use charge of P5 for every 15 minutes for speeds as fast as 1.8Mbps, but averages 400-700kbps (for HSDPA).

Smart on the other hand has 799 (free 60 hours) and 999 (unlimited). With Globe, depending on the signals (HSDPA or 3G) the speed can range from 384kbps to 2Mbps. With Smart, plan 799 has speed “up to 3Mbps”, while the plan 999 is up to 384kbps only.

Sun offers a 999 wireless plan that gives you both a modem and a mobile phone plan 350. If you don’t want the mobile phone plan, just get their Easy Broadband plan of 799. Both the 999 and 799 plans offer unlimited use of internet. For plan 799, be prepared to shell out P2,500 as a one-time modem charge. Sun also offers a plan 649 for existing Sun mobile subscribers.

In terms of value, Sun wins hands down; however, the 24-month lock-up for plan 999 might be a bit long for some. Smart locks your contract for only 12 months. If you’re the type of person who is in control of your urges, then the best option for you is the prepaid service – Tattoo or Smart Bro Prepaid.

Smart and Globe’s marketing though can be confusing. Consider the following marketing language of the two. With Globe, they charge “P5 for 15 minutes browsing.” With Smart, they state it as “P10 for 30 minutes.” Do the math and you’ll realize there’s no difference.

There is a difference though of ease of reloading. With Globe, you can just reload using regular call and text cards of Globe. With Smart, you need special Smart Bro Load Cards or a Smart load via retailer.

Choosing the right one

In the end, the word to the wise is that we base our decisions on our needs. What is our objective for a certain fixed expenditure? Marketers are very good in convincing us to go for what we want and sometimes, it’s not what we need. It’s always good to know first what you need before you visit the shop.

Why’s that? If you would take note, one of our biggest expenses are fixed expenses that we can do without. Do you really need that many postpaid cell phone lines and landlines? Is the mobile plan you took the right plan? Do you need to turn on the air-con for more than eight hours? These are questions that we often neglect to ask ourselves.

Tommy’s Dad is using a more pragmatic approach in selecting their Internet provider. On average, he notices that their costs for using prepaid Internet cards sum up to about P700 a month. However, he also realizes at that price range, most of the service providers only have limited hours for that package or it has slower speeds.

In the end, he chooses a DSL plan without naming his preferred brand.

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The Plans

So what’s the best value for your money? Rates (as of March 31, 2009) do not include any installation fee and modem rental charge.

Cable Internet

DSL

Wireless

MY MONEY STORY

Bossa Nova Music

By Sitti as told to Excel V. Dyquiangco

Photos by Wilson Chua

Not many people know that there are a lot of underground bossa nova singers even before I burst on the scene. Eileen Sison and the Guarana Band, for example, started their repertoire way back in 2001. Touted to be the leading proponent of bossa nova music in the country, the band indeed fields in great music until now. So when Warner Music at that time took a risk and hailed me as the “Queen of Bossa Nova” as part of the marketing strategy, that tipped the scales. I had to admit there were a lot of raised eyebrows – and I mean a lot!

The thing that truly affected me was all the criticisms and flak I got off Internet blogs. I didn’t desire to be a “queen” in the first place but here in the country, I guess you need to have a title so that the public can easily remember you. But if you ask me, the real “queen” should be Brazilian Astrud Gilberto, who introduced bossa nova music to the whole world back in 1950’s. Not one, lest me, can really compare with her music.

So a couple of months and several albums released later, I got used to the setup of the whole industry – criticisms and all. I still receive a couple of “remarks” now and then, but I just look at it constructively. This is how I learn and how I grow as a singer – the process is indeed difficult, but the end result is none short of amazing.

MTV supahstar

I wasn’t your ordinary artist who joined every singing contest there was, but just occasionally sang during family reunions or flag ceremonies at school.  At that time, pop was still my favorite genre. When I graduated from high school, they were looking for singers in bars and hotels so I just tried it out. The songs they made me sing were lounge music, jazz, pop, and bossa. It was only during a Vina Morales concert in Laguna (I was 16 then) that had me thinking: wouldn’t it be great if I get to be like her?

When I turned junior in college – that was when management and I decided to concentrate on my bossa music because a lot of people were saying that this type of music complements my voice. The transition from pop to bossa was easy. A lot of singers don’t actually like the music they sing but for me, I like it because I think I have finally found my niche.

When an American Idol-inspired reality and talent-based competition started in MTV, known as the MTV Supahstar in 2004, my former manager kept on pushing me to join since it was the first MTV competition and he said that it was probably different from any other competition. So I decided to have a taste of what it was like – my first competition shown on nationwide television. That time, I was already a graduating student of the University of the Philippines in Diliman with Business Economics as my major, and even while I was in the contest, I still kept on thinking of the needed requirements at school.

In the end, seven of us won the contest. They were supposed to turn us into a group – something like the S Club 7 – but that didn’t play out. Since I was already singing bossa nova music at that time, and I had a demo CD, I let former head of Warner Music Ricky Ilacad listen to it, and the rest is history.

I can’t believe it when I signed a contract, and they promised to release the album by October 2005. When this didn’t happen, it was moved to November of that year, and then to December. I was really feeling hopeless at that time – I had thought it was one of those “frozen delight” promises. But when January of 2006 rolled around, Warner called us up for a meeting and my first album was then released.

Hostings and learnings

I got to be a beauty queen (having won the Ms. Silka pageant), have hosted for Pinoy Big Brother in Studio 23 and Wowowee, and have acted in the soap opera Ysabella. But despite all these sidelines, singing is the one thing that I would always have the hots for – my passion for my career has no boundaries or limits.  And even if I still get stage fright at times, have lost my voice in some parts of my rousing performances, got distracted in the middle of the performance, and even felt sleepy in one gig, nothing can ever come between me and my singing.

I consider myself fortunate to be a bossa nova artist because in some way, you can say that I’ll always be there. It’s difficult to have an actor’s life because the pace is fast. In our case, I still consider it stable because we still have gigs and guest appearances on television shows. I have also learned to be objective when it comes to criticisms and to focus and just enjoy every gig. When you’re not really focused, your singing, the band, and the audience get affected by your whole performance.

I feel that I have also matured as a singer. Before, I wanted to win at the Awit Awards and to have a major concert at Araneta Coliseum, but now these are not as important anymore. My focus is on staying long in this business, to improve more as a singer, and to have an album that’s totally “Sitti.” I’m not really sure what that means but when I have come up with such an album, I would know.

Eventually, I also see myself deviating from bossa to something like Beyonce’s performance level.

Save, invest, then spend

So how do I use my money? Two concepts stuck out while I was reading Francisco Colayco’s “Wealth Within Your Reach” – save before you spend and put your money into something that will earn with inflation. On my first payment as an artist, I invested on a life insurance policy because I have read that the younger you are, the more you’ll get. I also invested in mutual bonds and in shares of Ayala Land and I get quarterly dividends from them. And here what’s astounding – I have also invested in my friend’s horse importation business which has huge returns monthly. This sounds like a scam but it really isn’t, and there is such a thing. And I earn from this!

I used to have a strategy before – I save 50% of my income, give 10% to tithes, and the rest to myself. But since I recently bought a townhouse, it’s not as easy to follow but I still manage to save at least 30%. When it comes to the townhouse, my goal right now is just to shorten the paying period and settle it this year.

I also have an expense ledger to list down my monthly expenses, and have my own stylist for my clothes as it really gets too expensive when I keep on buying clothes for all of my shows.

[sidebar]

MY MONEY LESSONS

Sitting Pretty
Bossa nova queen Sitti shares her career and money strategies:

1. Ignore the critics. Promoted by her studio as the queen of bossa nova, Sitti got a lot of criticism. But the title stuck and she quickly rose to popularity. Now, she doesn’t let nasty remarks bother her and just learned to take them constructively.
2. Stay focused. Getting distracted can affect your performance. In Sitti’s case, she has learned to be focused and enjoy every gig. And she has set goals for herself as an artist, but she’s not after awards and packed crowds anymore but career longevity.
3. Save aggressively. An entertainment career can be fleeting. Although Sitti has every intention to last long in the business, she tithes 10% of her income and saves as much as half. Although with amortizations, her savings have decreased but remain a significant 30%.

EASY MONEY>MONEY MATH

Invest Lump Sum or Frequently?

Three managers working at a real estate company decided to invest in the stock market. All of them had P120,000 to invest, but they disagree on how often and when they should buy shares of stock. Juan wanted to invest the lump sum at the beginning of the year. Manny would rather spread his investments equally every month while Troy plans to invest P30,000 every quarter.

In the course of the year, Juan bought stocks of Company ABC (which was quite volatile due to merger rumors) during the first trading day in January. Manny invested also in the same stock at the same time, but only P10,000 and then placed the same amount on the first day of each succeeding month thereafter. Troy invested P30,000 in the same stock the same day in January and P30,000 each on the first trading day of April, July, and October.

The stock prices of Company of ABC during the first trading day of each month were as follows: P120 (Jan), P105 (Feb), P95 (Mar), P120 (Apr), P70 (May), P75 (June), P100 (July), P90 (Aug), P95 (Sep), P115 (Oct), P130 (Nov), and P150 (Dec).

Then they all decided to sell all their shares the following month when the stock price was at P175. Which among the three made the most money (ignoring taxes, commissions, board lots, and other factors)?

1. Juan
2. Manny
3. Troy

Answer: Manny

Juan bought 1,000 shares of Company ABC at P120. When he sells at P175, he nets P55,000 from his investment. Troy’s P30,000 every quarter buys him different number of shares – 250 in January, 250 again in April, 300 in July, and 261 in October. All told, he was able to accumulate 1,061 shares, which he sold for P185,652 for a profit of P65,652. In other words, he was able to buy more shares particularly in July and October when the stock prices were low.

But Manny made the most money. His P10,000 a month allowed him to buy more shares as he captured more lower prices throughout the year (especially in March, May, June, August, and September, which Troy failed to capture), or a total of 1,190 shares. Selling everything for P208,299, he nets a cool P88,299, or 61% more than Juan and 34% more than Troy. That’s the advantage of frequent investing at smaller amounts, or what is known as peso cost averaging.

SMART SPENDER>TIPID TIPS

Back to School, Back to Spending
Learn smart ways to save on school supplies
By Ruth Manimtim-Floresca

Every year, before summer comes to an end, grumblings can be heard from parents about increases in tuition as well as the rising costs of school supplies. Since we are still very much affected by the global economic crisis, it is no longer surprising that more students continue to be transferred to public schools as more families cannot sustain the astronomical payments in private schools anymore.

Ease some of your financial worries by working out a budget that won’t leave you broke before another school year starts. Here are sound school spending tips you can do not only during the summer but also throughout the year.

1. Do an inventory at home
Before heading out to the malls and school supplies stores, gather all your child’s old school items from last year that he wasn’t able to use or are still useful. Rulers, pencil cases, calculators, backpacks, and other durable stuff need not be replaced every year. If they remained in good shape, your child can reuse them this year.

Check too your desk drawer for corporate giveaways that you may have already forgotten such as pens and pencils that you can add to your child’s supplies.

2. Make a list
Find out what your child really needs. As early as possible, ask the school for the list of official requirements for your child’s grade level. Double check this list and tick off those you already have. Make sure you list down everything your child will need for the school year before you hit the stores.

Plan to buy in bulk (that means a reasonable amount, not panic-buying quantities) for items such as notebooks, a box or two of pencils, a ream of bond paper, etc. Stocking up on extras will prevent you from making time-consuming, not to mention more expensive, trips to the store throughout the whole school year just to buy a pad of paper here or five pieces of art paper there. After all, any leftovers at the end of the year can still be used for next year or for your child’s summer activities.

A quick reminder: Just like in grocery shopping tips, remember to stick to your list and your allotted budget! Don’t be pressured with the “Buy me, buy me!” syndrome. Make school supply shopping a learning opportunity to teach an older kid about budgeting and making compromises (e.g. “If you want this backpack so much, we have to buy a less expensive lunchbox.”).

3. Buy supplies in one go
Save time and gas expenses by choosing the nearest store that offers items at reasonable prices. If you are going to a mall close by, find one or two stores where you can get the best value for your money.

Contrary to what some parents believe, buying from Divisoria is not always a wise move. If you live far from the well-known shopping haven, compute first how much you’ll be spending on gas or fares and how much money you might save from the things you plan to buy. Include travel time in your equation. Then ask yourself, “Is it really worth it?”

4. Learn to canvass prices wisely
Every mall has various stores where you can buy school supplies from. Since you’re already in one location and only need to hop from one store to the other, check out prices between stores especially for big ticket items such as shoes, bags and textbooks. A few pesos’ difference here and there still leaves you with more money in your wallet.

Compare brands. High end notebooks can go as much as P30.00 – P50.00 each as compared to the generic and lesser-known names priced at P10.00 – P15.00 apiece. When you multiply the difference by ten notebooks per child, imagine the savings you can get. Be firm and explain to your child that the sky will not fall if he can’t have the expensive notebooks.

Do some math. Compute per piece costs of items that are also offered in bulk packaging. A pack of three pad papers sold at P32.00 is definitely cheaper than buying individual pieces at P12.00 each.

5. Opt for good quality big-ticket items
In terms of bags and shoes, investing in branded items from reputable companies may be your wisest bet. Without a doubt, it is more cost-effective to buy an expensive but longwearing pair of shoes or a higher-priced backpack that would last your child for the whole year or more than to buy two or more pairs of low-quality and inexpensive shoes or more than one bag during the same time frame.

Ask the bag company you are buying from if they offer warranties or parts replacement. There are some that do like Illustrazio where my husband and I have been buying our kids’ bags for the past three years.

6. Don’t forget to flash those store rewards cards
Use your loyalty card to earn points on school supply purchases. Some stores even give away freebies when you reach a certain minimum purchase price. If you have already accumulated a substantial amount on your card balance, use the rebate to buy some of your child’s needed items.

7. Time your shopping well
Buy school supplies by the middle of summer or earlier. Hasty shopping can sometimes force parents to give up buying suddenly-out-of-stock items or forego the endless lines at the cashier counters, with thoughts of just coming back another day or spending extra time looking for another store.

If you can’t totally avoid buying at the last minute (e.g. a week or several days before school starts), shop early in the day as soon as the malls open. That way, the stores are not yet too crowded and you’ll be able to finish your shopping more quickly before the hordes of after lunch shoppers come in droves later.

8. Store all school supplies in one central location
Eliminate the “Mom, where is it?” questions throughout the school year by designating a big box, a shelf or drawer for all school supplies. This technique also makes it easy for parents to check every now and then which supplies are getting low and need to be replenished.

While it is harder to budget these days than the previous years, we can still cope with the economic changes by being diligent in monitoring our spending. In the end, what matters is that we were able to address our children’s school needs with the resources we have at the time so they can get the best education they can possibly have.