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Time Value of Money: How to Determine the Value of Money with Respect to Time

Money received today is more valuable than the same amount of money a year from now. It is essential to understand the relation between mone...

Philippine Consumer Price Index and Minimum Wage (1957 -2015)

Date Administration Inflation Rate Price of Goods Min. Wage (NCR) Wage - Price Ratio
1957 Carlos P. Garcia (March 23, 1957-December 30, 1961 0.00% 4.00 4.00 1.00
1958 3.90% 4.16 4.00 0.96
1959 -0.50% 4.14 4.00 0.97
1960 4.80% 4.33 4.00 0.92
1961 1.60% 4.40 4.00 0.91
1962 Diosdado P. Macapagal (December 30, 1961 - December 30, 1965) 5.80% 4.66 4.00 0.86
1963 5.60% 4.92 4.00 0.81
1964 8.18% 5.32 4.00 0.75
1965 2.56% 5.46 6.00 1.10
1966 Ferdinand E. Marcos (December 30, 1965 - December 30, 1969) First Term 5.40% 5.75 6.00 1.04
1967 6.25% 6.11 6.00 0.98
1968 2.36% 6.26 6.00 0.96
1969 1.96% 6.38 6.00 0.94
1970 Ferdinand E. Marcos (December 30, 1969 - September 21, 1972) Second Term 14.40% 7.30 8.00 1.10
1971 21.40% 8.86 8.00 0.90
1972 8.20% 9.59 8.00 0.83
1973 Ferdinand E. Marcos (September 21, 1972 - January 17, 1981) Martial Law (January 17, 1981 - June 16, 1981 16.60% 11.18 8.00 0.72
1974 34.20% 15.00 8.00 0.53
1975 6.76% 16.01 8.00 0.50
1976 9.20% 17.49 10.00 0.57
1977 9.90% 19.22 10.00 0.52
1978 7.33% 20.63 11.00 0.53
1979 17.50% 24.24 13.00 0.54
1980 18.20% 28.65 14.00 0.49
1981 13.10% 32.40 18.00 0.56
1982 Ferdinand E. Marcos (June 16, 1981 - February 25, 1986) Third Term 10.20% 35.71 18.00 0.50
1983 10.00% 39.28 21.00 0.53
1984 50.30% 59.03 46.00 0.78
1985 23.10% 72.67 46.00 0.63
1986 1.15% 73.50 46.00 0.63
1987 Maria Corazon C. Aquino (Feruary 25, 1986 - June 30, 1992) 4.07% 76.49 64.00 0.84
1988 13.90% 87.13 64.00 0.73
1989 12.20% 97.76 89.00 0.91
1990 12.20% 109.68 106.00 0.97
1991 19.30% 130.85 118.00 0.90
1992 8.65% 142.17 118.00 0.83
1993 Fidel V. Ramos (June 30, 1992 - June 30, 1998) 6.72% 151.72 135.00 0.89
1994 10.40% 167.50 145.00 0.87
1995 6.83% 178.94 145.00 0.81
1996 7.48% 192.33 165.00 0.86
1997 5.59% 203.08 185.00 0.91
1998 9.23% 221.83 198.00 0.89
1999 Joseph E. Estrada (June 30, 1998 - January 20, 2001) 5.94% 235.00 223.50 0.95
2000 3.98% 244.36 250.00 1.02
2001 Gloria Macapagal Arroyo (January 20, 2001 - June 30, 2004) First Term 5.35% 257.43 265.00 1.03
2002 2.72% 264.43 280.00 1.06
2003 2.29% 270.49 300.00 1.11
2004 4.83% 283.55 325.00 1.15
2005 Gloria Macapagal Arroyo (June 30, 2004 - June 30, 2010) Second Term 6.52% 302.04 350.00 1.16
2006 5.49% 318.62 362.00 1.14
2007 2.90% 327.86 382.00 1.17
2008 8.26% 354.94 382.00 1.08
2009 4.22% 369.92 404.00 1.09
2010 3.79% 383.94 426.00 1.11
2011 Benigno Simeon C. Aquino III (June 30, 2010 - June 30, 2016) 4.65% 401.79 446.00 1.11
2012 3.17% 414.53 456.00 1.10
2013 3.00% 426.96 466.00 1.09
2014 4.10% 444.47 466.00 1.05
2015 1.43% 450.83 481.00 1.07
* Price of goods base price 1957 at Php 4.00
** Minimum Wages include all allowances
*** Wage to Price ratio determines the purchasing power of the Minimum Wage Earner against the Increasing Prices of Goods. 
Source:
http://www.nwpc.dole.gov.ph 
http://data.worldbank.org

Time Value of Money: How to Determine the Value of Money with Respect to Time

Value of Money with Respect to Time

Money received today is more valuable than the same amount of money a year from now. It is essential to understand the relation between money and time since the value of money is affected by time through Inflation and Loss of Opportunity. Money loses its purchasing power over time due to inflation. As prices rise, the same amount of money today won't be able to purchase the same number of goods a year from now. Another way you lose money over time is through loss of opportunity. Cash received a year before could have earned had it been invested then.

To determine the value of money over time, we will use the formula below.

PV = Present Value
FV = Future Value
IR  = Interest Rate
N   = Number of Years

PV = FV / (1+IR)N

How Much Do You Really Earn?

Most people mistake their net take-home pay as the amount they are actually earning. Most don't take into account the job-related expenses they make. Your real earnings can be determined by deducting the job-related expenses from your net take-home pay. Transportation and meals are the typical expenses you spend every time you report to work. Other jobs might require you to spend regularly on clothes or require you to make several cellphone calls in a month.

Actual Cash on Hand

Deducting these expenses from your net take-home pay will provide you with a more realistic figure on your actual earnings. This figure is known as your net spendable income. After computing your monthly net spendable income we need to convert it to annual net spendable income in order to add your thirteenth month and all bonuses you received for the whole year.

Gross Salary= Basic Salary + Allowance
Net Salary= Gross Salary - Standard Deductions
= Gross Salary - Tax - SSS - Philhealth - Pagibig
Net Monthly Spendable Income= Net Salary - Job Related Expenses
Net Annual Spendable Income= (Net Monthly Spendable Income x 12) + 13th Month + Bonuses