FINANCIAL LITERACY, why it is not being taught in school?
Most of the Filipino's either white collar jobs or blue collar jobs holder don't get their first house yet. We all know that this is a hard decision to make and requires right planning and enough budget to shell out on the first stage of the process.Most above minimum wage earner people are afraid because they know they cannot afford the expenses as they go through the process given the fact that you must pay reservation fees, equities that is the big hurt to our pocket, move-in fees and the likes. Don't worry, we're not done yet and there's a way to that.
Let me share with you some tips which I learned from watching videos of local financial advisors that guest's ANC On The Money, listening audiobooks of the millionaire successful people like Robert Kiyosaki and Dave Ramsey.Their principle is almost similar to each other.
Some of e are;
1.SAVE AN EMERGENCY FUND OF AT LEAST 3 TO 6 MONTHS OF YOUR SALARY.
The general purpose of this is for you to have a money to tap to when something unexpected happens like you loose your job (well at least you still can eat everyday for months while looking for a new job), a family member got sick, your area was hit by typhoon and flood.It is fully recommended to save a 6 months fund for head of the family/ breadwinners.Remember that if we don't have this fund, the result would be borrowing money.
2.PAY OFF YOUR DEBT / DEBT SNOWBALL
Paying off your debt from smallest amount until you become "DEBT FREE".I used to be debt patient and I know the feeling of being in deep debt.It causes arguments within the couples and in most cases, with the lender if you are not committed to your obligation.According to Dave Ramsey, you can be considered debt free if your only debt is the mortgage of your house well, I'm can proudly say now that I'm debt free because my house is my only debt.Aim for that too and make it as a goal as much as possible because the money which is supposed to be used there will become your biggest tool to invest and have a sound retirement.
3.GET A LIFE INSURANCE
I am also quite new to this.According to 2012 Philam Life's study, only 1.1 percent of Filipinos have some form of life insurance. Another statistics show that 90 percent of Filipinos have little or nothing to leave their families when they pass away.
Healtcare, regardless of short term or long term is important to protect ourselves from using our liquid assets, you pay your premium and let the healtcare settle your hospital bills.
Generally life insurance is to provide us financial assistance when accident and disability happens and more importantly death benefits-the amount of money that the insurance company can transfer to our family when we pass away.As a responsible person,nobody wished that their family become poorer and struggle when you cannot give them things what they supposed to have right?
4.INVESTING
Invest....invest....invest...
Do not put your hard earned money in the banks except for your emergency funds because it will give you only .025 percent interest and inflation rate will suck it up.Invest on assets and not on liabilities.A house is not an asset though I used to believe in that too :), but if renting is higher than mortgaging a house why not? Just be careful with your spending. Robert Kiyosaki's definiton of ASSET is anything that puts money into your pocket while LIABILITIES is anything that takes out money from your pocket. Liabilities might as well apply to cars, gadgets and anything that we don't earn money from it.Find a sound investment that can beat our 4-5 percent inflation rate.There are lots of investment vehicles around in the market today like Mutual Funds, UITF (unit investment trust fund) that is widely offered at the major banks and Stock Market that can give you an average return of 12 percent yearly.Traditional investments are good if you know how to handle it correctly, Sari-Sari stores,passenger jeepneys, internet shops etc.. are just some of the types of traditional investments that requires your full management, if not you will just loose your money.If you are a busy type of person, mutual funds and UITF are the best choices because a fund manager with a nominal fee will handle all the responsibilities.
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Remember these quotes;
Savings-
"Salary-savings = expenses" is correct
"Salary-expenses=savings" is wrong.
70-20-10
"70% of your salary for spending, 20% for savings, 10% for the tithe"
increase your savings
Budgeting-
"A budget is telling your money where to go instead of wondering where it went"
Frugality-
"Do not spend higher than your salary"
"Live below your means"
Healtcare and Insurance-
"It is cheap but when you don't have and you need it, becomes so expensive"
Passive income-
"Don't just work for money, Let the money work for you"
Diversification-
" do not put all your eggs in one basket".
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These are just some of the so many right guidelines how to attain financial freedom.In the beginning I mentioned about getting a new house,Well I think its not difficult anymore after we practice this to our daily life. If we follow these steps, decision making will be easy, our financial life will totally change and our view of money will change.
Don't forget that God gave us wisdom,let's give a good share, let us help our financially broke friends by sharing them what we learned and what we earned.
Thank you.
