Financial Literacy

“Success in life depends upon on previous preparation, and without such preparation there is sure to be failure.”— Confucius.

According to a study, there are only 10% Filipinos who are financially free, 10% who are financially independent and 80% who live below the poverty line. From this we can already picture out that many Filipinos are facing difficulty in managing their lives. In order to lessen the number of people who are below the poverty line, different government and non-government institutions seek ways to help them.

Good employment opportunities, savings and investments are tools in making one’s standard of living better. These are life securities designed to protect the financial well-being of an individual. As people become rich, they also become afraid of losing their lives and properties because of dangers and hazards. Their worries can be mitigated by entering in insurance contracts, their protection against future losses after prepayments to the insurance company. People need to manage their resources well and experts are available to help them.

There are three people’s behaviors on money: (1) INCOME minus EXPENSE equals SAVINGS, (2) EXPENSE minus INCOME equals DEBT, and (3) INCOME minus SAVINGS equals EXPENSE. One should not be a spendthrift or someone who is recklessly wasteful. The ideal behavior of people on money is the third one because out of the income, you deduct your savings and the remaining balance will be allocated to your expenses. With this in mind, a person can plan his/her necessary expenses after maximizing the needed savings from one’s hard-earned income. 

At the age of 20 or earlier, a person is already getting started in handling his/her day-to-day expenses; he/she also starts saving money. Ages 27 to 30 are certain periods of having a family and preparing a budget for the entire household. People can start investing their money on worthy investment schemes once their budget allows it and by the age of 40-60 years old, they can have sources of funds in case of emergency situations and retirement. The last phase is when somebody dies or the leaving legacy, wherein assets and properties are transferred to the immediate family.

The key ingredients in building your fortune are time, money, energy and discipline. With the efficient and effective utilization of money, you can have more. But if you do not use the money well, you will have a bad future ahead of you. Plan for your expenses and list your priorities, be it in education, health, travel or food. Try putting your savings in a bank to earn interest, or investing in stocks or bonds to earn income, or establishing a business. These things will not only make you financially stable, but also will make you a catalyst of change for the improvement of the economy.