Are you living from paycheck to paycheck? Was your last paycheck exhausted before your next paycheck arrived?
So your financial advisor said you should set a certain portion of your salary for savings, insurance, investment and retirement. Doing the math, you realized that nothing is left after you spend for your daily needs. It seems like your income is not enough to allow for savings, so you dropped the idea. Come to think of it, you are at your most productive years earning regular income, but you are at the brink of financial difficulty. What happens when, after you leave the workforce one day, you receive a retirement package that is a chunk of what you currently receive?
You are not alone
There is now an emerging concern about the low financial literacy rate around the world. There is also an increasing interest on how financial literacy is linked to financial behavior and financial well-being. Financial literacy starts from financial education, be it acquired in school, the environment or at home. More often than not, business students are taught and trained to safeguard and manage other people’s resources, but not theirs. Investments appear to be overwhelming, but investments in the stock market can start at P5,000, with a mechanism that could be transacted by non-business oriented people. If business school graduates and those with high educational attainment are found to have a low level of financial literacy, this is a cause for concern.
More Filipinos are inclined towards seeking employment. Thus, income is highly dependent on compensation received from employers. While employers are encouraged to practice humanistic management (i.e., looking after the welfare of their people which may include initiatives such as financial wellness programs), one should not wait until it happens and one should not depend upon others for one’s financial wellbeing and future.
Define your needs and assess your income
Painful as it can be, you have to watch your numbers. Be realistic. Assess where you are now. Define your needs. How often do you sit in your favorite coffe shop earning points? How much do you spend for hair color and straightening, dining out, carbonated drinks, movies, etc.? Do you travel because you believe it is better than buying stuff? The experience and pleasure that come with travels are undeniably beneficial as it also keeps one’s sanity in this rat-race world, others claim. Travel if you must but you must do it without hurting your bank account or without incurring loans. Redefine your needs.
If you have critically assessed your needs, then you can start looking at your income. Is your income highly dependent on one source? You may have other talents you have not exploited yet. If you are a professional or an expert, you can do consultancy. You might have skills and talents that can earn you additional income. Or might it be high time to hone your entrepreneurial skills?
While we are trained to work for our paychecks, we can learn to make our money earn us a check. How many hours do you spend in social media or in playing with your techie games? You may wish to be more productive and take advantage of the easy access to information to educate yourself on financial products. Instead of parking your excess resources in the bank, you can make your money work for you as you invest in the stock market, mutual funds, legitimate businesses and insurance-investment plans. You can also help the government fund its projects by buying treasury bills and bonds.
It is not too late for you and I to exercise due diligence in equipping ourselves with survival tools that include financial literacy. We should not live poor if we are not. The solution to self-proclaimed poverty is to watch the numbers and act upon them.
Lerma Butigan Bautista is a Doctor of Business Administration student of the Ramon V. Del Rosario College of Business of De La Salle University (DLSU). She is an Associate Professor of the School of Accountancy and Business Management at Saint Louis University, a certified public accountant, and a consultant of various firms. You may contact her [email protected] The views expressed above are the author’s and do not necessarily reflect the official position of DLSU, its faculty and its administrators.