Do you think that the Filipinos were intended to live in poverty?
According to the demographic sweet spot that financial experts have consistently used, the country is in a terrific phase right now because the vast majority of people are working class.
There are still various ways for Filipinos to make money, even with the country’s low unemployment rate of 5.8% (according to Ibon, an independent research organization). Some of possibilities include working abroad, joining businesses that offer business process outsourcing and receiving greater pay while remaining domestically, or by offering online goods and services.
But why do the majority of Filipinos still live paycheck to paycheck, fail to prepare for retirement, or become mired in debt is the question. In order to change our financial habits, it can be quite helpful to understand the causes for our seemingly automatic responses to financial crises.
Many Filipinos are uneducated Financial Literacy
The subject of money is highly delicate for Filipinos. A Filipino is unlikely to be eager to approach a financial advisor for assistance or attend a financial conference in order to acquire suggestions on how to improve his financial status. This is the rationale behind why we turn to family members and significant others for financial guidance rather than seeking assistance from financial experts.
We also believe that financial advisors are merely salespeople looking to take advantage of us in order to increase their commission and are not worth the fees they demand from us. While this is a result of the rise in fraud in the nation, the majority of financial advisors only have your best interests in mind.
How to prevent this:
To begin, see whether you know someone who works for a financial institution in your network. Given that you are already familiar with the other individual, this might make your encounter simpler.
Learn about money management via blogs and books. If you are too hesitant to approach people and ask for assistance, you can still find mentors in money management by studying the works of professionals.
Find support groups that can assist you in beginning to manage your finances properly. A community where you may freely discuss your financial worries with the other members is provided by some close-knit clubs.
Please read: Corporate: Financial planning and Analysis
Many Filipinos do not prioritize where they spend their money
While many of us claim that our family’s health comes first, our actions speak otherwise. Since getting health insurance or medical cards requires a lot of paperwork, the majority of us only have PhilHealth and the provider through our employers. We only become aware of its significance after a serious sickness or unexpected health issues affect the family.
Our financial resources will either be used for the schooling of our children or our siblings, or for cultural events like Christmas gift-giving and birthday parties for everyone in our social circles. Additionally, there is the temptation to spend cash on frivolous items rather than putting it down for rainy days, such as electronics.
How to prevent this:
When purchasing a health insurance policy, Aya Laraya, the creator of Pesos and Sense and the financial coach for Sun Life Financial’s Money4LifeChallenge, advises following these steps.
- Get checked out. Know the medical background of your family.
- Make a grocery list. Establish a budget.
- Investigate health insurance options.
- Check the small print.
- Purchase health coverage.
Many Filipinos are reluctant to talk about money with their partners or families
Our financial safety nets can immediately become our parents’, siblings’, and friends’ greater wages. This is greatly influenced by the fact that in Filipino society, it is not acceptable to reject or ignore a family member when they are in need. Being financially independent makes life easier for you and your family, but this shouldn’t be the case.
Other money-related topics, such as health issues and education sponsorship, are taboo or depressing to us.
How to prevent this:
How to be financially independent and how to deal with family members who believe they can just ask for money from you when their funds run out are two different aspects of this.
Financial literacy and taking care of your financial condition are the first steps toward becoming financially independent. If you gain all the knowledge necessary to manage your finances but lack the motivation, nothing will change.
There are many simple ways for Filipinos to borrow money, which leads to bad debt.
If you visit an appliance store, there’s a good chance you can use home credit to purchase the appliance you desire. Most consumers are unaware of the way that tiny payments made up front on home finance lure customers into ignoring compound interest. Your interest may increase by as much as 60% without your knowledge.
Additionally, there are micro-lending businesses that can provide us with easy access to personal loans in less than a week.
How to prevent this:
As cliché as it may sound, don’t spend money you can’t afford to. We spend beyond our means for the majority of our bad debt. Instead of going into debt to purchase something you need, choose a cheaper substitution.
Many Filipinos miss out on the opportunity to use wise debt to advance in life.
You can expand your assets and increase your income by taking on other types of debt. One example of a good debt is a loan taken out to finance the purchase of a home or a developing business.
Although it may require more paperwork, this type of debt will ultimately be advantageous to you.
How to prevent this:
Determine the asset for which you want to spend the debt. Some would argue that owning a car or purchasing property to rent out are excellent investments. Keep in mind that you will only be borrowing money to purchase the asset and not for the extra costs they would incur. Make sure you have enough cash on hand to cover these impending costs.
Calculate whether you will make enough money from the car you plan to use for Uber to pay for the driver’s wages, petrol, insurance, and upkeep. Consider the association dues, maintenance expenses, and estate tax that the property will incur but that you cannot pass along to your prospective renters when purchasing a condominium with a loan.
Conclusion
When societal conventions and the desire for immediate gratification work against you, managing your funds might be challenging, but it is achievable. Simply identify your areas for improvement and set up a plan to address them.
