Did you know that Filipinos are among the least financial literate countries in the world? This means many Filipinos are not aware of the concept of investment, savings, and even as simple as managing your own money. This explains why most Filipinos don’t have savings account and most of your money go to remittance back home.
As an OFW, you might say, “Wala naman yan” or “Hindi ko naiintindihan ang financial literacy na yan.”
Don’t worry. Building financial literacy may not happen overnight, but these five questions will help you not just understand financial investments but also promote and encourage you to start building your financial security:
Question No. 1: Do you have savings?
This is the first question you need to answer when starting to build your financial literacy. Savings is crucial because it not only prepares you for the rainy days but also gives you a chance to bounce back in case of financial difficulty and an edge by the time you reach retirement age.
Saving is a continuous process. Set aside a portion of your monthly income, say $10 or $20 and place it in a fund, preferably a bank account. When you do this consistently, you might be surprised with how much money you were able to save and it will feel good.
Question No. 2: Do you have a financial plan?
Investopedia defined financial plan as a comprehensive evaluation of one’s current and future financial state using known variables to help predict future asset values, cash flow, and withdrawal plan. To make it simple, what are your short-term and long-term goals.
Your financial plan must lay your specific, realistic, and time-bound goals given the money you are earning. For example, you plan to buy a car below P1 million after five years or at least P100,000 in your Emergency Fund after three years.
Question No. 3: Do you have insurance?
Not many people believe in insurance, which comes in different types, for three reasons: (a) they don’t know how it works; (b) the premium is too high; (c) they simple don’t trust insurance companies.
Here’s the thing: having an insurance may come in handy during tough times. Invest in life or health and medical insurance because (knock on wood), you’ll never know what could happen if you are abroad.
Question No. 4: Do you have any passive income?
Passive income is earnings you gained from any enterprise without being materially involved. In other words, you don’t have to work hard for it and yet, you get to earn something from it at the end of the month. Examples of these are the earnings you get from rentals, investment, or limited partnership.
This should be your goal. Apart from your monthly income, look for other ways you can earn and grow your money even without exerting too much effort. Explore your options. Read about investments. Educate yourself as much as you can to boost your learning.
Question No. 5: Do you use loans properly?
Loans can be helpful, especially during times of need. Unfortunately, there are instances when cash isn’t enough; hence the need to apply for a loan. The question now is how do you use the proceeds of your loan to make it work to your advantage. Consequently, how well do you handle it.
Don’t be among the many Filipinos who borrow money to sustain their lavish lifestyle, only to find themselves buried in debt later on. Borrow only when needed and with an amount that is necessary.
Given these five questions, how many of them did you answer yes? If you have one or two “Yes” answers, then read up, educate yourself, and learn more about the ins and outs of managing your finances.