Maestra

I was excited when finally the Department of Education is noticing the lack of financial literacy on Filipinos. They actually launched a program to address the issue but since then I have not heard anything about it (even from the media).

Well I hope the program is still there and the Department of Education is doing its part to instill financial literacy in high school students. But I think before they can do that, they should conduct different seminars and workshops to empower high school teachers about the subject matter.

It’s a well known fact that (public or private) teachers are suffering from various forms of financial problems. A few teachers whom I talked to say they only have enough salary for their day-to-day expenses. They don’t have savings nor have any savings account from a bank. What saddened me more is the fact that most of them are buried in deep (as in deep) debt and their only way to make it through the month is to borrow more. That’s why in my hometown there are a lot of lenders commonly known as 5-6.

I’d like to present a few facts to help all the teachers there especially the Filipino ones. I always believe that we should improve the financial literacy of our teachers first before they can impart the knowledge to their students. J

Note: You need NOT be a Registered Financial Planner to understand the basics.

Having more money (promotion/dagdag-sahod) is not the only solution to financial problems. More often this signals the brain to spend more because it assumes that there will be more surplus. Moreover, this signals others that it’s ok to borrow more because there will be money at the end of the month to cover it.

• The Solution: Always treat extra pay as extra savings. For example, when the government gives bonus to teachers for a job well done they should (right away) go to the bank and open a savings account. I think there are banks that require 1000Php initial deposit to open a bank account.

Save a (constant) portion of your take home salary and put it in your savings account. It doesn’t matter how much as long as it is constant. Say for example you are receiving 15000Php after tax every month but cannot afford to save a constant 10% of it. Then start small. Save 500 every month. Immediately after receiving your salary go directly to the bank and deposit it. That way you can train yourself and your family to live within 14500 per month. Then as time passes by you can add 100 every month.

• The Solution: I usually tell my friends to force their savings so might as well tell the teachers to do the same. 

Put on a life goal of becoming financially independent. I have read from Robert Kiyosaki’s “Rich Dad Poor Dad” that teachers (generally) don’t want to be rich. They just want to teach. It’s ok if that’s your principle BUT bear in mind that during your sunset days you might be neglected by your love ones (just because you are a pabigat.) Please do not attack me on this issue. I know for a fact that Filipinos have close family ties and the children will never neglect their parents. But of course this is not always the case.

• The Solution: Always aim for financial independence. You yourself should take care of your future.

Do not rely solely on Government Managed retirement fund. Have you seen this news [link of the news here]? Are you like him/her? Are you contributing solely on government managed retirement funds and relying to have enough money when you are old? As for many teachers, my guess would be a 99% YES! Although some teachers have accounting subjects during their tertiary education, they often missed out what the accounting subject is teaching them. They just know there are numbers and a balance sheet and a problem that they need to solve but never (in most cases) focus on the message of the subject. If you apply basic economy or accounting in real life do you think government pension will suffice?

• The Solution: Expose yourselves in other investment strategies. No, I am not talking about 5-6. I am talking about legit investment strategies. If it is difficult for you to reach investment facilities then better drop Facebook and learn the basics through youtube and informative blogs. We are now in a digital world so make use of it and “connect” instantly with other people.

Do not rely on your children for future needs. This is a typical Filipino family situation wherein the parents rely solely on their children to take care of them after retirement. Please, if you can change the situation then do so. Your children have a life of their own. The best thing that you can give your children (if you do not have money) is the assurance that you can take care of your future and not bother them just because you need money. Your children can of course voluntarily give money/allowance from time to time BUT do not assume that this will also be your case.

• The Solution: Spend some time to strategize your retirement plan. Do it as early as possible and make use of the power of compounding interest. If you are in your 50’s and still have no means of funding your retirement then you might want to consider taking up another job or making money out of your hobby to buff your savings.

Avoid scams. Unfortunately a lot of people are lured to get rich quick scheme because people want to be rich but they do not want it the hard way. There is no such thing as getting rich as quickly as possible. If someone told you that he/she can double your money in a month or two then turn away. He/She is just fooling you. Always remember that legit investments will NOT give you GUARANTEED returns.

• The Solution: Make it a habit to check investments that come your way. This is a very good strategy because you will be more familiar with it and be able to assess if it is jut a scam or a legit one.

Lessen your debt intake. Oh sure easier said than done. BUT everything is possible if you have the will. Start by realizing how much your take home pay is and budget within that amount. No more, better if less. Remember that some sacrifices have to be done in order to get where you want. If you want a promotion then you have to work harder and smarter. You have to take several subjects and pursue a master’s degree. If you want to be fit and healthy then make it a habit to eat healthy and exercise. You see, you have to work your ass out. Same with being financially free. You can’t be financially free if you have debts till your neck and paying 20% per month just to get by. Change something from your routine if you have to.

• The Solution: Pay up your debts as early as possible and do not borrow anymore. Live within your means.

Let go of your vices. A big portion of our money goes to vices. Those sticks of cigarette or those bottles of beer. How about those sweet tooth cravings? How much are you really spending for those vices? A normal person can live without vices. The good news is, and so can you.

• The Solution: If you are to choose between your vices or your financial freedom, please choose the later one. Vices can actually do you worse than you imagine. Collect the money you should have spent on your vices and add that to your savings. Not only you will become healthier but also a step forward to your financial goals.

Stop saying “Hindi ko kaya.” or “Ang hirap.” or “Ayoko na.” Remember that law of attraction, What you think, what you say you will attract – no doubt.

• The Solution: Start a positive mantra in your life. “Kayak o to.” “Gagawin ko ang lahat.” “Hindi ako susuko.” Those are better to hink than their negative counterparts.

Get the family in the bandwagon. It is always best to talk to your family about finances. Let them understand that you yourself have a lifelong dream of becoming financially independent. Let your children understand that if you will not do this today they will also suffer in the future because you will be relying on them during your old age.

• The Solution: Make financial planning a normal topic at home so that family members can communicate freely about the topic. It is best to understand the views of everybody in order to have an orderly and peaceful family finance. You can actually involve the children on goal setting activities and let them do their part also.

I hope I am able to open the minds of the teachers out there. Feel free to PM me for suggestions and queries.

Till next time.

What to do with finances this year?

I've not been writing lately because I want to reflect more on what I should do this year with my finances. It's not that I have a lot of it but I want to make sure that my finances are in tact and are geared towards the goals I have set few years back.

What struck me was the realization that basics are still the best guides in handling everything especially money matters. They have not failed me yet.

Here's what im going to do this year in order to achieve my financial goal this year.

1. Save first before spending.

2. Increase tithes.

3. Invest more money.

4. Lessen expenses.

5. Prepare for emergency.

6. Give away what i find unnecessary to me.

7. Live a simple life.

These seven simple things never failed me yet. I hope readers can also find their seven simple steps this year.

Till then.

Lessons of Debt

It is a very common practice for Filipinos to loan money to buy things especially big purchases like a house and lot or a car maybe.

As for incurring debt, three lesons have been shared.

1. It always depends on the purpose. If the purpose is wrong, debt is bad.

I remember a qoute told by David Ramsey thatngoes this way, "We buy things that we don't need with money we don't have to impress people we don't like." If you think you fit this qoute then i think you have a problem.

It is not bad to be ahead of everyone. It is not bad to have things. But if you accumulate things the wrong way, i am 100 percent sure that you are going to dig yourself deeper and deeper until there is no more space for younto breath.

Lesson: "Do not keep up with the Joneses. Who are they anyway?"

2. Size of debt versus income matters.

Think of it this way. You are applying for a loan and your records show that you are paying your bills on time with instances of paying more what is required in your credit card. What is the probability that the bank will lend you money? Actually it is high.

On the other hand, if you are so indebted and your debt is close to your monthly salary then the probability is very small. The bank analyzes cashflow. The mere fact that your debt to income ratio is closer to 1 signals a red light.

3. Debt Management Approach

Paying debt requires financial management. It requires discipline. You cannot depend on other people. It is you who is responsible. Start managing your debt or your debt will begin to manage you. The smaller your debt the more cash will be put to your bucket and the faster younwill achieve financial independence.

Dream On

When I started attending a series of financial literacy seminars first thing that struck me was their tagline, "Financial independence is not a dream, it's a reality!"

All my life, no one told to me about financial independence and its importance to my life. So naturally I was taken aback when I first heard it.

First let us define financial independence. According to wikipedia, it is the state of having sufficient personal wealth to live independentlynwithout having to work activelyfor basic necessities. His only means that the tag line suggests that a person can accumulate wealth to sustain his needs. Only if he makes it a priority.

From that day on, I committed on making my dream a reality. The journey is not a joyride. Actually it is difficult. I have to learn how to restrain myself from buying and accumulating things. I have to immerse myself with books on personal finance. I have to take advices from different people, media, internet and bloggers. I need a total overhaul.

To this day i continue the discipline in handling my finances. I am more confident to talk about money now. I am more informed than before. I am able to foresee my future and can lay down financial plans easily. The seminars and the discipline are now bearing fruits. Everything is part of my system now.

I am confident that I can reach my target this year. And I am confident that I can exceed what is expected. Thanks to the community, now i can start "Dreaming on!"