Why do we go to school? Why do we devote half of our lives to education? Well, it all started with a dreamy "I am going to be rich." or "I am going to be successful."
Everyone wants to achieve something — we all believe that if we go to school, get educated, and earn a degree, there is a chance for us to become someone we envisioned ourselves to be.
Every year, universities across the country produce hundreds of thousands of graduates, but have you seen these people, or at least half of them, become financially stable after two to three years of working as professionals?
When confronted with the bitter taste of reality, we couldn't deny that most Filipinos, even college graduates, still fall into the trap of living paycheck to paycheck. We are all excited to leave university and enter the professional world, engrossed with the idea of earning money so that we can get ahead financially. However, even after a half-decade of working our tails off for a living, we still end up sinking in debt.
According to a National Baseline Survey on Financial Inclusion conducted by the Bangko Sentral ng Pilipinas (BSP) in 2016, only four out of ten Filipinos have savings. Furthermore, according to BSP Governor Benjamin Diokno, 80% of the 7.6 million Filipinos aged 60 and up do not have a retirement fund. Aside from these, he added that 75% of the Filipino adult population, or 54 million Filipinos, have not invested at all.
What do you think went wrong? Have you ever thought about what they were teaching us in school? Growing up, we learned about Math, English, Science, Geography, History, Calculus, and everything else except proper money management. The educational curriculum fundamentally lacks life skills — it did not teach us basic money management habits. Did it fail us? Technically, yes. Kieron Sweeney, an international speaker, mindset specialist, and business mentor, stated in his talk, “We all graduated with knowledge in certain areas, but the entire world runs on money, and if you don’t know how to manage it properly, you run into trouble.” Evidently, the school curriculum is one of the reasons why we’re still stuck in the quicksand of poverty, and it is partially to blame for the growing number of financially illiterate Filipinos.
We’ve been clinging to the frail edge of the severely damaged paper bill that was left on our hands — indeed, we’re in serious trouble.
To address this alarming issue, AAMBIS-OWA Partylist Rep. Sharon S. Garin and Marikina Rep. Stella Luz A. Quimbo filed House Bill No. 9058, also known as the “Savings and Investments Act of 2021”, a bill proposing to include a saving and investment subject in the junior high school curriculum to equip young Filipinos “with tools for long-term savings and long-term investments prior to senior high school and college or university studies.” Following the filing of the aforementioned bill, the Department of Education announced that they will expand the integration of financial education by issuing DepEd Order No. 022, Series of 2021, or Financial Education Policy. This aims to improve financial literacy and strengthen the skills of teachers and students in handling their finances. Furthermore, the Bangko Sentral ng Pilipinas (BSP) launched the Digital Personal Equity and Retirement Account (PERA), a voluntary retirement saving plan in which anyone can open an account online. This retirement plan allows its members to save and invest annually, resulting in tax-free investment returns and benefits. Banco De Oro also offers the Easy Investment Plan (EIP), ideal for people who want to save and invest for the long term. This program aims to assist its members in reaching their financial goals and achieving financial wellness. In addition, BDO ensured that investing through EIP is affordable by allowing members to invest as little as Php 1,000 per month.
Heading back to Kieron Sweeney’s TED talk, he introduced Life’s Golden Buckets system: a simple money management system in which his goal is to assist everyone, especially parents around the world, in educating themselves and their children. Because he believes that they are the ones who are most likely to want their children to “grow up not in debt but flourishing with investments.” This system includes seven buckets representing our bank accounts:
The first bucket is called the “Tax Account,” where our after-tax income goes. Self-employed individuals, particularly those who have their own business, will contribute 20% of their gross income to this account. After that, we’ll divide the money among six accounts.
The second bucket is the “Investment Account,” where our money can grow. We will invest 10% of our money in this account, and we must never spend it.
The third bucket is the “Spending Account,” into which another 10% of our money will be deposited. This will allow us to avoid using credit cards or taking out loans to buy the things we need and want. This bucket will keep us from going into debt.
The fourth bucket is the “Education Account,” where we put 10% of our money to save for our education so that we can go to the university we want in the future.
The fifth bucket is the “Life Necessities Account,” which gets 55% of our income. This will help to cover our day-to-day expenses.
The sixth bucket is the “Fun Account” because we deserve to have fun while working our way to financial freedom and security. This is where we put another 10% of our money, which we must spend every month.
The seventh bucket is the “Charity Account,” where we’ll put the remaining 5% of our money so that “we always have money to give back, and we have money whenever there’s a need in the world.”
If we could make this system a habit, we might get ahead financially. If only we were taught these things in school, perhaps things would be different. Maybe if we learned about financial literacy, we would realize that it is not as complicated as it would seem and that it is not always about budgeting, cryptocurrency, investment, and trading. Being financially literate means that we have a different perspective on money and understand why we must protect it, and keep track of where it goes each month. It is about having the courage to take risks to achieve our dreams and other financial goals while well-equipped with financial principles and concepts. We will make wise financial decisions if we are financially literate. Financial literacy will provide us with fundamental knowledge of investment, budgeting, financial markets, savings, and capital budgeting. It will assist us in becoming financially independent and self-sufficient — it will help us get out of debt.
We grew up wanting to achieve something, yearning to be someone we aspired to be, so we became slaves of money: hitting the books religiously to have a nice job and a decent income — we chased money unconsciously. During the chase, we had our chances — a lot of them — but we wasted every one of them; however, perhaps now is the time to be financially aware. Maybe we should stop making money and spend it mindlessly until it vanishes. We must break free from the cycle of living paycheck to paycheck. Let’s work on becoming financially literate because we should have realized by now that it’s financial freedom, not money, that we should be chasing.
Here are some basic ways how to be financially literate:
1.) 𝗣𝗿𝗮𝗰𝘁𝗶𝗰𝗲 𝗯𝘂𝗱𝗴𝗲𝘁𝗶𝗻𝗴 𝗮𝗻𝗱 𝘁𝗿𝗮𝗰𝗸𝗶𝗻𝗴 𝘆𝗼𝘂𝗿 𝗲𝘅𝗽𝗲𝗻𝘀𝗲𝘀.
The problem with us is that we try to keep up with other people's lifestyles, so we buy things we don't need. This is because we do not have a budget and do not keep track of our expenses. Learning to do these things will allow us to maintain control of our money and eliminate wasteful spending.
2.) 𝗟𝗲𝗮𝗿𝗻 𝗻𝗲𝘄 𝗸𝗻𝗼𝘄𝗹𝗲𝗱𝗴𝗲 𝗮𝗻𝗱 𝘀𝗸𝗶𝗹𝗹𝘀 𝗼𝗻 𝗵𝗼𝘄 𝘁𝗼 𝗲𝗳𝗳𝗲𝗰𝘁𝗶𝘃𝗲𝗹𝘆 𝗺𝗮𝗻𝗮𝗴𝗲 𝘆𝗼𝘂𝗿 𝗳𝗶𝗻𝗮𝗻𝗰𝗲𝘀.
Do your research, read personal finance books, sign up for financial newsletters from reputable sources, and participate in webinars. You can try enrolling in courses or consulting with financial professionals if you have enough or extra money.
3.) 𝗢𝗽𝗲𝗻 𝗮 𝘀𝗮𝘃𝗶𝗻𝗴𝘀 𝗮𝗰𝗰𝗼𝘂𝗻𝘁.
This will help you secure your money while earning interest.
4.) 𝗙𝗶𝗻𝗱 𝘁𝗵𝗲 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗼𝗽𝘁𝗶𝗼𝗻 𝘁𝗵𝗮𝘁 𝗳𝗶𝘁𝘀 𝘆𝗼𝘂𝗿 𝗯𝘂𝗱𝗴𝗲𝘁
We must dispel the myth that investing requires a large sum of money, when in fact, some investment plans allow for a minimum investment of Php 1,000. Investing can help our money grow and provide us with financial security in the future.
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Written by: Daisy Mae Concepcion
Layout and Design by: Cris Cudal and Charles Ian Ramos
REFERENCES
Sweeney, Kieron. [TEDx Talks]. 2016, May 28. Financial illiteracy in the school system | Kieron Sweeney | TEDxStanleyPark [Video]. YouTube. https://youtu.be/l6MxdDvk8QY
Pascual, J. (2015, August 20). Most Filipinos have no savings – study. ABS-CBN News. https://news.abs-cbn.com/business/08/20/15/most-filipinos-have-no-savings-study
Cordero, T. (2020, October 23). BSP’s Diokno: 75% or 54M Filipinos don’t have investments. GMA News. https://www.gmanetwork.com/news/money/economy/761120/bsp-s-diokno-75-or-54m-filipinos-don-t-have-investments/story/
Ornedo, J.M. (2020, September 9). 80% of Pinoy seniors have no retirement fund —BSP. GMA News. https://www.gmanetwork.com/ncaa/news/nation/754948/80-of-pinoy-seniors-have-no-retirement-fund-bsp/story/
Dela Cruz, J.M. (2021, April 5). Lawmakers want investments included in the Jr. HS curriculum. Business Mirror. https://businessmirror.com.ph/2021/04/05/lawmakers-want-investments-included-in-jr-hs-curriculum/
Bernardo, J. (2021, July 8). DepEd intensifies financial education to improve literacy in PH. ABS-CBN News. https://news.abs-cbn.com/news/07/08/21/deped-intensifies-financial-education
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