“Sayang! Sana noon ko pa ‘to nalaman!” (I wish I knew about this a long time ago.)
In the last three years that I’ve been teaching financial literacy I can no longer recall the number of times I’ve heard these words uttered by people coming from all walks of life but mostly from people who have already been working for at least 5 years.
You know what they say, “You don’t know what you don’t know...” This is also very true when it comes to financial literacy. People don’t really realize the high cost of their financial ignorance until somebody actually lays it all down to them.
Let me share with you three major things that are being put to waste because of financial ignorance.
I guess this is rudimentary. Because of our lack of financial knowledge we end up spending and wasting our money on a lot of unnecessary purchases. Predominantly this has something to do with how we were wired to spend our money. Most of us use this type of budgeting: Income – Expenses = Savings.
It’s good that you have a budget or a plan as to how you want to spend your money but the problem with this formula is right after we receive our income the very first thing that we prioritize are our expenses - bills, basic needs, lifestyle, and all other imprudent or unplanned expenses, which more often than not goes beyond what we actually earn thus, we end up with no savings and sometimes even a deficit.
Now, let me put this in figures, let’s say you’re earning P20,000/month, multiply that by 12 months and then multiply it again by the no. of years that you’ve been working it will give you your net income.
No. of Years: Net Income:
5 P 1.2M
10 P 2.4M
15 P 3.6M
20 P 4.8M
25 P 6.0M
30 P 7.2M
Where did all your money go? Did you really spend it wisely?
Each and every one of us is entitled to take part in the growing economy of our country, the Philippines, but the question is what are we doing to make the most out of this opportunity?
Let me share with you the story of a friend who missed out on such a huge opportunity simply because she didn’t know her options. Let’s call my friend Juana. Juana is an engineer who used to work for a huge semi-conductor company. In 1995, at the very young age of 36 years old, she already had more than P1M in her bank account. Here’s the thing, on that very same year, Philequity, one of the leading mutual fund companies in the Philippines right now, was just starting and the NAVPS (Net Asset Value Per Share), or in layman's term, the price per share of Philequity Fund Inc. was only P1.1. Again, that was back in 1995. Let’s fast forward to 2015. As of November 3, 2015, Philequity Fund Inc.’s NAVPS already appreciated to P35.1 per share. Are you getting the picture here? If Juana knew about this opportunity, if she only understood back then how investing in the stock market works and actually invested at least P1.1M in Philequity Fund Inc. back in 1995, she would be able to buy at least 1 million shares, and if she sells all of her shares now she should be having at least P35M. But where is her P35M? Wala! Upon realizing this, with the deepest sigh that she could possibly make, the only word that she was able to say was “Sayang!”
People think that investing in the stock market is too complicated and that it’s only for those who make a lot of money. NO! There’s a simple way of doing it. We just need to be deliberate enough in seeking out the right opportunities and the tools to learn about these things.
“Time is gold.”
I never thought that this well-known line had a literal meaning to it in financial literacy. Let me keep this simple. In the table below it shows two types of investors, Mr. Save Early and Mr. Save Later respectively. Assuming that both of them will be investing P20,000 for six years in an investment vehicle that will earn an average rate of 12% annually, this will be the result:
When both of them reaches the age of 60, Mr. Save Early gets P7.7M while Mr. Save Later only gets P3.9M. Take note, the only difference that they have is time! So the question now is, when is the best time to start investing? NOW! Don’t waste your time! Take action!
Let me end with this,
“If you think education is expensive...try ignorance.”
Quit wasting your time, money, and opportunities. Do something today.
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About the Author
Chai Santiago is a graduate of Manufacturing Engineering and Management from De La Salle University who later on found her passion and purpose in the Financial Education industry. She is a Certified Financial Educator® (CFEd®) under Heartland Institute of Financial Education (HIFE) and a Financial Coach at International Marketing Group (IMG).