“Don’t be afraid of your fears. They’re not there to scare you. They’re there to let you know that something is worth it.”
― C. JoyBell C.
Many Filipinos get ensnared in believing monetary myths, instilling fear in them to seek out modern ways to cultivate their money. In a publication released by Bangko Sentral ng Pilipinas in 2018, it was mentioned that financial literacy in the Philippines remains low. Citing the results of a study by the World Bank, BSP said only 2% of Filipino adults answered all questions about financial literacy correctly. This is many notches down the ideal percentage.
Importantly, we must educate ourselves about this matter. Money talk is not something you should hide in terror of, but rather something that you should acknowledge and use to your own advantage. Without further ado, let us talk about five Filipino money myths and how to debunk them.
Myth #1: Investing is for rich people only.
The stock market is where investors connect to buy and sell investments — most commonly, stocks, which are shares of ownership in a public company. Many people get intimidated to invest in the stock market because of inferiorities.
Debunk it: You don’t have to be an entrepreneur or read hundreds of business and finance books to qualify in the stock market. Now, there are many investment alternatives that you can try out (besides, they’re highly accessible). Stock Brokerage firms, acting as a middleman to connect buyers and sellers, require as little as Php 5,000 initial investment. Not so bad for your pockets, right? Perhaps, you would also be interested in investing in mutual funds, retail treasury bonds, and other legal businesses.
Myth #2: I don’t earn enough so I can’t save money.
“There are too many bills to pay. I’ll just save whatever’s left at the end of the month.” My dear reader, we should avoid this common trap. By the end of the month, you see yourself with a scarce amount of money to save (in some cases, none). To comfort yourself, you would continually be making excuses.
Debunk it: Make it a matter to budget your money and strictly follow it. Implement the 50/30/20 budget rule with your income: allocate 50% on needs, 30% on wants, and 20% on savings. Find other methods that could work out for you. The takeaway here is discipline. Learn how to strategically manage your money by tracking your expenses.
To know more about tracking expenses, click here.
Myth #3: Banks can’t be trusted.
In a 2017 survey conducted by Bangko Sentral ng Pilipinas, it was announced that 77% of the adult population in the Philippines do not have a bank account. 60% reported not having enough money as the main reason, followed by the perceived lack of need (21%) and the absence of documentary requirements (18%). Other reasons cited are high cost (10%), lack of knowledge in account opening (9%), lack of work (8%), and lack of awareness (8%).
Many decades ago, our parents did not see banks as a matter of importance. This has influenced the next generations to think the same, leaving Filipinos to just save their money in piggy banks and vaults.
Debunk it: The Philippine Deposit Insurance Corporation (PDIC) insures up to Php 500,000 per depositor per bank. This covers bank deposit accounts and does not include investment accounts. If you keep your money on the hidden nooks and crannies of your house or ask others to keep it for you, there are high chances that it could get stolen. Have the peace of mind that your money is insured by putting it on a deposit account.
Myth #4: I don’t need a Financial Plan. I only live once.
“Live while we’re young.” This is what we’re continually told by society, and yet also the main reason why many people go broke. For some, they think that monthly pays to a financial plan are unnecessary and expensive. They think that they would deprive themselves— why save for tomorrow’s comfort when you can be happy today, anyway?
Debunk it: Your job and your money aren’t going to last forever. Evaluate if would you still be happy with your purchases 20 years from now. Apply this thinking, too, whenever you will buy something out of impulse. Live while you’re young without jeopardizing your future. A financial plan will do just that— help you manage and be happy with your money now while also funding for your future.
Myth #5: I don’t need an emergency fund.
When it comes to people who own multiple debit and credit cards, they usually think that emergency funds are unnecessary. For others, they have the thinking that they don’t need much because they can always run to a friend or family to support their needs or get a loan. However, it’s always best to have a financial back-up just in case things go wrong.
Debunk it: One emergency can wipe out your entire savings. Tomorrow isn’t promised, so it’s best to always expect the unexpected. A sudden circumstance such as unemployment and other unplanned expenses can put a dent on your financial situation, but an emergency fund will help you get through it.
Stop believing the cultural taboo that you’re attracting misfortune by having emergency funds and insurances. It’s highly crucial for every household to have an emergency fund that is easily accessible.
The bottom line
There are still a lot of misconceptions that hinder Filipinos to go out of their way to make financial advancements. The time has come for us to be wiser in handling our money. Leave the myths behind the last century and set a good example for the next generation by familiarizing yourself with these matters. After all, modern problems require modern solutions.
To ensure that you’re on the right track, consider getting a financial consultant today. Our financial consultants at IARFC will help you to cultivate your money for a brighter tomorrow.
Disclaimer: Just a reminder, dear reader, that the content in this column is my opinion only and should not be construed as investment advice because I am not your financial adviser, neither did I take into consideration your personal objectives, financial situation, needs or circumstances as your fiduciary. This column is mainly for your entertainment and education only.