When is the best time to prepare for the future? The answer is yesterday, and the second best answer is today.
This year has taught us that material things can instantly vanish – your car, your house, your job, your savings account and even your lifestyles. All it takes is one financial blow like getting critically ill and you’re broke. So how can we protect yourselves from unexpected financial blows?
I wish financial literacy was actually taught in class, maybe in high school. Maybe, just maybe, we as a country will be better equipped and financially educated enough to know that we need to use financial instruments and manage risks. I wish someone told me earlier that saving money is not enough, that it is only the first step, and that buying a car or a house is not necessarily accumulating assets. I wish I’d known what depreciating assets are.
Here are some of things I have learned now that I wish I knew when I was younger:
Financial Literacy is the key to financial success
We think we know how to handle our money, but do we really know? Where can you put money to beat inflation? What is inflation anyway? Is saving money enough? Where can and should you invest?
There are highly qualified people who can help you learn, you just have to look for the right people. Find a trusted institution that can help you grow your hard-earned money and manage the risk for you.
Emergency fund is basic
What’s an emergency fund anyway? It is the money that you can use in case of emergency, like losing your job, and other immediate financial needs.
It is common practice to save at least 3-6 months of your income as your emergency fund and keep it where you can easily use it in case of emergency.
Health is wealth
Your savings and all your assets can easily be wiped out in case you get sick. You need to get yourself health insurance and take care of your health too.
Did you know that more than 50% of the total health expenditure in our country were paid out-of-pocket? This is because the majority are not insured, they have no health insurance coverage, or maybe they have but it is not enough to pay for their hospital bills. No one wants to think that they or the people they love will get sick one day. Many people can survive critical illnesses like heart disease, stroke, or cancer but they can’t escape the financial effect of it. A critical illness can cost you anywhere from 500,000 to 5 million pesos. Think about that.
In our country, it is so common to see people refusing to buy their own health insurance thiking that it’s just an additional expense. If you can’t afford to buy your own health insurance, then you can’t afford to get sick.
One might say, “I don’t need one, my company is paying for my health coverage.” Okay, let’s talk about that.
I know a call center employee, a single mom, with a high paying job. Life is great with a boyfriend on the side until she was diagnosed with lung cancer. She was just 29, the sole breadwinner with 2 kids and her mother relying on her income. The health insurance provided by the company was able to shoulder the initial medication and treatment but because her coverage was just P180,000, she maxed out her coverage right away. After chemo sessions, she became too sick and weak to come to work and the company obviously terminated her. She got replaced by someone who can perform the job. Because she is no longer an employee, she can’t even use her HMO for check ups. All employee benefits got cancelled when she got fired. So sadly, she died, and her kids were sent away because her old mother can’t take care of her children.
In conclusion, plan well and execute well. Do your research, and look for a qualified and trusted advisor.